The young generation seems to have a preference for renting instead of buying. They can on demand have an item or service and try it out quietly. More and more companies are adapting their business model to this. What can you do as a (fashion) brand to respond to this development?
It offers many advantages for entrepreneurs. Entering into a long-term relationship with the consumer where the focus can once again become more focused on offering added value.
In the fashion industry, we are seeing tentative first steps in this direction: clothing rental is back and Generation Z is at the forefront. For example, Lizzy Perridon launched ‘Litchy’, where you can rent a designer dress for a wedding or New Year’s party – with the unmistakable slogan ‘Why should you buy’? Other pioneers in this field are Scotch & Soda, Filippa K and H&M.
Abonnementseconomie & retail
The switch to rental business models has been going on in other branches for some time. While the subscription model has its origins in digital services such as Netflix and Spotify, it is increasingly finding its way to physical products. Consider, for example, the popular Swapfiets where you always have access to a bicycle and repair service for a fixed amount per month. But Boldking also offers a subscription to razor blades, just like HelloFresh with its meal packages.
The switch from a linear economy to a circular economy is increasingly relevant for the retail sector. Millennials and Gen Z are more concerned with the impact of their buying behavior (and fast fashion) on the environment. At the same time, these generations are quickly tired of things and have a great need for ‘news’. Subscription commerce seems to be the answer.
In the fashion industry, among others, the Dutch Scotch & Soda, acquired by Americans, is pioneering with a rental and subscription model for clothing. By taking out a subscription, called Scotch Select, you order 3 items at a time, which you can wear for as long as you want. Tired of them and ready for something new? Then you send them back and you can select 3 new items.
You can also choose to keep and repurchase the items for 65% of the original retail price. According to research firm Global Data, the market will be ahead online clothing rental in 2023 to even grow to 2.5 billion dollars (2.2 billion euros converted).
Pollution from the fashion industry
Another development that influences the development towards one subscription economy, is the growing focus on pollution from the fashion industry and the negative effects of fast fashion. The millennial and Gen Z are becoming increasingly aware of their environmental footprint by buying everything new. As a result, the second-hand goods market has grown exponentially in recent years.
As a result, the second-hand goods market has grown exponentially in recent years.
Never before was it like this fashionable to wear second-hand clothes. Purchased through platforms such as Vinted and Vestiaire Collective, which are rapidly increasing in popularity and users.
Renting clothes is also a sustainable solution for consumers who still like to wear something new on a regular basis. You are sustainable by ‘sharing’ your beautiful dress with others and wear something new to every wedding and party. It is fully in line with the minimalist trend, also due to the popularity of the FIRE movement: financially independent, retire early. In this way, followers become ardent minimalists and attach as little value as possible to material possessions. By renting clothes you are responsible for the planet and your wallet.
Is it time for a radically new business model?
The rental concept is therefore an excellent way for the fashion industry to become more sustainable. We have come to think of clothes as a disposable product. Recently you have seen a cautious, starting turn in this thought among consumers. In addition, we not only see that consumers are becoming more loyal through subscription models. The brand also gains more insight into consumer preferences. This in turn can serve as valuable input for the design process.
Is it time to radically change the business model? We see leading brands pioneering this. There is no doubt that subscription models in various industries are becoming more common and popular with consumers. Certainly for products that many people use, a subscription seems a great solution, such as basics or the trade-in model of Scotch Collect. Now that Covid-19 is forcing retail to innovate, you may be able to take the step a little faster.
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