Consumers Value Access over Ownership – What Does That Mean For Your Business?
Since 2009, Rent the Runway has been a godsend to women on-the-go looking for name-brand formal attire without wanting to break the bank or crowd their closets. As of a few months ago, the apparel rental company will be coming to the rescue in more ways than just one.
In April, Rent the Runway expanded its services, a slight departure from their original premise of offering up luxury gowns on a convenient platter. For an easy $139 a month, Rent the Runway’s new Unlimited service gives customers the option to rent 3 premium pieces, have them delivered directly to their homes and swap them out whenever they see fit, rotating them for 3 new pieces once they’re good and ready. Considering most of these pieces retail for $500+, we’d say that’s quite a steal.
Unlimited is another in a line of rental and/or subscription-based retailers (i.e. Rent Frock Repeat, Bag Borrow and Steal, et al) that are carving out their own niche and quickly becoming a retail staple.
Fast fashion disrupted the apparel industry as a whole, once consumers realized they could get runway-ready trends in half the time for less than half the price. Fashion “seasons” have become mere reminders that we’re still expected to wear lighter colors in the summer and darker tones in the fall – after all, consumers no longer have to wait for the trickle-down effect to take place. Of course, fast fashion is usually equated with lower quality goods as the short production timelines and unfortunately often poor working conditions mean less-than-stellar quality control.
Nowadays, rental and subscription-based business models are disrupting fast fashion by providing premium quality at an affordable price. Savvy shoppers now expect to get exactly what they want, at the quality they want delivered to their doorsteps and, in a lot of cases, completely commitment-free.
It’s crucial to note, however, that according to the Bureau of Labor Statistics, the average American family spends $1,700 on clothes annually and the average citizen dumps about 70 pounds of clothes per year. As concerns regarding sustainability continue to rise (especially amongst millennials), “throw-away” culture is declining as consumers are now turning to more eco-friendly options for, well, everything. A Nielsen study drives home this point as it is revealed that 66% of consumers are willing to pay more for a product if it comes from a company that’s committed to making a positive environmental impact, a number that is up from 50% in 2013.
Rent the Runway has seemingly covered all its bases however, as they recently traded in harmful shipping materials for reusable carrying cases. They estimate to have saved nearly 300 tons of waste from landfills (5% of which are made up of textile waste) since they made the switch a year ago.
The fact of the matter is that Unlimited (and other services like it) offers an unprecedented level of accessibility to luxury brands to a much broader share of consumers. Mid-priced upscale brands like Tory Burch or ML Monique Lhullier may see this business model as a threat as customers will feel more inclined to rent the same items for less. On the other hand, luxury shopping itself isn’t going anywhere – customers still turn to high-end boutiques like Gucci, Chanel and Dior for the in-store experience.
Moral of the story? If you’re even remotely in the luxury game, a rental or subscription-based business model may be something to think about as it offers premium-quality goods to consumers who may have previously shied away from your brand. While there is something to be said for keeping an air of exclusivity, expanding your target market can do wonders for your bottom line.
Click below for some more examples of business models that are disrupting the retail industry!