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To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

The global online clothing rental market is expected to grow over the next decade, according to a new report by Grand View Research. The trend is being driven by the increasing demand for high-end designer clothing, along with changing consumer preferences. Moreover, rising incomes and a proliferation of fashion labels are fueling spending on fashion-related items such as clothing.

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

According to Grand View Research, COVID-19 negatively impacted the online clothing rental market in 2020. As a result of the lockdown, all businesses, except essential services, were closed which disrupted the supply and distribution of online clothing thereby affecting the clothing manufacturers. For instance, in the U.S. in response to the pandemic, Rent the Runway, a top fashion rental leader in North America, struggled during Covid19 with an announcement of layoffs, temporary pay reductions, and staff furloughs. However, despite the economic downturn, ehe global online clothing rental market size is expected to reach USD 2.33 billion in 2030, registering a CAGR of 8.5% from 2022 to 2030.

Founded in 2009, Rent the Runway allows customers to subscribe to their rental service, rent items a-la-carte and shop resale from over 800 designer brands. Rent The Runway has built a two-sided discovery engine, which connects deeply engaged customers and differentiated brand partners on a powerful platform built around its brand, data, logistics and technology.

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

The RTR business model is to offer three subscription plans. The cheapest plan costs $94 a month and allows customers to rent four designer items valued at up to $350 each. Its mid- tier plan allows customers to rent eight designer items a month valued up to $3,000 each at a cost of $144 a month. The expensive tier costs $235 a month after the trial period and allows subscribers to rent up to 16 items a month valued up to $3,000 each. Each tier allows for four items to be rented at one time. At anytime if the customer loves the item and wants to keep it, they also have the option to purchase it, typically at prices 10-85% off retail.

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

A noteworthy challenge during the COVID-19 pandemic was cleanliness. Precise health and safety regulations are imperative, particularly for peer-to-peer networks such as Hurr, where lenders send articles of clothing right to renters. Nevertheless, it is showing that the market is returning to the pre-pandemic condition as people go back to their daily life and begin to attend weddings, feasts, and other gatherings after a long pause.

For example, fashion retailer, John Lewis launched a fashion retail services, powered by HURR, the John Lewis Fashion Rental service now makes shopping for womenswear more affordable than ever, with a curated selection of clothing – from covetable designer brands to John Lewis’s most popular must-have collections – available to rent for up to 20 days.

“It’s a truly unique proposition that can’t be found at any other high-street retailer. Fashion Rental introduces new and exciting designers to John Lewis customers, encouraging them to support a more sustainable way to shop,” said Kathleen Mitchell Commercial Director Kathleen Mitchell at John Lewis.

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry

It is forecasted that the women’s segment will experience the highest rate of growth from 2022 to 2030. This is due to the ever-evolving fashion trends which are anticipated to be a driving factor for growth. It is also projected that the traditional segment will experience the fastest CAGR during the projection window. This is because traditional clothing is often worn on festive and special occasions, thus stimulating its growth.

To Rent Or Buy? Will Rental Services Go Mainstream In Retail Industry


North America is leading in market share with a percentage of approximately 39.13%, and is expected to experience a substantial CAGR in the near future.

We reached out to experts to ask for their perspective on whether or not major retailers and brands should explore rental service options:


Profitability can be an issue


Mimi Margalit, Retail Strategy Consultant and former Head of DTC Merchandising at Rebecca Minkoff said: “The main challenge with rental as a service integration is profitability. On the software side, reverse logistics is expensive. On the brand side, forecasting demand and inventory management complexities require significant investment in merchandising expertise. AI has come a long way, however, forecasting sized fashion clothing that consumers want but do not need is not the same as forecasting toilet paper.”

“Rental & Resale is definitely something that will become mainstream with many emerging software founders focusing on ways the current solutions can be re-engineered to accommodate different business models.
The combination of both rental & resale is extremely interesting. For instance, buy this item now, resale it later for a trade in value on your next purchase.”

“As a pure play rental business model, the most ideal clothing items for rental would be one size fits all – for obvious reasons. Novelty items that consumers may only want to wear once would be ideal but should be balanced out with season-less products that will never look old for the sake of profitability.”

“However, rather than pinpointing one item, I would propose any item could be great for resale under the right circumstances. For instance, caastle to be testing out a theory that anyone can launch a multi brand resale shop using their software with a specific customer/community in mind.”


Retailers need to be strategic


Christine Lee, Vice President of Global Retail at Bazaarvoice said: “I definitely think that retail brands should be adding rentals as a strategic segment of their existing brand designs and assortments. Brands should be thinking about a rental program as a way to drive affinity and find new customers that wouldn’t have initially been able to purchase with them at a new price point. This way, customers can essentially grow alongside the brand, starting off with renting from the brand, then buying resold items from the brand, and when they have enough disposable income, they can then start buying things brand new,” she continued.

“However, because rentals can often be for special occasions and customers will want to make the most out of the short time they’ll have an item, a tremendous amount of more information is required on fit to ensure satisfaction. Retail renters mostly turn to feedback from their fellow shoppers rather than solely relying on size charts when making their decisions. So, if a brand wants to start a rental collection, having a user-generated content (UGC) program through which their customers can post ratings and reviews about the product as well as photos and videos of themselves wearing or using it will be essential.”

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