You know what’s nice? Wearing a beautiful, expensive dress to an important occasion.
You know what’s arguably even nicer? Paying a fraction of the price for said dress, shipping it off to someone else to be cleaned and stashed away, and not having to agonize over when you’ll wear it again, because you don’t own it.
This is the experience offered by the fashion rental economy, an industry on the rise as more shoppers turn to services that loan out clothes.
The big fish in the fashion rental economy is Rent the Runway, the huge startup that’s raised more than $400 million in funding and has grown to 9 million members. But more companies are jumping into the space and expanding the parameters of what the fashion rental economy can look like.
One of the latest entrants to the field is Tulerie, a peer-to-peer, invitation-only fashion rental company. Tulerie allows users to rent clothing, shoes, and accessories to one another, with the app acting as a medium for borrowers and lenders. The company comes from Merri Smith and Violet Gross, two women who worked in fashion and finance, respectively, and believe there’s a huge opportunity in the fashion rental industry.
“I use Rent the Runway a lot, but I didn’t love the inventory, which is aimed at a more mass-market consumer,” Smith, who spent seven years working for Saks Fifth Avenue, tells me. “My friends and I are always borrowing each other’s clothes, and Violet and I realized there’s an untapped opportunity here. A business of renting friends’ clothes can have serious legs with the right infrastructure.”
Smith and Gross believe renting is the future of fashion. It represents an overall shift in shopping patterns — not just for clothes but across all categories. The rise of renting overlaps with the growth of the sharing economy, where digital companies like Uber, Lyft, Airbnb, and TaskRabbit have offered a new way of consumption: paying smaller amounts to borrow other people’s stuff.
The thriving sharing economy is estimated to hit $40.2 billion by 2022. This is leading us to “the end of ownership,” which is how authors Aaron Perzanowski and Jason Schultz describe the result of shoppers eschewing personal property in the digital era in their book of the same name.
Fashion, in particular, is ripe for this shift, as it can be a viable way to feed into fashion trends without having to break the bank.
The rise of renting coincides with the sharing economy
There are several reasons why shoppers prefer renting as a method of consumption. Research has found that there’s a growing affinity, especially among millennials, for spending money on experiences instead of stuff. In the “experience economy,” as CNBC refers to it, shoppers would prefer to save up money for trips and music festivals.
Shoppers are also inundated with never-ending choice, and so there’s a freedom in not being wedded to one item. As sociologist Skyler Wang told the San Francisco Chronicle about the sharing economy, “A huge part has to do with the fact that we want change and access to different things. People don’t necessarily want to commit to just one thing anymore.”
There’s also the fact that today, shoppers — especially millennials — are hyper-aware of spending. It’s already been a decade since the financial crisis, but young consumers are still particularly spooked about the financial industry and are wary of credit cards. Instead, they make calculated decisions. And while there have been deal-savvy shoppers for decades, millennials today prefer secondhand over splurging on a name brand. Booming startups like the RealReal, Tradesy, ThredUp, and Poshmark have brought a certain slickness to the resale market, which is edging toward $41 billion.
With this type of thinking when it comes to shopping, renting makes sense, and explains why RTR users love their subscriptions so much. As one RTR user told Racked last summer, “I look at dresses in my closet that I bought a few years ago and I’m like, ‘Wow, I can’t believe I spent $700 on a Diane von Furstenberg dress that I’ve only worn a few times.’ Why would I buy anything now when I can just rent it?”
But while the sharing economy has affected hotel room rentals, office space, homeownership, car sales, and cable subscriptions, it hasn’t affected fashion just yet.
But shoppers have closets that are packed to the gills, thanks to fast fashion and the speedy pace of trend. This is something the Tulerie app, which launches Tuesday, aims to capitalize on.
A Tulerie membership is free, but users must first be interviewed and accepted into the network. Once they are whitelisted, users can list clothes from Gross and Smith’s chosen list of designers, which are in line with luxury retailers like Net-a-Porter and Saks Fifth Avenue: classic luxury brands like Gucci, Celine, Prada, Louis Vuitton, emerging designers like Monse, Ulla Johnson, and Rosie Assoulin, and contemporary brands like Reformation, Tibi, and Zimmerman.
