These are phenomenal points and Gen Y will definitely be asking the same questions. An additional question re:carbon footprint — the environmental impact of their dry/wet cleaning. No one has brought that up quite yet, but it could be real detriment to the business model if that side of the service is found to be as environmentally challenging as traditional laundering services. Anyone seen/heard more details on their cleaning practices?
To comment on the initial question -- I think the lower end models will be extremely challenged. The value to the consumer diminishes when the product becomes something you could/would potentially buy and not have to deal with all the other risks and challenges of choosing, waiting to receive, trying on and potentially getting something that doesn’t fit right etc. Then packaging it up, bringing to a postal service and returning it ... all of that effort is not worth it for something you could just buy online for the same or less. At least when you buy something and you don’t like it you go through all those same steps and return it but you get your money back. I predict the value of the rental model is still there for higher end luxury goods. But the race to the bottom will be tough and unsustainable for most.