MusicMagpie has said more people are opting to rent gadgets rather than buy them outright due to the cost-of-living crisis as it also revealed a slip in profits.
The resale platform, which sells used phones and electronics, said it expects more consumers to seek ways to raise cash and save money as a result of increased pressure on household finances.
It came as the business said profits fell to £19 million from £23 million in the first half of this year compared to the same period in 2021.
Its revenue also declined to £71.3 million from £72.8 million which it owed to less people buying CDs and books after a spike in sales during the pandemic, when people were locked down at home.
Shares in the company dipped by more than 10% following the trading update.
In light of the continuing squeeze on consumer spending, we believe that device rental subscription services will become an increasingly attractive option to a wider range of consumers.
Steve Oliver, MusicMagpie’s chief executive
MusicMagpie said it had 16,500 more subscribers to its rental subscription service in a year, where people can rent a refurbished phone for a lower monthly price then return it once the rental ends.
The platform’s boss said this reflected customers trying to replace technology while avoiding larger costs from buying items outright.
Consumer technology makes up nearly two thirds of the group’s entire revenue and was up 15.9% to take in £46 million in the first half of the year.
Chief executive of MusicMagpie, Steve Oliver, said: “In light of the continuing squeeze on consumer spending, we believe that device rental subscription services will become an increasingly attractive option to a wider range of consumers seeking to replace their non-discretionary technology products in a cost-effective way.
“Notwithstanding the challenges presented by the current macroeconomic uncertainty, we expect consumers will continue to seek ways to raise cash and save money and as a result, we are confident that the business is well positioned for future growth in the second half of 2022 and beyond .”
Inflation reached 9.4% in the UK in June, the Office for National Statistics said last week.
Households are cutting back on non-essential spending as people prepare for even higher costs and energy prices ahead of autumn, Nationwide Building Society said this week.