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?