Photo: @JoesBoilingPoint via Twenty20
Knowledge@Wharton staff
Presented here for discussion is an excerpt from a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
Rent the Runway’s and thredUP’s success has inspired other entrepreneurs to get into apparel rental and the industry is becoming a market worth billions, according to a panel at The Wharton School’s Baker Retailing Center CEO Summit.
Panelists noted that the shift toward clothing rental and resale mirrors what’s been happening across industries: less outright purchasing and ownership, more limited-time experiences. Sharing-economy businesses such as Spotify, Netflix, Uber and Airbnb come to mind.
“Consumers are evolving and moving toward access models. We’ve seen this of course in music, entertainment, transportation and hospitality,” said John Donoghue, a SVP for corporate development at CaaStle, a logistics platform for retail brands offering subscription rental.
Another factor pushing consumers toward re-commerce is their increasing concern, especially among younger people, about reducing pollution.
On the panel, Jeffery Fowler, president for the Americas at the online luxury fashion retail platform, Farfetch, said he sees re-commerce enabling companies to “do good and do good business.” Mr. Fowler asserted that when shoppers know their clothes can have a second life instead of going directly into a landfill, they’ll feel more comfortable buying and enjoying the attractive, fashionable items they want.
Another speaker pointed out that even though people have long donated used clothing to charities, some of it ends up being destroyed because of the sheer volume of donations.
An executive of a top European luxury brand observed that today’s customers demand environmental responsibility from the brands they shop. The annual salary of his firm’s CEO is linked to achieving specific environmental measures.
The panel’s moderator brought up the question of rental and secondhand when it comes to buying gifts. “Can I buy my wife a used handbag? Is that okay these days?”
The panelists agreed that re-commerce items have so far been considered a purchase for oneself rather than a gift. They speculated about whether giving a rental subscription, for example, instead of new clothing, would increasingly become socially acceptable. If it does, that would be a milestone for consumer adoption toward re-commerce going mainstream.