A Tulerie algorithm will generate how much items should be rented for — about 5 percent of the retail price for a four-day rental, with the number increasing for 10- and 20-day rentals. The company will take an 18 percent commission on rentals and provide shipping envelopes and labels for the users. A white-glove service — where Tulerie will take charge of rentals, from photographing the merchandise to the shipping and cleaning — is also available for a commission of 40 percent.
Tulerie’s invitation-only status is supposed to make borrowers and lenders feel secure, Gross says: “We want you to feel like you are borrowing from a friend, and not that you are loaning your best dress out to some random stranger.” Payments are processed via Stripe, and if someone damages an item, they are liable for 200 percent of the retail value, a penalty Smith says is necessary to put lenders at ease. Borrowers and lenders can rate one another, and users will get kicked off the platform if they receive more than three negative reviews of damaged products.
Gross and Smith believe Tulerie will take off because it’s trying to bring fashion to the sharing economy by commodifying the consumer’s closet.
Is renting the future for fashion?
According to Coresight Research managing director Deborah Weinswig, renting in fashion is poised for growth since shoppers today want an “ever-changing, on-trend wardrobe.” Social media will also have a major impact, since Instagram affects the frequency of outfit-wearing. One RTR user told Racked last summer that she was opting to rent dresses for weddings specifically because of Instagram.
“If you go to a wedding and take photos in a dress you own, you probably can’t wear it again,” she said, “especially if the next wedding is in the same social circles, and especially when so many of the weddings I went to were all in the same season.”
Trisha Gregory, whose three-year-old luxury rental company, Armarium, has nabbed investors like Tommy Hilfiger and Gilt co-founder Alexandra Wilkis Wilson, says it’s only a matter of time before brands start renting services of their own. She compares the landscape to the way e-commerce looked two decades ago, when brands were initially hesitant, and then eager, to work with digital partners like Net-a-Porter, and are now finally starting to roll out websites of their own.
Armarium buys directly from some 80 luxury brands, including Alexander McQueen, Thom Browne, Proenza Schouler, Bottega Veneta, and Marchesa — and most of them have never worked with a rental company before. She says they are eager to work with Armarium, whose rentals start at $400, because “they are paying attention to how the sharing economy has affected other industries.”
Charles Gorra, the founder and CEO of the luxury handbag resale company Rebag, agrees fashion is headed this way. Last week, Rebag launched a new business model called Rebag Infinity, where shoppers who buy handbags from the company can return their item up to six months later and automatically get a 70 percent credit to buy a new bag. Gorra said the company offers this type of program because it’s what customers asked for.
“The question we constantly get from customers is, ‘How can I own a product for a shorter time without needing to fully invest it?’” he says. “Shoppers want access to luxury, but they’re finding that everlasting assets are wasteful. They want to be resourceful in the way they obtain a new handbag, and they also want another one six months later.”
Gorra is counting on this new program to be a huge success, but he also says Rebag could eventually get into luxury handbag rentals, since he too feels short-term ownership might be the future.
“Aside from the Birkin or Chanel bags, which carry interest for generations, most of the bags you see that are exciting at fashion week will lose interest in six months,” he says.
Even traditional retailers are trying to figure out ways to get involved with fashion rentals, especially in the ever-struggling mall brand category. This month, the mall staple Express debuted Express Style Trial, where shoppers can rent three pieces from the brand for $69.95 a month. This came on the heels of New York & Co. announcing that it, too, was experimenting with a rental subscription — NY&C Closet costs $49 a month for three items. Last year, Ann Taylor launched a service called Infinite Style, where customers could have access to unlimited clothes for $95 a month. Even the shoe giant DSW has said it would look into shoe rentals, although it hasn’t shared how it would deal with hygiene issues.
Still, the fashion rental economy is niche. According to Forrester Research, only 6 percent of shoppers rent clothes. Rent the Runway CEO Jennifer Hyman has said that her future plans include putting “H&M and Zara out of business,” but fast fashion is still thriving and doesn’t show signs of slowing down anytime soon, even as RTR continues to roll out different subscription models.