High Fashion for Rent
Much was made how the Great Recession took large numbers of "aspirational" shoppers out of the market for luxury goods. People, either because of job loss or concerns
over employment, just couldn’t afford to shop up-market anymore.
In recent years, however, a variety of rental services, such as renttherunway.com, lifestyleforlease.com
and avelle.com, have sprung up to offer consumers the option of wearing designer
clothes, accessories and jewelry at prices they can afford.
Rent the Runway,
for example, offers clothing from 130 top designers at 10 to 15 percent of
the retail price. Instead of plunking down thousands of dollars for a dress,
consumers can wear their favorite designer fashions for a couple hundred.
Co-founder
Jennifer Hyman told The New York Times back in 2009 that
she got the idea for the business after watching a sister shop for a dress
to attend a wedding.
"Here was this young girl who loves fashion and was willing to spend
a good portion of her salary on a dress that she’s only going to wear once
or twice, and I thought, there has to be a solution for this," Ms. Hyman
told the Times.
A RetailWire poll in November 2009 asked whether
consumers were more drawn to these rental services because of price or convenience.
Fifty-six percent said price was the big draw, 25 percent thought price and
convenience were equally important and six percent saw convenience as most
important.
"Where luxury had been exclusive, the Internet has made it a commodity,’ Dudley
Blossom, of LIM College, told The Associated Press. "This is fundamentally
changing the way the average person is accessing luxury."
Discussion Questions
Discussion Questions: Will rental services for luxury goods continue to grow? Is the biggest market for this type of service in fashion or some other luxury goods category?
The luxury market is fascinating. After fighting e-commerce for years the luxury manufacturers are now eagerly selling online. Of course the more readily available products are (rental, buy online) the more the true status symbol will be having something new and exclusive that had to have come from the runway.
I don’t see how luxury manufacturers can stop the rental train but as the economy improves there will be the true luxury consumers who won’t want to spend thousands on a bag only to see the person next to them with the same purse which they rented for the occasion. It’s going to drive the need for private sales and truly exclusive product differentiation with the true high end luxury customer.
The manufacturers have danced for years with the devil of ‘mass luxury.” If it’s available to the masses, they’ll need to dance quickly to come up with things only the truly rich and indulgent can own.
It’s an interesting play and one that will no doubt resonate with a percentage of aspirational shoppers. I don’t, however, look at the concept as being particularly disruptive to the luxury market however. If anything, it’s really a different market.
The concept of luxury is based on exclusivity and scarcity. In other words, something becomes luxurious when only a small number can truly attain it. The renter of a Ferrari isn’t the same consumer as the Ferrari owner. They’re entirely different people.
An interesting idea, basically the equivalent of tuxedo rentals for men. There are, however, significant differences between tuxedos and women’s fashion and several real challenges to making this a significant business. First there is the inventory. High fashion, by its nature, has a fairly short shelf life. Combine that with the number of units required to cover the size range and a hurdle rate of 5-7 rentals each to cover the purchase cost along with a fairly short shelf life and it can get pretty onerous trying to recover the investment. Secondly, I’m not sure if this model really addresses the “aspirational” needs. My sense is that the “aspiration” is to be able to afford high fashion, not necessarily to wear something that someone else has already worn.
All that aside, there most likely is an opportunity in major urban centers, where there is a large population of young women climbing the career ladder who are required to attend formal events and want to look their best.
I agree with Bill that this business model may make this a tough sell.
Rent-a-necklace businesses have been doing quite well in the aspirational luxury market. But here’s the difference–necklaces and earrings don’t have a staggering range of sizes and fits. Jewelry also doesn’t have the “wear out” factor in the same way.
The Prom Night Tuxedo rental business has been brisk, partly because teenage boys don’t really care as intently about prior usage, precise fit and a stain on the lining. If boys are still in this market in this modern era, their standards are lower than young women’s.
As I said in November of 2009, I’d still like to rent a full set of Carhartt Outerwear when I need it twice a year. Not a luxury to many, but it would be to me.
And, as Doug Stephens points out, I am really different than the Ferrari owner, but I would love to rent the new Ferrari ‘Supercar’ just once. Even if I could own one, I really shouldn’t own anything with that much horsepower. I mean, really; 600 horsepower, 4 seats and four-wheel drive? But rent it just once–you betcha!
I agree the customer who rents luxury and the customer who buys luxury are different. But among the younger shoppers, the concept of renting luxury is changing not only behavior, but mindset. Only 2% of the U.S. households are truly ultra-affluent. But, 20% fall into a category of “ready-to-spend, high income but not rich yet.”
