Last week US-based luxury rental service Rent The Runway raised a fresh $125m from investors co-led by Franklin Templeton Investments and Bain Capital Ventures while T. Rowe Price Group Inc. and Hamilton Lane Advisors joined as new investors. The move took the start-up (founded in 2009 by Jennifer Hyman and Jenny Fleiss) into the so-called “Unicorn” category, which is to say it now carries a valuation of $1bn. With this in mind Marcus Jaye takes a look at some of the UK start-ups who are attempting to capitalise on Generation Rent.
We all talk of cost-per-wear, but what if you were actually charged that way. Drowning in our own good taste and struggling to find enough room and time to manage it all, is it time for a rethink when it comes to our wardrobes? Do we really need to own so much stuff? The fuller our wardrobes get, the less we wear each item. In the age of Marie Kondo-type decluttering and our continued sartorial over indulgence, there’s a growing group of start-ups challenging the need to own, store and clean our clothes.
The rental fashion market has long been associated with formal occasion wear and expensive items that were unaffordable to buy, but, there’s been a new shift, recognising the short lifespan of items, the huge amount of returns and the consumer demand for a wide variety of choice and constant change. Taking inspiration from other consumer sectors, Ikea is even renting furniture now, we’re seeing a new form of peer-to-peer lending and rental in fashion.
Victoria Prew is Co-Founder & CEO of HURR, the UK’s first peer-to-peer wardrobe rental platform. “I’d witnessed the massive growth of the sharing economy that’s impacted all areas of our day-to-day lives (from car sharing to house sharing) and believed fashion was the next big industry that was ready to be disrupted,” says Prew.
A self-funded enterprise, Prew’s background is in real estate, HURR asks members to upload the items from their wardrobes they are willing to rent. Launched last month, they’ve built a waiting list of 1,400+ people and started with close to £250,000 worth of “virtual wardrobes” listed on platform. Renters can access designer pieces for around 20% of the retail price for a 7 day rental period. For example, if you want to rent a Ganni maxi dress for the week that’s worth about £200, you can rent it for £40.
“We have a range of designers, from modern contemporary brands, through to the luxury labels (eg. Prada, Chanel, Hermès). Items must be over £150 RRP and in excellent condition to meet our lending criteria,” she says.
“We operate with no membership fees or listing fees. We only make money when our members make money and operate a commission based model (taking 15% of the rental price from the lender and 15% from the renter).”
But, what about the costs of delivery and cleaning? “When uploading a listing, the lender can specify the postage and dry cleaning costs. Dry cleaning is ultimately up to the lender, however we’ve partnered with a leading eco-friendly dry cleaning company BLANC in London where items can be dropped off and dry cleaned,” says Prew. “For Central London packages, we have also partnered with Pedals, a bicycle courier to deliver parcels. Members can also choose to meet up in person, or post an item if preferred,” she says.
“We’re scaling out to all UK major cities later this year, with a view to moving into Europe and the global market. Our vision for HURR is that a member can go on holiday anywhere in the world, and have their wardrobe waiting at their hotel from another member part of the HURR community,” says Prew.
Isabella West, Founder & CEO of Hirestreet, launched the UK’s first high-street focused fashion rental service in May 2018. “We specialise in women’s occasion wear outfits. Our brand motto is: memories over materials. Our customers hire outfits for 10 days at a time for a fraction of the retail cost, saving themselves money to spend making memories on the day,” she says.
“I knew Hirestreet was a service I would use. As a 25 year old living in London I found myself buying endless new outfits, for birthdays, brunches and weddings. I always felt guilty buying things as I knew I would only wear them once. After several failed attempts to resell items on sites like Depop I started to think that there must be an easier way for girls like me to have lots of outfits without the guilt,” says West.
“Before launching Hirestreet I surveyed as many people as I could to see if it was just me that felt this way, however the more people I spoke to the more I realised that this kind of behaviour was common place amongst girls of my generation and that there would be huge potential for a low-cost rental service,” she says.
The business model is straight forward. Hirestreet buys the items and then leases them for around 20% of the retail price. After a rental, each garment is dry cleaned and turned around for the next customer.
“Typically we would look to rent each item at least 15 times – this therefore requires us to buy items that will be popular across seasons and also highly durable. If a customer does not return the dress or if it comes back in a poor condition then they are liable to pay a fee to cover the additional costs of repairing/replacing the outfit,” says West. Brands include Seven Wonders, Runaway The Label and ASOS. “Based on research form the Ellen MacArthur foundation we estimate that extending the lifetime of each outfit in this way reduces the environmental impact of the garment by up to 70%.” says West.
Hannah Johnston and Rosie Gunn, are the Co-Founders of new rental start-up, The Endless Wardrobe. “Rosie worked in womenswear and lingerie at M&S and I ran my own sales consultancy.” says Hannah. “We’re old school friends and have been sharing clothes for 15 years, now, for weddings, parties, holidays, dates and even work.”
“When we travelled the world together in our early 20s, we lived out of each other’s rucksacks. Without much luggage (or money!) by rotating clothes every so often it felt like having a whole new wardrobe!” says Hannah. “We came up with the idea to turn this into a business when we were digging out Rosie’s holiday clothes from under her bed for me to borrow last year.”
“We realised there was an opportunity to do what we had always done on a much bigger scale, so we started The Endless Wardrobe,” she says. They are still refining the model with a small number of users operating on a trial basis, hence the ‘members only’ policy at the moment. It will operate a similar model to Hirestreet: owning a range of product and renting it out for a fee.
“We post the clothes out to the customer, packaged up as good as new with swing tags to give her the same thrill as if she’d bought something – without the buyer’s remorse! She simply wears and then returns to us to dry-clean,” says Hannah.
Other fashion sharing start-ups include MyWardrobeHQ, a “social community for buying, selling and renting designer items from people and profiles that you covet”. Users can follow brands and peers who inspire them and rent items from their wardrobe or, indeed, buy them if they decide they love the item enough. For example, a Chanel handbag might carry a monthly rental price of £100 and, if the renter decided they wanted to keep it, they would pay the pre-agreed replacement price which might be £500. 20% of these transactions go to MyWardrobeHQ. The full launch will take place in September.
The shift from ownership to sharing is gathering momentum, but, fashion, with its multiple sizes, styles and seasons, adds many more variables into the mix. At the moment, it has minimum cost constraints which makes the market smaller. The idea is a good one, and you can see the appeal to the consumer, it’s just how you monetise that desire that will be the difficulty. These start-ups may have to increase their commissions or prices in order to make it financial viable, which could out-price the concept.
Brands will also be watching, and, if it proves popular and profitable, they will start to offer their own services considering how much people are wearing once and returning anyway.
Currently Mud Jeans and Houdini Sportswear offer the rental model, and in the US, CaaStle is a rental service from the Gwynnie Bee brand and includes other retailers such as American Eagle Outfitters Inc., Express and Ascena Retail Group Inc.’s Ann Taylor. The environmental benefits are clear, but this fashion sharing concept will rest on cost, convenience and choice.