As brick-and-mortar stores struggle to adjust to a changing retail climate, fashion rental services have been on the rise.
Rent the Runway, which pioneered the business model in 2009, now has a valuation of over $1 billion, with dozens of other startups swooping into the space. But it’s not just new players that are taking a shot at this kind of business. Several traditional retailers have also developed rental services of their own.
Rentals make sense for a number of reasons. With generally lower prices than traditional retail, borrowing appeals to the millennial or Generation Z consumer, who may be more budget conscious but still wants to keep up with the latest fashion trends. Fashion rentals also generally have a lower carbon footprint than fast-fashion — appealing to the environmentally-conscious younger consumer.
Meanwhile, for retailers, loaning out items can also be beneficial to their bottom line: For example, companies can make more money from lending out a single item 10 times than they would if they sold the same item outright, Melissa Gonzalez, CEO and founder of the Lionesque group, has told FN. CaaStle CEO Christine Hunsicker said retailers using its platform to offer rental subscriptions can generate operating margins of 25 percent. CaaStle does business with Ann Taylor, Express and Bloomingdale’s.
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Here are six traditional brick-and-mortar retailers that have experimented with the rental service model:
Banana Republic announced in August the launch of Style Passport, its online subscription rental service. “We’re constantly evolving with our customer, meeting her where she is shopping,” explained CEO and President Mark Breitbard in a press release. “Style Passport will drive incremental revenue and help us connect with younger shoppers who appreciate great style and want an affordable, sustainable way to try new fashion.” The service costs $85 a month for a three-garment plan; it includes free shipping, unlimited exchanges, returns and laundering services.
This summer, Urban Outfitters and Free People parent URBN launched a rental service called Nuuly. The platform includes both items from Nuuly’s owned brands and pieces from a range of third-party labels. For $88 a month, customers can test six items, with free shipping, returns and laundry and dry cleaning. “We don’t think that customers will stop shopping through existing channels, but we do think that shoppers are looking for additional options to add newness and variety to their wardrobe,” Nuuly president and URBN chief digital officer David Hayne told FN.
Bloomingdale’s entered the rental subscription space this month with the launch of My List by Bloomingdale’s. My List’s initial stock includes fall looks from 60 brands, including All Saints, Kooples, J Brand and Mackage, with more than 100 items that are exclusive to the retailer. The service costs $149 a month, which covers shipping both ways and cleaning services. Bloomingdale’s competitor Macy’s is also considering the possibility of a rental service, CEO Jeff Gennette said; the department store chain entered the resale market last month in a partnership with ThredUp.
Express announced an apparel rental service called Style Trial in late 2018. For about $70 a month, customers can try three items. Pieces can be kept for as long as the wearer wishes, with laundry service and shipping both ways included in the package; exchanges are also unlimited.
Like Express, Ann Taylor entered the clothing rental space in late 2018. Through its subscription service, called Infinite Style, Ann Taylor allows consumers unlimited rentals for $95 monthly. Shipping both ways and dry cleaning are included; if shoppers want to buy any of the items, they get 40% off the sticker price.
NY & Company
NY & Company was the first established retailer to experiment with a rental subscription model, beginning a monthly service called NY&Co Closet in July 2017. For a flat rate of about $50 a month, customers can get three pieces at a time, with shipping both ways and laundering services included. Like Ann Taylor, NY & Company provides a discounted rate for any products purchased.
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