University of Hertfordshire

By the same authors

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Original languageEnglish
Place of PublicationLondon
PublisherDepartment for Environment, Food and Rural Affairs (Defra)
Commissioning bodyDepartment for Environment Food and Rural Affairs
Number of pages130
Publication statusPublished - 16 Jan 2020

Abstract

In 2018, the UK Government published its Resources and Waste Strategy for England. That policy document identifies resource efficiency as a key strategy to reduce waste and rationalize the use of resources through the adoption of circular economy principles. Amongst the mix of strategies outlined in the document, there are examples that rely on innovative resource efficient business models. One example of such a business model is a Product Service System (PSS). This document reports the results of a project, DEFRA ABR112, which was aimed at exploring and developing ways to assist in extending the useful lives of products. The project implemented a pilot PSS, where infant care products such as car seats and pushchairs were supplied by way of renting rather than outright ownership.

Action Research (AR) was adopted as a research strategy for the project. The pilot project involved the design and implementation of a PSS offering featuring new and refurbished car seats and pushchairs.

The implementation of the pilot was preceded by a feasibility study, which included one to one and group interviews with industry experts along with focus groups involving parents of infants. The pilot commenced in January 2014 and the PSS offering was advertised on a parental charity’s web site.

A variety of research methods were used within the AR framework, for example, in-depth interviews with consumers and business managers, expert workshops and surveys.

Customers took up 1048 leases, with more car seats being rented than pushchairs. A total of 183 refurbished car seats and 21 refurbished pushchairs were supplied to users. Some car seats were used up to four times.

The reason for the greater success of car seats when compared to pushchairs could be explained by participants’ rational economic thinking. Car seats are costly in respect to their potential duration of use and so participants may have regarded leasing them as a better option than purchasing. Pushchairs have a relatively longer duration of use, in addition to being used across multiple births. This suggests that products with a shorter duration of use in respect to their cost might be more suitable for access through PSS.

A Pareto effect was observed in the leasing statistics in that only a small number of types of car seats and pushchairs were rented out.

Participants demanded a great variety of products to accommodate their life styles. This has implications for the financial viability of the PSS, because the greater the range of products required the greater the risk that some products would not achieve multiple uses, which means that renting such products would not be commercially viable.

Aside from rational economic considerations, other elements contributed to the difference in success of the PSS offerings of car seats and pushchairs. Car seats are not as visible a product as pushchairs, so their use may not necessarily be influenced by considerations of social approval or disapproval. In contrast, parents’ desire to have pushchairs that are fashionable as they can communicate prestige and are a means of communication, a “showcase” to display their infant.

Parents seem to have health and safety concerns about leasing pre-used infant care equipment, as they might be damaged or unsafe. In order to address this, PSS providers should implement and certify a robust quality assurance process in order to eliminate these concerns.

The reasons for the comparatively low take-up of pushchairs compared to car seats may also be due to conventions about outright ownership in western countries such as the UK.

Parents are interested in the benefits associated with ownership, such as having the freedom to modify products and not having to comply with the responsibilities that the PSS brings about such as regular fee payments, keeping the product in standard specification, product maintenance and packaging stewardship. Participants were worried about being charged for damaged goods, especially if they entertained life styles that could risk damaging the product.

Findings suggest that environmental benefits (which some of the PSS literature presents as an advantage of PSS), seem not to be of great importance to consumers when making decisions about acquisition of infant care products. This raises questions about whether marketing communications to promote PSS offerings should include statements about its environmental benefits. Parents are generally more interested in practical benefits such as access on demand and cost savings. Some consumer types, and possibly market segments (e.g. voluntary simplifiers ) may be more interested in environmental protection.
The findings of the study suggest that PSS need to be evaluated from the regulatory point of view. An understanding of the consumer credit legislation is necessary for the design and implementation of PSS. Accordingly, there is a role for policy makers in disseminating knowledge on PSS and providing information in order to enhance businesses’ understanding of the relevant legislation and the possible need to acquire consumer credit licenses when they want to adopt PSS. The findings of the research suggest that legislation may also need amendments in order to accommodate PSS and provide the necessary quality assurance concerning specific standards covering PSS and other applications of refurbished products.

PSS presents issues of product liability, quality assurance and responsibility, as well as whether the service is delivered or not by qualified personnel. The pilot study generated new knowledge but this was a low risk scenario within a small-scale protected experiment. Large-scale implementation by businesses may be risky. Scaling up the PSS faces a number of other challenges, such as financial viability due to attrition - the writing off of products due to damages or theft and the number of cycles of use that can be achieved

Attrition, or products having to be written off due to damage or not being returned, can be a limitation of PSS. In this pilot, 8.8% of the products had to be written off due to damage or failure to return. Since they are pre-used, the condition the products were in and their safety were a main concern for the parents participating to the study.

The success of the PSS pilot, especially as far as car seats are concerned, suggests that PSS deserves more attention and further research. Further studies could focus on types and brands of car seats and pushchairs which are specifically designed to be supplied through a PSS. Research in different contexts and with different products should also be conducted in order to compare the findings of this project with those in different contexts. This would indicate the transferability of the present study.

The project also demonstrated the usefulness of combining Action Research with a variety of theoretical approaches. Whilst the effective consumption of car seats through the PSS in the action research was at odd with the findings from the RGT survey, the poor performance of the pushchairs confirmed the findings from the field research.

At the end of the project, the manufacturer discontinued the leasing programme of the PSS, partly because of the costs of implementing it on large scale. However, the insights the project gained in the PSS project contributed to the design of a smaller scale rental program aimed at parents with the hip dysplasia condition. The parental charity elected to terminate their involvement with rentals of products.

The actual resource efficiency and environmental benefits of the PSS were investigated through a Life Cycle Assessment (LCA) approach. A separate report is available as an Annex.

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