The Renter’s Market is Transforming – How You Can Keep Up

As with many industries, the equipment rental business is undergoing a major transformation which profoundly impacts the industry’s competitive landscape. Residential and commercial construction levels have recovered since the last economic downtown about five years ago. This translates to a surge in the immediate need for equipment rental.

The net result of these changes will increase competition both on price and service, while creating new business opportunities for those who can capitalize on them.  The leaders in this changing environment will be the organizations that have the lowest operating costs, who consistently provide the best customer service and are the most adaptable to changing customer needs and requirements.  Leveraging technology will be a cornerstone for success for the winners, and the failure to do so, will be the primary cause for those left behind.

These changes are coming from within the equipment rental industry as well as from customers.  On the industry side, consolidation is taking place. Bigger rental companies are buying up smaller underfunded ones or expanding both geographically and/or by product offering. Local equipment owners are starting to see losses associated with being a small fish within the broader sea of equipment investing.  Bigger companies gain the advantage of operational scales of economy, the opportunity to generate greater revenue per each rentable unit, and the ability to serve larger customer organizations managing or limiting numbers of vendor relationships.  Underlying equipment rental operations are the financial resources to fund operations. Better funded operations have access to newer equipment, advanced operational and management technology, larger scale marketing and agreements, a larger geographical footprint, etc., which all ultimately generate greater revenue while lowering costs.

This does not diminish hope for the rest of the market players. For customers entering, or as is common in the recent past, re-entering, certain markets are able to maintain a sense of financial flexibility through renting. It requires lower startup costs, does not require as many storage or maintenance costs, and maintained access to the newest technologies. Additionally, many renters are happy with their rented assets, and choose to purchase the equipment after a couple years of renting. This “rent-to-own” model is becoming increasingly common and allows rental clients to test out their equipment and increase the decision making period when purchasing equipment.

On the customer side, equipment rental may be regarded as a strategic financial strategy to reduce capital and maintenance costs.  According to HIS Global Insight, Rental equipment revenues are rising. It is expected to increase nearly 10% to about $40 Billion in 2015. This would be the highest amount since 2007! Similarly, investment in new equipment is said to exceed 30% of industry revenue through 2018. Customers are elevating demand and creating a situation to which businesses must be prepared to respond.

Underlying these changes is the need to utilize technology in ways that may be new to the rental industry.  Managing equipment and customers across expanded geographic areas and service locations requires operational and management software solutions that meets those needs.  Real-time information reporting and management become critical to gain the higher utilization of rental equipment.  Managing a bigger inventory of equipment creates more complicated requirements manage maintenance and servicing.  An equipment rental ERP system is designed to handle these demands in an integrated software solution.  The entire business operation, equipment inventory management, customer agreements and contracts, scheduling, and workflow is seamlessly incorporated into a single system with real-time management and reporting.

Effective use of ERP systems has many areas of positive impact on the business; one of the key ones is customer service.  Up to date and accurate information on equipment availability and status helps effectively manage customer expectations. Effective scheduling and inventory management make more equipment available to the customers as needed.   

Implementing an ERP system is a considerable undertaking and gaining the operational benefits listed above requires embracing new approaches to business operations and workflows.  Organizations that find success leveraging their ERP functionality will discover a competitive advantage that increases profitability through both cost savings from better equipment and revenue generation from higher utilization.  Contact HSO for more information at

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