Higher-income shoppers embracing rent-to-own stores

Here's a surprising consequence of the faltering economy: The rent-to-own segment is performing very well, bringing in new customers that likely would have never shopped those stores in the past.

USA Today reports that traditionally, most customers of rent-to-own stores — which are frowned upon by consumer watchdogs for charging exorbitant prices for goods like washers, refrigerators and television sets — have household incomes below $50,000 a year. All that has changed recently:

Aaron's, the second-largest retailer in the $6.3 billion industry, plans to open 200 stores in 2010 on the heels of an 18% increase in same-store sales last year. While not growing at the rate Aaron's is, the largest rent-to-own chain, Rent-A-Center, is also thriving. Same-store sales were up 2.3% last year, thanks in part to a higher-income client base that's expanding in the recession.

Looks like most of those new shoppers are using the rental stores as a stopgap measure for appliances that break down; in the past they would have gone out and bought a new one right away, but tightening belts and credit limits are evidently making the week-by-week rental more attractive. Rent-A-Center reports that three-quarters of its customers return their products within 17 weeks of rental.