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Why Renting is The New Rage in Retail

NEW YORK – Borrowing over buying could be the future of fashion.

More and more companies are testing ideas similar to Rent the Runway, giving customers access to designer clothing at a more affordable price.

“Rental has always existed; you have celebrities you are borrowing gowns from designers, I used to borrow from my roommate or sister all the time – so it’s kind of like that, but on steroids,” said Sarah Tam, Chief Merchant at Rent the Runway.

Rent the Runway began 10 years ago, but Macy’s, Bloomingdale’s, and the Banana Republic are launching rental operations this month. And Lord & Taylor is expected to join them, after being acquired by rental service “Le Tote.”

Retail Analyst Avery Faigen says the shift toward rentals results from two factors: Millennials wanting unlimited fashion choices and more consumers becoming environmentally conscious. Experts say renting is better for the environment, and the fashion industry is one of the most wasteful in the world.

“In the past, you know retailers would say this is what we have to offer, but now customers are really the ones that are helping retailers decide what is important and trending,” Faigen said.

For $159 a month, Rent the Runway members can enter the company’s closet in the cloud. Choose from thousands of items online and have four pieces, including accessories, at any one time. The Banana Republic will charge $85 a month and allow customers to borrow three items at a time.

Tam says the average woman only wears 20 percent of her clothing, so fashion’s expansion into the sharing economy makes sense.

In a way, Rent the Runway is upending fashion in how AirB&B, Uber, and Spotify have transformed their industries.

“And in addition to that, it’s this proliferation of social media that has really made variety essential in a person’s wardrobe,” Tam said.

Faigen warns that companies need excellent marketing and staffing to succeed in the rental space, but retailers are undeterred. The global online clothing market is expected to grow by more than 150 percent over ten years, to a market value of $2.8 billion.

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