Inside retail's rental opportunity
What the growing fashion rental market means for retailers
In partnership with rental company GlamCorner, the Elizabeth Street store’s activation allows customers to rent pieces from its stock of designers, including Aje, Acler and Lee Mathews. Where once the typical David Jones customer might have come in to buy a great dress for a night out, now they can just rent one.
For Audrey Khaing-Jones, co-founder and COO of GlamCorner, the collaboration makes perfect sense. “The partnership was a natural alignment with our mission to drive a generational shift in fashion consumption and accelerate the transition to a more circular economy,” she says.
Yet it’s also a smart move for David Jones as it ramps up its focus on sustainability at a time when consumers are more careful about what they buy. Rather than seeing rental as a market in competition with its own, the retailer is embracing it as an additional revenue stream.
One of the key characteristics of Millennial and Gen Z consumers is their preference for sustainably minded brands and products. Now, these consumers are emerging from lockdown with a more cautious attitude to spending and an even greater commitment to sustainability, says Dr Stephen Wigley, Associate Dean of Fashion Enterprise at RMIT.
“COVID-19 might not have been directly an environmental issue, but it has given us pause for thought about how our world operates,” he says. “I think people will still be interested in dressing up for work or going out, but there will be ethics around what that means.”
Who is offering rental, and why?
Pre-COVID, the rental market was growing rapidly and was expected to almost double in value to more than $US2 billion ($AUD2.6 billion) globally by 2025.
Surprisingly, although lockdown affected fashion rental initially, the sector quickly bounced back – in fact, says Wigley, rental is one of the few COVID-19 success stories. At UK service By Rotation, rentals fell but listings increased as people ‘Marie Kondoed’ their wardrobes. Since March, GlamCorner has experienced a 50 per cent rise in subscriptions – and in October announced a $12 million series B funding round, which will allow the company to move to a fulfilment centre five times bigger than its current home.
“Based on the effects of the pandemic, our most popular categories have veered towards more casualwear, with athleisure, knits and ‘waist-up dressing’, says Khaing-Jones. “Our customer is looking for options such as workwear for two-to-three days a week.
“We’ve also seen a surge in sign-ups for our maternity subscription-box offering in 2020.”
We’ve also seen a surge in sign-ups for our maternity subscription-box offering in 2020.”- Audrey Khaing-Jones, GlamCorner
While David Jones and Country Road are among the few retailers in Australia to dip their toes into the rental market, overseas there are more brands that have brought rental in-house.
In the US, Urban Outfitters launched its own in-house rental platform – called Nuuly – for its private label brands. Subscribers pay a monthly fee of $US88 to rent six items each month, including shipping and cleaning. Nuuly’s stock is held in a purpose-built, 28,000 square-metre warehouse that contains a laundry facility.
Banana Republic offers a similar monthly subscription service for $US75 a month, for which customers are able to hold three items at a time – but can return them and receive new ones whenever they like.
These services are ideal for Millennials and Gen Z consumers who love novelty, but are aware of the environmental costs of fast fashion, says Associate Professor Nitika Garg at UNSW Business School. “For a brand like Banana Republic, rental keeps them relevant. It also indicates an awareness that people are becoming more price-sensitive – thanks to the pandemic recession –and feel unable to bank on a steady income.” Bringing rental in-house also cuts out the middleman, she adds. “You can protect your brand.”
So, should you try it?
While the idea of rental seems appealing, there are barriers for retailers that don’t have the deep pockets of Urban Outfitters.
“There are basically two types of rental model for businesses: the direct-to-consumer type where the customer rents an item and the business takes care of the cleaning and processing; and the use of a peer-to-peer platform, where a business would work with a company like GlamCorner to handle the processing,” explains Wigley.
“My instinct would be to try to set up an in-house model, because you have more brand control, but it obviously takes time and money to operate.”
Garg argues that brands need to conduct market research before trying any type of rental proposition. “You need to really understand your consumer and know what you’re going to gain, and what you might lose,” she says. “Does rental gel with your brand image? Will demand justify the cost?”
You need to really understand your consumer... Does rental gel with your brand image?”- Associate Professor Nitika Garg
Rental might be worth investigating if you have a distinctive offering, such as overseas labels that are difficult to source, says Wigley. “Or you might have a brand that designs and makes products that are distinctive or expensive, and they may want to find a way of not necessarily selling more, but maximising the revenue streams from those products.”
Even with the success of GlamCorner and now David Jones’ entry into the market, fashion rental is still a nascent sector here, adds Garg. “Part of the reason is that the Australian market overall is smaller than the US, which is also much more consumerist. But, long-term, I think the rental market will be strong.”
Felicity Robinson is the former deputy editor of marie claire and the co-founder of PRIMER website and content studio.
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