In-Depth: Why retailers are embracing rental
The fashion rental and subscription rental sector is gaining traction and many well-known fashion brands are eyeing the potential of moving into this area.
Much like Ocado in the grocery market, or The Hut Group in the beauty sphere, the pioneers of the fashion rental market are now leveraging their expertise and tech to brands and designers wanting a piece of the action.
Department store giants, Harrods and Selfridges, have teamed up with My Wardrobe HQ and Hurr respectively, while Moss Bros and LK Bennett have announced subscription rental partnerships with Caastle.
This nascent market is moving on from a proliferation of start-ups offering a range of services from peer-to-peer models to brand-to-peer subscriptions to brands and retailers offering the service directly (often in partnership with an expert business) to complement their new season sales.
On the face of it, it makes sense. Consumers get more choice, the chance to perhaps try designers that may have been out of their price range, and the warm feeling of joining the conscious consumption movement. For the retailers get the data, own the relationship with the consumer and control the brand experience of renting their clothes.
Isabella West, CEO & Founder of Hirestreet, a fashion rental platform, and Zoa, a managed rental service, says: “In a post pandemic world, consumers want sustainability, affordability and variety. Brands are now realising that offering rental alongside retail does not cannibalise, but rather it compliments their existing proposition.
“Brands looking at this space are realising that for a select stock (often low use case items), rental actually enables them to make a return of 3x retail – as well as increasing loyalty and average customer spend.”
Zoa is Hirestreet’s fully managed rental service and has been designed to lower the barriers to retailers and start-ups looking to launch a rental offering. “We have built a technology stack that is optimised for circularity. Unlike on Shopify or WooCommerce, every product has the concept of ‘date availability’ – each retail partner is able to customise core settings like: rental periods, lead and lag times, delivery and insurance fees and their theme,” says West.
Zoa – the name comes from Zoea, meaning a baby hermit crab, and was inspired by their amazing talent at sharing – launched in May.
“We have been back-to-back on-boarding clients since (typically the process takes about 4 weeks). We have 2 clients live at the moment and another going live next week. Hirestreet is also powered by Zoa, so Zoa actually makes up 100% of our business,” says West.
Hirestreet and Zoa’s initial clients are leading rental brand Cameron Ross and start-up Rathbones Tailor - both menswear brands.
“We have an incredibly exciting pipeline of brands to onboard throughout the coming months. The majority of retailers we speak to are already thinking about rental, but before Zoa, they were put off by the logistical and technical challenges of building and running a rental service. Zoa has been designed such that retailers can opt into the services they need (tech only, tech and logistics, and then full management). Typically, retailers are looking to understand – how easy it is to work together, and what to expect from a rental offering,” says West.
Zoa is designed as a platform that can be used by anyone no matter how big or small and has partnered with Lone Design Club, a collective of small and emerging fashion brands and designers.
“These rental start-ups will become recognised brand names in years to come – our expert in-house team who helped scale Hirestreet so rapidly are constantly on-hand to mentor and advise,” says West.
The logistics of moving into the rental model can look daunting and prohibitive to some brands. Dealing with cleaning, repairs, warehousing and delivery needs to be simple and effective in order to make it a viable option. “ACS - Advanced Clothing Solutions offers a turnkey solution for brands and retailers to enter the circular economy,” says ACS, COO, Anthony Burns. “We take care of everything behind the scenes. This includes order management, powerful eco-friendly cleaning, garment repairs, quality control, warehousing, and (reverse) logistics.
“In recent years there has been an evident shift from ownership to usership. In comparison to the traditional e-commerce model, circular business models are far more profitable for brands. Instead of selling an item once for the RRP, brands can generate a continuous flow of revenue as a garment is rented out (or resold pre-loved) for as long as possible. ACS’ role in the partnerships ensures that garments continue to remain in like new condition for as long as possible, allowing brands to maximise their return on investment,” Burns says.
Based in Glasgow, ACS’ rental partners include Moss Bros., Slaters, LK Bennett, Hirestreet, Rotaro, My Wardrobe HQ, Endless Wardrobe, Bundlee and Graceful Changes, to name a few. For e-commerce, ACS services garments from ASOS, Hobbs, Whistles, for example.
“Brands and retailers that partner with ACS can focus on growing their business and brand, confident in the knowledge that their garments are being taken care of and everything is running smoothly behind the scenes at our UK based facility.
