In a bid for more customers, some apparel brands are starting to rent their clothes — without a monthly subscription.
Fashion designer Rebecca Minkoff recently became the first to offer a “borrow” option on her website, powered by rental technology platform CaaStle. Customers can wear the item as many times as they like during the rental period and have the option to buy it at an adjusted price.
Subscriptions, on the other hand, generally have a set monthly fee for a certain number of items from the retailer. While some brands have subscriptions just for their clothes, companies like Rent the Runway and Stitch Fix offer a multitude of designers.
“In reality, how many different subscription services are you going to belong to?” Minkoff recently told CNBC.
“It becomes unsustainable.”
Retailer Vince will introduce the “borrow” button for men’s and women’s apparel on July 13, and designer brand Rebecca Taylor is expected to launch the service later this summer for its women’s clothing. Both already have subscription programs.
“We envision the ‘borrow’ button being ubiquitous across anyone who sells clothing,” said Christine Hunsicker, founder and CEO of CaaStle, which also provides rental-based subscription services to the likes of Banana Republic, Express and Destination Maternity.
“They can expand their consumer reach,” Hunsicker said.
Hunsicker said she expects larger brands to offer subscriptions along with the one-time rentals, while smaller companies may stick with just rentals.
“If you think about what percentage of the population can afford a $300 or $400 jumpsuit, you are really talking about the top 1%,” Hunsicker said.
For Minkoff, it’s an opportunity to get new customers to try the brand or even current customers to dive a little deeper. Her dresses typically range in price from $98 to $378.
“It was a way to meet our woman where her pocketbook is, but also people that have sustainability in mind,” said Minkoff, author of the new book, “Fearless: The New Rules for Unlocking Creativity, Courage, and Success.”
It’s the younger customers that tend to be drawn to sustainability.
“For every brand right now, the goal is to get younger customers, but the price points don’t work for everyone,” said Jefferies retail analyst Janine Stichter.
In a recent note to clients, Stichter said one-off rentals are “a logical step for brands trying to acquire new, younger (often aspirational) customers, as they may ultimately become purchasers of the brand.”
If an item is rented out three or four times, a retailer also is able to monetize inventory better, she told CNBC. Retailers just need to make sure they don’t cannibalize their existing business.
In a sense, the concept has come full circle. Rent the Runway started as a one-off rental company in 2009 before expanding into monthly subscriptions in 2016. Overall, the subscription business took a hit during the pandemic, but is now rebounding.
Still, CaaStle’s Hunsicker believes there is room for growth in both models.
“There is an inflection point coming where enough people have experimented with and tried rental and realize it is not a replacement for ownership,” she said.
The market size for fashion subscription boxes dropped 22% year-over-year in the second quarter of 2020, according to data from analytics firm Second Measure. By the fourth quarter of 2020, sales almost recovered to 2019 levels.
People will still buy their core items and rent those that are outside their reach or trendy, Hunsicker believes.
“As more and more consumers sort of age with that being an option, it will just become the way that people interact with clothing,” she said.
Source: Business - cnbc.com
