The global online clothing rental market is witnessing a rising demand over the past few years. Increasing internet penetration, inclination towards designer apparel and prevalent awareness about negative environmental impacts are encouraging shoppers to explore renting apparel online.
According to Netscribes, the global online clothing rental market is expected to reach a whopping value of USD 1.96 billion by 2023. The market share in APAC is expected to increase at a CAGR (11.87%) during the 2018 –2023 period. In this article, we will delve into the driving factors, challenges, and key trends propelling the growth of the global online clothing rental market.
Shifting preference for designer clothes
Social media has been largely responsible for this trend, as it fuels the popularity quotient of designer apparel through selfies and photos. Moreover, with people vying for a celebrity-like status, they are quite aware that repeating their garbs can dent their repute on these platforms.
This is causing a serious shift towards donning on designer clothes and consistently adapting to changing fashion statements, thus spiking the demand for online clothing rentals. Renting clothes online allows shoppers to bring variety to their wardrobe and offers access to designer outfits at affordable prices.
Minimizing negative environmental impact
Clothing production has doubled from 2000 to 2014. Accelerated apparel production has led to many environmental problems, ranging from the generation of greenhouse emissions and solid waste to high consumption of freshwater. These ill-effects have caused the need to lower apparel production to be widely acknowledged. This ideological shift is expected to propel many shoppers towards renting apparel in order to counteract environmental harm.
Increase in Internet penetration in developing countries
Renting dinner jackets and tuxedos from offline (brick-and-mortar) channels has become commonplace in many developed countries. However, with smartphone connectivity becoming ubiquitous combined with wide options and cost-effectiveness online, tech-savvy millennials consciously choosing these renting alternatives.
Among the developing countries Argentina, Chile, India, and China are some most promising markets that are expected to catalyze the revenue growth of the global online clothing rental market by 2023.
Challenges facing the online clothing rental market
As we move towards an age where experience deemed of higher value than ownership, the general notion of renting clothes is yet to be accepted as a norm. This is a major reason why people feel reluctant to take advantage of such services and the options they provide.
Lack of customization
While a customer may want to rent a certain outfit, there will be instances where they won’t have access to the exact size and body type as per their needs. Such inability to customize apparel ends up in players losing out on a major chunk of market demand. Customers are left to purchase variants from stores that they can alter at their will.
Huge expenses for maintenance and hiring experienced personnel
In the online clothing rental market, the expenses for dry cleaning and transportation are exorbitant. For a clothing rental company, the longer a dress lasts, the more revenue it can generate (cumulatively), and to continue doing so, the company is required to incur higher maintenance costs and dry-cleaning expenditure.
Key trends in the online clothing rental market
Adoption of subscription services
The online clothing rental market is shifting towards the adoption of subscription-based services. Subscriptions allow customers to rent three to four pieces of clothing simultaneously for an unlimited time period, in exchange for monthly fees. These services help companies to reach a relatively large customer base, save time in acquiring new customers, and generate recurring revenue. Rent the Runway is one of the oldest companies in the business, known for providing formal wear since its nascence. Today it offers a spectacular range of apparel for any occasion. Other firms offering monthly subscription packages include Gwynnie Bee, New York & Company Closet, and Tulerie.
Fashion rentals for plus-sized shoppers
The online clothing rental market is expanding its customer reach by catering to a niche market segment — plus-sized women. Offering clothing rentals for plus-sized consumers – a segment that was previously ignored – has opened new avenues for fashion retailers. For instance, Stitch Fix Plus has become a household name within this niche, by providing apparel on rent to plus-sized women, with no subscription fees and free shipping.
Inclination towards the use of technology for logistics services
Logistics management can be a real challenge for clothing rental companies. To avoid such obstacles, firms have begun adopting CaaS (clothing-as-a-service) technology that optimizes subscription service management. This requires the company to store the inventory with CaaS, allowing operations activities such as garment care, reverse logistics, customer service, and so forth to be carried by logistics platforms. For instance, CaaStle has been offering its CaaS services, such as technology, reverse logistics, and managed services to well-established brands like Ann Taylor, American Eagle, and Vince.