“We’re extremely busy at the moment and have recruited approximately 70 additional employees over the last couple of months to allow us to keep up with our growing demand. Not only have we onboarded several new brand partners, but our original business – traditional formal hire – has seen a surge in orders as we navigate our way through twice as many weddings now that restrictions have eased,” Burns says.
“Nowadays, consumers often don’t want to be seen in the same outfit twice, therefore rental lends itself well as an alternative to having those outfits sitting unworn in the wardrobe after getting a few pictures. It won’t be long before rental fashion is mainstream,” he adds.
The rental subscription model has seen brands such as Moss Bros aim to create the “Netflix of fashion” with the menswear retailer’s £65-a-month "Moss Box" service. Consumers can select two items from casual to formalwear with unlimited swaps from a selection of more than 180 items including from brands such as French Connection, Barberis and Ted Baker.
LK Bennett’s initiative, called LK Bennett Borrowed, allows consumers to rent two items at once for £79 per month. The customer can rent two items for a whole month, or swap items up to eight items. Free postage is provided for delivery and returns and for those who want to keep their rented products, there is 50% discount off the retail price. The service is available on lkborrowed.com.
Tamsin Chislett, CEO & Co Founder, Onloan, which offers a subscription rental model of two items a month for £69, worth an average of £500 and four items a month for £99 worth an average of £1,000.
“Consumer appetite for more sustainable solutions is driving businesses to consider their offering and introduce alternative, more circular options. While at a business level companies are realising that it provides an alternative revenue stream to their existing models and allows them to reach a wider consumer.
“It’s important to recognise that rental is not a completely perfect solution to the fast fashion linear model and should not be used as green washing, but it’s exciting to see it gain momentum."
Tamsin Chislett, Onloan
“It’s important to recognise that it’s not a completely perfect solution to the fast fashion linear model and should not be used as green washing, but it’s exciting to see it gain momentum,” says Chislett.
“We’re a bit different, we’re a purely subscription based platform working in direct partnership with contemporary brands. We buy both current and past season pieces, investing in a designer's long-term creative vision and therefore the industry as a whole. 70% of the site is past season pieces, taking a distinctive ‘no hype’ approach to buying and ensuring what we present is ‘all killer no filler’,” she says.
“We haven’t partnered with a third-party retailer yet, though it's something we are exploring at the moment. It seems only natural to try and work collectively to provide consumers with alternative methods of consumption and to give them access to more circular options.” says Chislett.
Chislett believes the perception of rental has changed rapidly. Customers used to see it as a solution for event-wear only, but now they use it much more frequently as a way to switch up their style and for everyday use.
“They can continue to get that fashion dopamine hit, but in a much slower and more considered way,” says Chiseltt. “They’re more aware than ever of the impact of their purchasing behaviour both at an environmental level and an emotional level and rental allows them to experiment and try before they buy into their forever wardrobes. It’s switching up impulse purchase behaviour.”
But, how green is all this rental with the extra deliveries and cleaning? A recent study from LUT University in Finland hit the headlines when it claimed that fashion rental is in fact worse for the planet than buying clothes and throwing them away.
“Due to the circular nature of rental and resale business models, they are inherently sustainable in comparison to the traditional linear take-make-dispose fashion system,” says ACS’s Burns. “Through the Environment Bill, the UK government is taking steps towards reducing textile waste by incentivising textile recycling, reuse and incentivising innovative design. This is encouraging brands and retailers to implement positive change in order to stay one step ahead of the curve,” he says.
“At ACS, not only do we enable brands and retailers to introduce a circular business model, but we also operate a circular business model ourselves. Our values align with those of our partners. We have achieved zero waste to landfill and we’re committed to continuous improvement as we drive down our CO2 emissions on our journey to net zero,” says Burns.
This mental switch from ownership to usership will take time, but it is starting to gain momentum and you can see why many brands want to experiment with this market. The pros for the brands managing their own rental models are increased ROI, customer loyalty, sustainability and customer data. The pros for the consumer are potential cost savings, unlimited wardrobe/try new styles/brands and being more sustainable.
Linking with tried and tested tech and logistics from industry leading experts will make this idea more attractive to even more brands, while increased scale should help reduce the costs and make it a no-brainer for consumers.