A British clothes-rental startup is thriving during lockdown while others struggle, suggesting the fashion rental sector may have shifted for good
- During the coronavirus lockdown, the rental fashion market has slowed. People are going out less, and find ongoing subscriptions expensive.
- Rent The Runway, one of the biggest players in clothing rental, has seen customers leave, and has cut staff pay.
- But British startup By Rotation, which lets users rent clothes from each other, has grown thanks to its variety of clothes and its social features. Its success suggests the fashion rental market is shifting.
The market for fashion rental skyrocketed during the 2010s. As social media became part of consumers' everyday lives, industry heads capitalized on fast-moving trends and fears of "outfit repeating." Instagram lets others analyze your every move, so people began buying clothes they'd only wear once and then hide at the back of a wardrobe.
Startup Rent the Runway (RTR) posed a question: Why buy an outfit for each big event when you could just rent it instead? Over the past ten years, consumers have continued to answer, and RTR has grown into a billion-dollar company. But during coronavirus, it's lost some of its sparkle — and the success of a new player, based in London, has shown how the market has shifted.
A billion-dollar startup launched in 2009, RTR, which was sustainable and relatively cheap, soon became the go-to place to borrow designer clothing. Similar startups emerged in the UK, the Middle East, and China. In March 2019, Bloomberg called renting clothes "the future of fashion" — in August that year, market investment analysts Technavio predicted the online clothing rental market offer average returns of almost 11% between 2019 and 2023.
But without anyone to dazzle in a rented Valentino gown during the coroanvirus lockdown, consumers retreated to sweatpants and slippers. The market is now expected to decline by nearly half this year. RTR operates on a subscription model, charging $159 a month for unlimited rentals — customers have either been cancelling or indefinitely pausing their subscriptions.
RTR responded by announcing a hiring freeze for the rest of 2020, slashing its marketing budget, and cutting the pay of the leadership team. Another luxury fashion rental startup, Armarium, announced it was ceasing operations on March 7.
Coronavirus is not the only problem. Vogue Business reported earlier this month that for Generation Z, fashion-rental platforms that use a subscription model are just too expensive. The market is moving towards resales: People are buying clothes, wearing them once, and then selling them on platforms such as Depop. Globally, traffic on Depop's website has doubled since April 1. June was its best month ever and the business saw triple digit growth year-on-year — more than 20 new users signed up every minute, on average.
For more evidence of this trend, look across the Atlantic, to where a new rental-fashion startup is thriving. By Rotation is a nine-month-old, London-based peer-to-peer app, where users lend and rent clothes.
It was set up by founder and entrepreneur Eshita Kabra-Davies after she says she saw a gap in the market for peer-to-peer lending. It's part of the sharing economy, which is expected to reach a value of more than $335 billion by 2025.
Users can rent a £450 ($584) Jacquemus "Le Chiquito" bag for £10 ($13) a day. By Rotation now has more than 20,000 users, 60% up since lockdown began, and more than 4,000 clothing and accessories listings from a variety of brands — listings are 50% up. It has gained more than 10,000 Instagram followers during the pandemic.
Kabra-Davies says the reason By Rotation is thriving is, first, because users want a wider selection of clothes than just designer brands (By Rotation has lots of casual clothes, too), and second, because people can make money off more expensive items. One user bought a Jacquemus bag for £200 ($260), and quickly made £70 ($90) back renting it for 10 days.
The company has also built social features to entice customers — it has reviews, much like Airbnb, to track the quality of what lenders are renting out. Kabra-Davies says her team monitors which listings people are most interested in and what styles are being uploaded to the app. They hope to predict trends in the next few years based on the data. And amid growing concern about sustainability, By Rotation launched an "Impact Scale" that calculates how much textile waste and CO2 they save renting any item, rather than buying it new.
It's become part-renting app, part-social network. The company uploads weekly style guides, using past rentals as suggested items for things like a "picnic in the park" or a "Cotswolds staycation." Kabra-Davies says that women who use the app are connecting with each other from seeing their rentals — By Rotation has hosted weekly conversations on Instagram Live, named "a glass of wine with," connecting "rotators" to figures in fashion, discussing why they are moving towards fashion rental. Browsing the app, it almost looks like Instagram, except the items on the pages are the users' own clothes and accessories.
By Rotation's success highlights the ways that the fashion rental market is shifting — and suggests that, for those in lockdown who have no need to dress up, a new friend might be the month's most desired accessory.