These households are rapidly adopting the fractional ownership and rental concept across many categories, including cars, homes and luxury goods. Once they participate, and get a taste of how easy it is, many may adopt these behaviors for a longer time.
My Millennial kids use rental services all the time. They are no longer attached to the status of owning things like they once were. Nor am I. VRBO.com is our go-to travel partner. Rent the Runway is our go-to fashion partner. Zip cars are fantastic options for urban transportation.
I think this retail model is just getting started.
I’m with Anne–this is a larger movement that speaks to Millennials and beyond. To them, ownership isn’t everything and sharing among groups of friends (both virtual and in physical proximity) is a big part of the fun. This model also appeals to women who tend to get a kick out of recommending, curating, and passing along (guilty as charged). I think it works best as an augmenting strategy for existing retailers and etailers rather than as a stand-alone business model.
I think this has a really, really short runway.
Think of the challenges, including the fact that one designer’s size 2 is another designer’s size 8. And the rental costs themselves aren’t trivial; the dress for that special evening could well cost $200 to rent. The market for this service has to be very limited.
I have plenty of friends that have used these services and LOVE them. Operationally, they’ve got the process pretty well wired; you receive the garment in multiple sizes and then send back the ones that don’t fit, and their shipping procedures from anecdotal accounts I’ve received are very customer friendly. I think these services are here to stay, and will really only add volume to the segment. The people who can afford to actually buy these pieces will still do so.
I think the luxury market has much more to fear from the rapid expansion of so called “membership exclusive” sale sites; Gilt Groupe, Hautelook, One Kings Lane etc. These sites have grown astronomically in a short period of time. There are serious implications to diluting the luxury customer’s tolerance for price. The difference between this market and the aforementioned topic is the sheer size and volume of these online discounter. Instead of bringing in new aspirational customers, the market is so large that the core luxury consumers will eventually figure out, if they are patient they can find whatever they want 60%, 70%, 80% off. This will have a profound impact on luxury brands and retailers.
As Liz Crawford mentioned, we guys have been renting tuxes for eons. My fave was powder blue with a ruffled shirt and paisley cummerbund. Senior prom. I was smokin’! Got a Clearasil stain on the lapel and a peach schnapps stain on the pants cuff, but the rental store didn’t seem to notice. (Full disclosure, the stain on the pants cuff INCLUDED peach schnapps, along with some other stuff.)
Of course, our girls have been “renting” expensive dresses for a long time, too, which works best if they don’t remove any of the tags while wearing them. Makes returning them much easier. Avoid the peach schnapps and use an effective antiperspirant and you’re good to go – er, return.
I have never moved in circles whose members could identify the designer of an upscale garment or accessory from fifty paces and be impressed. And if they could, I’d wonder about their values. I do sympathize, however, with the honest women whose values also preclude “borrowing” a dress from a retail store. Scott Sellenbaugh’s remarks helped me understand the process better, and if some gals absolutely require champagne fashions on beer budgets, they should try it out. In other categories, such as upscale autos, I can identify with the guys who simply want to “test drive” an expensive sports car for fun that they’d never be able to afford otherwise. As for profiling for whatever purpose, not for me. Rental cars are appliances.
To define the potential field for luxury rentals, we acknowledge that they are all for show – being used in public and social settings. So, renting an upscale kitchen appliance or entertainment center wouldn’t be considered in this discussion (although there are rent-to-buy services for some home stuff). Then, to respond to the question regarding additional types of luxury goods that could be rented, one should look at what we look at. I tend to get an impression of a man from his wristwatch. That’s just me. Is this a potential rental category? With women, I am impressed with what inevitably turn out to be expensive scents from tiny little sculpted bottles. Can these be “rented” in the form of single applications? Also with women, super-expensive stilettos seem to make them salivate. This is known as SATCS, Sex And The City Syndrome. Can those 6″ heels that are painted red on the bottom be rented?
The new business blogs are filled with examples of luxury products, services, hospitality venues, being offered for ‘rent’ rather than purchase. Financially it makes a lot of sense, particularly if all those new entrepreneurs out there can write it off as a reasonable business expense. The renters of course have the obligation to keep the renting experience luxurious.
Sounds like Goodwill for the affluent. Really, what rich person wants to rent? Why rent when you can buy? Personally, I’ve looked into Avelle and it’s not a deal. You still pay hundreds of dollars to rent a purse for a week to a month. Why do that when you can purchase a designer bag and have it for a lifetime?
People who rent are just Kardasian wannabees anyway. Gross!
This won’t fly when the economy improves.