Should Retailers Be Tapping Rental?
As the boundaries of ownership begin to blur, ORDRE looks at why brands and retailers should embrace the sharing economy.
In an era where novelty and choice are in peak demand, it’s hardly surprising that fashion brands and retailers are in a constant battle for consumer loyalty. According to McKinsey and Business of Fashion’s State of Fashion Report 2019, one in three young consumers in the UK wears an item of clothing just once or twice before losing interest, and one in seven considers it a faux-pas to be snapped in an outfit more than once.
In light of these startling changes in attitude, more sustainable and convenient frameworks like rental commerce are prevailing. A concept already well-established in the entertainment space – subscription services for music (Spotify) and films (Netflix) have virtually eradicated ownership-based models like CD’s or DVD’s – it’s gaining favour in fashion too: By 2023, Allied Market Research predicts the global clothing rental market will be worth USD$1.9 billion.
Yet, rental doesn’t necessarily need to replace traditional retail models – there’s strong potential for the two to share the floor space and work in tandem. ORDRE outlines three reasons why retailers should consider embracing the market.
Increase Scope for New Audiences
Catering to growing demand for one-use items and occasion wear, rental offers flexibility and options suited to a wide variety of audiences: “The average consumer cares about making smart choices, [about] not being ripped off,” says Jennifer Hyman, chief executive of fashion rental service Rent the Runway, in the State of Fashion report. “No one is going to spend a few hundred or thousand dollars on an item they’re only going to wear once or twice.”
Leasing expensive luxury items at a fraction of the price plays on the appeal of attainability, and ensures that there are no limitations on selling to consumers in specific spending brackets. “What designers have really seen is that the customer base that Rent the Runway brings is new and different compared to their other partners,” adds Hyman. “We are bringing new customers who are trying the brand for the very first time.”
Generate Sustainable Consumerism
Considering the rental model extends the lifecycle of products, it also taps into fashion’s blossoming love affair with sustainability. According to the State of Fashion report, nine in ten Gen-Z shoppers believe companies have a responsibility to address environmental and social issues, while two-thirds of consumers worldwide say they would avoid or boycott a designer based on their relationship with sustainability.
Brands are beginning to explore rental initiatives in a bid to develop a more circular business model: As part of their US expansion strategy, French ready-to-wear label Ba&sh offers free clothing rentals on weekends from its New York outpost, and VF Corporation – which owns labels like The North Face and Timberland – has pledged to incorporate rental services into its business by 2030 as part of its corporate sustainability goals.
Partner With Field Leaders
Established retailers are also dipping their toes into the market by teaming up with native rental players who are leading the field. In 2016, Neiman Marcus launched a collaboration with Rent the Runway. In return for free real estate – 3000 square feet of space on their San Francisco shop floor to be exact – the retailer was able to capitalise on their millennial customer base. Across the pond, Parisian department store Le Bon Marché partnered with luxury rental platform Armarium in 2019 to provide its clients with an in-store pop-up rental experience. Unveiled in time for the AW’19 runway shows, it targeted the inflated number of consumers and fashion week attendees visiting the city during market. The year prior, London retailer Browns explored the rental space with Armarium.
With the end of ownership on the horizon, the fate of traditional trade models hangs in the balance. Yet one thing is clear: the rental revolution is only going to continue evolving with the voyeurism of the digital age and the global interest of sustainability.