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The End of Ownership? The Power of Rentals
With the rapid expansion of the fast fashion industry, influencer marketing covering every facet of social media and designer brands making it more accessible to purchase, consumers are turning their wardrobes into rented spaces.
It’s no secret that designer clothes are an investment. Many consumers will save hundreds of dollars for a particular bag, pair of shoes or coat. However, in recent times, it’s become far more common for consumers to rent their clothes for a special event, a holiday or just for Instagram.
The phenomenon sparked in 2009 with Rent the Runway, an online service that provided designer apparel and accessories for rent. Starting out as a pure e-commerce platform, it opened a brick-and-mortar store across several U.S cities.
Running the Rental Space
Of course, rental isn’t a new thing. Netflix changed the face of in-store movie and TV show renting, and Spotify revolutionised the world of music streaming. The evolution of consumer habits changes rapidly. So, should online retailers jump on the bandwagon? Urban Outfitters recently announced its new clothing rental service in the U.S – however, this isn’t the traditional designer pieces that consumers have come to know. Instead, a customer pays a monthly fee to swap out items from Urban Outfitters, Anthropologie, Levi’s, Fila, Girl Meets Glam and Anna Sui.
In Australia, a brand who has been dubbed the ‘Airbnb of Dresses’ has hit the global scene – Designerex. Founded by Kirsten Kore and Costa Koulis, Designerex currently has over 45,000 users in Australia and have just launched in the U.S. Using a different approach to other rental services, Desigenrex is a peer-based platform, where consumers can share their own wardrobe with other users – “real women sharing their wardrobes with each other, motivated by a love of fashion, sustainability and income’.
According to a report by McKinsey, ownership is rapidly decreasing in popularity with consumers, particularly Millennials and Gen Z, who are leaning towards the rental side of retail, with aims to reduce the impact on the environment and gain transparency regarding the origin of their purchases. As young consumers remain hungry for the latest trends, they also remain unbending on sustainability – the greener, the better. In the report, 41 per cent of rental goods is predicted to become more relevant in the retail industry. “This new living closet that we’ve created is going to apply not only to how you get dressed, but it will apply to all of the products that you use,” explained Rent the Runway’s CEO, Jennifer Hyman.
The Fast Fashion Debacle
The lifespan of clothing has dwindled, with retailers pumping out new pieces monthly, weekly and sometimes daily. Although this may seem like a great thing for consumers, the price that retailers pay can be astronomical. Research shows that 60 per cent of customers buy more new clothes than 15 years ago. At the same time, they’re disposing these clothes twice as fast. Fast fashion retailers have lowered their prices and drop new items every day, with low lifespans. Designer brands, on the other hand, have double-downed on its ‘luxe’ approach – prices of jewellery and watches have nearly doubled since 2005.
The fashion sharing industry isn’t just a transformation for consumers, it’s also a massive opportunity for retailers. Although not all retailers have designer labels to spare, they can offer the ‘quick-fix’ that consumers crave. Shanin Molinaro, CMO of Village Luxe explained the phenomenon: “We would never say ‘don’t buy,’ but buy smarter, better. Purchase pieces you love that will stay with you through many wears or items that can be shared and given to friends or loved ones.”
The issue behind the rental platform is the delicate and intricate business model that’s needed to support the system. Companies have to be cautious about which brands they collaborate with, the returns policy, late fees and many other matters. Rent the Runway has come under fire for its lucrative returns policy, with the chance that users will be charged up to 200 per cent of retail cost if the items are not returned on time, along with a daily $50 late fee. There is also the issue of authenticating the designer pieces that is available on the platform. In 2017, Instagram account Diet Prada exposed Aussie rental platform Borrow My Balmain for purchasing knock-off designer pieces and leasing them out at the designer price.
As the industry adapts to the changing consumer habits, so do retailers. Luxury and sustainable brands have proven that shifting a focus to a rental platform, so it’s time for other retailers to do the same. Consumers have a love for beautiful, reliable and guilt-free shopping, and the rental platform helps contribute to that.
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