Rental Fashion Platforms: A Sign of the Times?

Resale and new rental platforms are not just a sign of the times, but a strong and viable future business model for fashion. What are the opportunities and challenges that lie ahead in these retail formats and how does traditional retail fit in amongst them? asks Bev Malik

Last week saw the breaking news of Depop’s sale to Etsy for £1 billion, and many column inches were dedicated to Carrie Symonds’s procurement of her wedding dress from rental site MyWardrobeHQ, that has itself undergone several transformations as a retail platform in the past few decades. Rental for fashion is not new, it has existed in different formats for well over a decade with many US based platforms pioneering this format, neither is second-hand or resale, which had performed increasingly better before the pandemic. However, we seem to be witnessing something of a perfect storm that is giving these two retail formats a momentum that is difficult to ignore. 

The pandemic undeniably has left a trail of challenges for retailers across the UK, the aftermath of which is slowly beginning to unravel. What is clear is not only that the high-street format of yesteryear – as tired as it was – has very little place in the post-pandemic world. That’s aside from a small bump in wholesale in regional stores and boutiques as fashion and luxury consumers avoid big city and department store shopping.

So, what are the other major shifts in post pandemic retail? In terms of consumer behaviour, we are witnessing consumers tightening purse strings in the advent of Brexit, and certainly over the pandemic, and a divergent desire to spend on uplifting outfits to break the drudge of several depressing lockdowns. We have also seen consumers looking much more closely at their own wardrobes, home (and now work) space and environmental impact sometimes in microscopic detail day to day. The idea of renting a dress for a fraction of the retail price for an occasion, rather than investing in one for several seems more than prudent— so, too, does selling on your wares or perhaps renting them out. Cash consciousness, a different social and economic environment, and the added bonus of helping the environment? It’s quite easy to see how the new retail landscape is being actively and dynamically rewritten by players in rental and resale markets.

Key players in resale or ‘preloved’ for luxury include Vestiare Collective, which raised a significant 59 million euros in funding including from Kering. Many luxury customers prefer to find cult classics online on Vestiare— from the highly coveted ‘Old Celine’ and ever collectible Hermes or Chanel, to bright Instagramable accessories from ‘New Bottega’. The latter often worn a few times and then resold by a crowd of fashion-conscious customers who are investing in something for high impact, but that can only be worn a few times before feeling old on their social media feeds. Both timeless and ‘hype’ looks perform well on Vestiare Collective, whereas the more timeless seem to perform better on Resee, whichis effectively a more edited format of Vestiare Collective.

Emerging key players aside from MyWardrobeHQ in rental include Hurr Collective who collaborated with Selfridges on a concession, and Rotaro – who are expanding their online presence with a pop-up on Carnaby Street this week. Interestingly, a quick overview of both of these sites reveals one of the first challenges to these platforms – choice.  You can rent very similar brands, and very similar looks from both of these platforms, and they are so young that perhaps they have not yet evolved their offers to include different collections and cater for different customers. One could describe their target audience as a contemporary dress customer – one whose brand landscape includes Rixo and Rotate Birger Christensen. This is not high fashion but it’s certainly less toxic for the environment, more open and clearly commercially viable as pretty clothing than the high-street. On the accessories front — Cocoon club offers a range of it bags for a subscription. 

The mutual challenges across both formats centre around fairly mundane but significant logistical problems and structuring business models for maximum growth. American rental powerhouse Rent the Runway, with revenue of over 100 million dollars and an evaluation of 800 million dollars, acts as something of the canary in the goldmine. Aiming to meet consumers with 2 different sizes for each garment, a fulfilment centre that must deliver sorting through garments, inspection, stain removal, mending steam cleaning shipping, and can meet these significant overheads by working on a subscription model with some doubts on the ethical practices of their warehouses and layoffs during the pandemic still leaving something of a bad taste in the mouth. 

From a business modelling point of view renting a garment for £33 and then ensuring its serviced and cleaned before being returned — all of which can take time as well as money clearly is a format that is anything but margin rich. Invariably some styles will turnover better than others, and whilst Rent the Runway have specially designed collections for their use, other platforms that do not customise their selection will risk their merchandising potential which can clearly be sculpted around events such as wedding season, holidays and events.

Shipping out of London can also present issues with some of these sites, and it’s possible to debunk the ethical fashion credentials on these platforms. The carbon footprint on each dress will reveal the shipping methods to be harsh to the environment.

There is no doubt that the momentum for rental will continue. But the question for the consumer will ultimately be at which point do they decide to keep something of worth to them rather than spend money on rental. If renting a dress for a week can cost several hundred pounds, would it be worth simply buying one? The customer ultimately will decide but has found herself in a position where she now has more choice. The resale and rewear market seems destined to grow as well, although fashion has and always will lean towards newness. As resale sites grew during the pandemic, so too did the proliferation of new boxfresh sportswear looks in every wardrobe. These retail formats and their growth will be part of a series of other retail and commercial evolutions to come in the short and medium term in post-pandemic Britain.