Last week the Swedish group launched the option to rent furniture to its customers. In fashion, although this model has existed for years, it is not until now when large companies are starting to consider it.
Shoes, T-shirts and dresses for rent. Last week, Ikea launched the possibility for its customers to rent furniture for a certain period instead of buying it, which opens a door to the development of this business model in other segments. In the fashion sector, it has existed for years but it has not been until now when non-specialized companies have started to bet on it.
What if now fashion starts betting on this segment? In Barcelona Fashion Summit 2019, Agatha Ruiz de la Prada considered entering this sector. The designer raised the issue after talking about Tous’ investment on a jewellery rental company.
The company, specializing in jewellery and accessories, entered last December in the capital of a jewellery rental start-up by subscription, Verone. The platform allows you to occasionally rent jewellery with rates ranging from 8% to 10% of the full value of the piece. In addition, the company has different subscription plans for its users, with five options ranging from 29 euros to 99 euros per month.
The garment rental market in 2017 moved around 1.01 billion dollars, and it is estimated that by 2023 the figure will reach 1.85 billion dollars. The main driver of this segment is North America, which accounts for 40% of the business followed by Europe, according to the report Online Clothing Rental Market: Global Opportunity Analysis and Industry Forecast, 2017-2023, prepared by Allied Market Research.
Tous entered a jewellery rental start-up with a minority holding at the end of 2018
Precisely the largest group that operates in that segment is from the United States: Rent the Runway. The company has more than 6 million customers in the United States and an offer of 200,000 pieces from more than four hundred brands. The company was set up in 2009 by two former Harvard, based on the access economy model that have Netflix or Spotify, for example. Rent the Runway customers can rent designer clothes for a period of between four and eight days for 10% of the full price.
After the success of Rent the Runway’s business model, which during its history has raised more than 180 million dollars through rounds of financing, numerous companies have proliferated based on that same model. This is the case of Le Tote, which allows you to choose between three garments and two accessories each month, Gwynnie Bee or Tulerie, where you can only access through invitation.
Although Asia-Pacific is still in the adoption phase of this model, it is estimated to be the fastest growing market, 11.4% more until 2013, boosted mainly by China and India. Other factors that have made clothing rental grow in this region is the need for an economic alternative to direct purchases, to the social acceptance of rental clothing and to the awareness of consumers about the profitability of this segment.
The clothing rental sector will grow by 11.4% until 2023
In India, one of the markets where this type of company will grow the most according to the report by Allied Market Research, Rent it Bae operates. The company recently received a capital injection, whose amount has not been disclosed, by the fund Gems Vc to boost its growth.
The Chinese giant Alibaba has also set its focus on this business after an investment in Ycloset, aimed at women between 22 and 30 years old for the rental of clothing and accessories in China. The company, which has more than 15 million registered users, has already received an injection of 50 million dollars from Alibaba, just like Softbank China and Sequoia China funds.
On a global scale, according to the report this segment will grow more from now on powered by new technologies, an easy access and popularity among the millennial generation. In addition, the trend of sustainable fashion is also enhancing the use of rental clothes as it avoids the culture of use and throw away.
Run the Runway is one of the largest companies specialized in this segment, with more than 6 million customers
Moreover, the report also points out that women will continue being the main consumers of this segment, though the expenditure from men in rented clothes is growing gradually, as well as that of children.
In Spain, there are also companies specialized in this segment, such as Cloeth, which operates through a monthly fee or temporary rental, or Lamasmona, specialized in rental of party clothes. However, the trend is not deeply rooted in the country, which for instance meant the closure of 24fab, which cleared its stock and closed all its stores at the beginning of 2018.