In the event you consider Jennifer Hyman, CEO of Rent the Runway, her firm is a significant disruptor in vogue. It rents out designer garments from some 500 totally different manufacturers to subscribers who pay a month-to-month price, permitting them to borrow a excessive-finish wardrobe for a lot lower than it might price to truly purchase. The corporate has thrived, topping $100 million in income final yr and turning into worthwhile for the first time.
One explicit section of vogue retail must be afraid, Hyman says, and that’s quick vogue. “I plan to place Zara out of enterprise,” she told Glossy after Rent the Runway introduced a brand new, decrease-priced subscription plan that can make the service accessible to extra clients. The new $89 plan permits subscribers to borrow 4 objects per 30 days. The usual plan, which affords limitless objects per 30 days, is rising to $159, however now permits clients to borrow 4 objects at a time, relatively than the earlier three.
The narrative of Rent the Runway’s narrative as a fast-fashion killer (paywall) is one Hyman has been pushing for a while. She raised the level final yr, for example, when speaking with Quartz a couple of partnership the firm established with Neiman Marcus. As Hyman sees it, individuals store quick vogue for stylish objects, whereas they make investments extra in traditional wardrobe staples that they’ll preserve for years.
It is smart, then, that folks would like to hire fleetingly trendy objects as a substitute of shopping for them. Customers are additionally more and more open to renting what they need by means of a service, relatively than proudly owning one thing outright. Suppose of the means streaming providers equivalent to Spotify have modified the music trade and eradicated the want to truly personal the music you take heed to.
However there’s greater than slightly hyperbole in Hyman’s feedback about placing Zara out of enterprise. For starters, Zara pulled in €15.4 billion (about $18. billion) final yr, throughout 93 international markets. Rent the Runway’s income, whereas rising quick, remains to be a drop in a bucket that measurement—and the firm solely operates in the US. In accordance with analysis agency NPD’s Checkout Monitoring knowledge on e-commerce attire, which analyzes precise spending by shoppers who've opted into their panel, solely 5% of Zara’s US on-line patrons additionally subscribe to Rent the Runway.
Nonetheless, Rent the Runway’s success does increase some questions on the future of purchasing: May clothes rental, together with Rent the Runway and the growing crop of comparable companies, steal sufficient clients from quick-vogue manufacturers in the US to make a noticeable dent of their gross sales?
We surveyed retail specialists who regulate not simply the garments individuals purchase, but additionally how they store. They embrace:
- Deborah Weinswig, managing director at Fung World Retail & Expertise, a retail suppose tank
- Manik Aryapadi, a principal in the retail observe of A.T. Kearney, a world technique and administration consulting agency
- Sean Maharaj, a director in the retail observe of AArete, a world consultancy specializing in knowledge-knowledgeable efficiency enchancment
- Marshal Cohen, chief trade analyst at the NPD Group, a world market analysis agency
The specialists supplied a blended bag of responses that say as a lot about the adjustments in retail as they do about Rent the Runway’s probabilities of success.
Can clothes rental take down quick vogue in the US?
“There’s little hazard that quick vogue could be disrupted by the clothes rental pattern,” says Aryapadi. Whereas classes like bridesmaid attire and tuxedos “have a transparent bullseye on them,” he believes it’s far too early to label Rent the Runway a disruptor. It’s not even clear but whether or not customers will undertake clothes rental in massive sufficient numbers to drive lengthy-time period, sustainable development.
Weinswig, on the different hand, believes clothes rental might siphon some gross sales away from quick vogue, however like Aryapadi, she felt manufacturers equivalent to Zara weren’t the ones that have been actually susceptible. “Millennials particularly seem to love the choice of renting a stylish however cheap costume or an costly designer robe relatively than shopping for one,” she says. “That stated, attire rental is extra suited to big day attire and formalwear attributable to the rare utilization however excessive worth of such clothes.”
Maharaj believes Zara’s designer-on-the-cheap enchantment truly makes it a goal. “It’s exhausting to say whether or not [Rent the Runway will] in the end dominate the market,” he says. “But when numbers inform a narrative, then different increased-finish quick vogue retailers must be fearful, and will anticipate to really feel the warmth over the subsequent -2 years.”
Cohen was the just one who stated outright that rental actually might upend clothes retail. “Can a rental mannequin displace a standard retail mannequin? Darn proper it could,” he says. “Simply have a look at Uber/Lyft vs. Medallion Taxis. Rental when finished proper has the capacity to convey a way more reasonably priced and completely acceptable strategy to dressing.”
Is clothes open to the identical type of disruption as transportation and music have been?
In concept, clothes rental threatens to do to vogue what firms equivalent to Uber and Spotify did for transportation and music—however clothes is a very totally different type of product. Is it even open to that sort of disruption? Is it potential for Rent the Runway to become the Spotify of vogue?
Cohen clearly thinks so. He says even luxurious vogue is in danger, and that department shops and boutiques ought to watch their backs as clothes rental grows.
However Aryapadi had a special response. “Clothes is a novel class,” he says. “In contrast to providers equivalent to music downloads or cab rides, individuals really feel an emotional connection to manufacturers and what they stand for. A constructive and interesting client expertise can also be half of the equation. Whereas this doesn’t make clothes ‘immune’ to the rental idea, it’s pretty resistant.”
Weinswig says that “CEOs of rental startups consider that renting attire will become extra frequent than buying it,” however once more, she sees it primarily making use of to garments for particular events.
Who else stands to win or lose?
Clearly Rent the Runway and Zara aren’t the solely gamers concerned right here. Others not talked about could stand to realize or endure as properly. Weinswig says clothes-rental providers might achieve classes equivalent to maternity put on, plus-measurement clothes, and specialised efficiency gear for out of doors sports activities. Maharaj factors out rise in clothes rental would damage conventional attire retailers past quick vogue. “Timing is every little thing, and this all comes at a time when conventional retailers are nonetheless making an attempt to reposition themselves in the world of Amazon,” he says.
Did somebody point out Amazon? Aryapadi believes if the e-commerce large received concerned in clothes rental, that would change the story completely. “It's potential that if Amazon makes headway into subscription providers, their subscription base and platform commerce flywheel might alter client preferences, the prevailing sentiment being, ‘If Amazon is doing it, it’s maybe value making an attempt,'” he says. “In the identical means shoppers got here to anticipate subsequent-day or two-day supply, it wouldn’t be out of the working for Amazon to efficiently monetize the clothes rental market.”
Whereas there’s no clear consensus on how large a menace rental providers equivalent to Rent the Runway are to quick-vogue chains, the chances are high that Zara is secure at the least for the foreseeable future.
What is evident is that clothes rental ties into broader shifts in the means shoppers are considering of possession. It would take an even bigger firm than Rent the Runway to immediate a widespread change in the means individuals purchase—or don’t purchase—their garments, however even Aryapadi, the most skeptical of the group, appears to consider it’s potential, given the proper circumstances.
As Cohen factors out, “Rental has gone from a unclean, used, and low-finish perspective to an excellent cleaner, simpler, extra handy approach to store luxurious.”