In the Loop

The naked truth about clothing rental

clothes on a rack for rent
ShutterstockGreenBiz Collage

This article is drawn from the Circular Weekly newsletter from GreenBiz, running Fridays.

As some of our U.S. readers gear up to shop til you drop this Black Friday, it’s the perfect time to reflect on consumption, consumer behavior and — as always — the possibility of more circular business models.

In your tryptophan- or carbohydrate-induced food coma, picture this: a world where you no longer own clothes. What would it mean to buy access to garments, rather than buying garments outright; to purchase apparel as a service rather than an owned commodity? How would this influence the design and durability of garments, or the logistics and tracking of products? And what benefits would drive consumers to shift from owning to renting what they wear?

This question was one of the provocations offered by Mitra Powell, director at global creative agency Dragon Rouge, to kick off the Ellen MacArthur Foundation’s Make Fashion Circular workshop, which I attended in New York last week. This precompetitive collaboration — launched in 2017 at the Copenhagen Fashion Summit as the Circular Fibres Initiative — aims to radically redesign the apparel industry and catalyze cooperation among key stakeholders. And with a lineup of core partners, including H&M, Nike, Burberry, PVH, and others, the potential for collective impact is hard to ignore.

As you likely know, the apparel industry has a polluting reputation. Beyond the more widely cited statistics about the carbon, water and human footprint of apparel production and distribution, clothes are being worn less. The average number of times a garment is worn has decreased by 36 percent in the last 15 years, with clothing use in the United States at around a quarter of the global average, according to the Ellen MacArthur Foundation’s New Textiles Economy report.

There’s plenty of room for improvement, and companies are beginning to find new value in the $460 billion worth of wearable clothing that is discarded each year, according to the same report.

The two-day Make Fashion Circular participant workshop convened about 100 companies and stakeholders from across the apparel industry to explore collaborative approaches to transforming business models, as well as to ensuring safe and renewable materials and improving recycling that can turn old clothes into new. Business-model innovation was a central topic of conversation for large brands, retailers and innovators exploring pathways towards greater circularity. (The event was convened under the Chatham House rule, meaning that conversations can be shared but participants can’t be identified.)

For example, clothing rental quickly has matured from the short-term, event-focused model of high couture popularized by Rent the Runway to an everyday option for some consumers. While clothing rental accounts for a nominal share of the clothing industry today, more companies are emerging to offer subscription-based or peer-to-peer rental models.

One company gaining traction is For Days, a T-shirt brand based on the ethos "We can have everything without creating waste." Users pay a monthly fee for a selection of T-shirts that they are then welcome to rip, stain, stretch or simply wear into oblivion. When they’re ready for a change, customers pay $8 to exchange worn for new, and the company recycles used T-shirts into thread for new products. Unlike other rental models, For Days offers users the freedom to wear and treat pieces as if they were their own without consequences.

Other companies — such as Le Tote, YCloset, Gwynnie Bee and Vigga — take a subscription approach, in which customers pay a monthly fee to borrow a fixed number of garments. Diverging from its original upscale approach, Rent the Runway also offers a subscription-based model for everyday wear, not just formal wear, and is incorporating goods from 39 brands, including Levi’s, The North Face and Club Monaco. It is partnering with coworking giant WeWork to facilitate clothing drop-offs and pick-ups.

Still another rental player to watch is CaaStle (the name is in part an acronym for "clothing as a service"), which provides a fully managed platform for brands to tap into the rental market. Launched by the founder of Gwynnie Bee, CaaStle enables brands, including Ann Taylor and New York & Company, to offer rental platforms on their own sites, a similar approach to the growing number of third-party companies enabling recommerce.

So what’s in it for the apparel industry? Beyond generating multiple revenue streams from a single item, brands can maintain longer and stronger customer relationships when the interaction extends beyond the point of sale. Moreover, companies have better stock control and can leverage customer usage data to inform design.

For consumers, rental models offer variety, flexibility with changing styles and needs, and eliminate the hassle of shopping and the burden of disposal or donation. There is potential as well for rental services to leverage artificial intelligence to offer personalized suggestions based on preferences and feedback.

Still, there are many unanswered questions about the scalability of clothing rental. Brands are learning how to assess the usable lifespan of a garment; how to make the economics of logistics pencil out, particularly for low-cost items; how to avoid cannibalizing existing revenue streams; and, ultimately, how to measure the profitability of renting versus purchasing models for apparel.

Apparel rental may not be a fit for every consumer — or apparel company — but there seems to be no shortage of brands willing to try it on for size.