Rental services continue to gain traction, as consumers look for more budget-friendly and sustainable ways to wear the latest trends. But a new study from CGS suggests that this market is still in its early stages, with consumers not yet adopting these services at scale.
The 2019 Future of Fashion & Retail Consumer Survey spoke to roughly 17,000 consumers but found that only 3% had used a rental service such as Rent the Runway or Haverdash. Whether because of the high cost (19%) or a lack of clarity about the services themselves (14%), the majority of consumers are not yet engaging in the rental economy. Only 5% said they were considering or had considered a subscription service for apparel and footwear.
But CGS believes that the low adoption rate can be partly explained by the newness of the business model. The most commonly cited reason (39%) for not using rental or subscription box services was not knowing about them or not understanding what they do. And that presents an opportunity for brands to engage and educate consumers on these topics.
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“Consumer expectations are changing and our survey results reinforce that apparel brands must find new ways to encourage brand loyalty,” said Paul Magel, president of the business applications division at CGS. “Take Gen Z consumers, for example. These individuals are used to rental models — whether that’s Netflix or Airbnb — so marketing sustainable and eco-friendly options in a rental format is the perfect way to engage them.”
Of the consumers surveyed who had used rental services, saving money (27%) and reducing environmental impact (18%) were popular motivations. This was particularly true for the younger demographics surveyed; 64% of Generation Z respondents said they would pay more for a sustainable option. This group was also found to be most likely to participate in a rental service, at 28% versus the average of 13%.
CGS found that retailers and brands aiming to capitalize on this market should price their monthly option under $100 for three rental items a month. While 72% of customers were happy to pay up to $50, the number dropped to 18% at $100. Additional revenue can then be made from users buying items after service; 58% said they would buy or had bought an item after renting.
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