Renting everyday clothes is fast becoming a more sustainable alternative to fashion — and fueling companies like Caastle, a platform that manages the service for a growing number of branded apparel retailers.
“What rental does is allow you to have that same experience as fast fashion but with higher-quality items,” said Christine Hunsicker, cofounder and chief executive officer of the New York-based firm, describing rentals as a complementary business, given that customers tend to purchase basics, and rent more fashion-forward items, prints and colors. “Instead of disposing of it, someone else is wearing it. I think that’s the number-one benefit. You can still have the same ‘I’m only going to wear it once or twice attitude,’ but the next person is wearing it once or twice and the next person is wearing it once or twice.”
In the last month alone, Caastle has launched Vince and Rebecca Taylor, adding those two advanced contemporary firms to its rental stable that already includes Ann Taylor, New York & Co. and Express. Caastle has developed separate branded web sites for each of these companies’ rental businesses. Over time, this allows brands to make fewer products and make more money each time someone rents the item.
Six years ago, Hunsicker cofounded Gwynnie Bee, which started as a plus-size, subscription-based rental company but has since evolved into more inclusive sizing. That was the impetus for developing the Caastle platform, a cloud-based, managed service.
“We went out with this idea that we believed there was a more efficient and better way for the apparel space to operate. We wanted to be the platform and technology that powered all that,” said Hunsicker. “For us, there were a couple of key reasons we thought this would be really good for brands or retailers, but we needed some data to prove it would actually happen — customer acquisition, increasing engagement and spend with one’s current customers, and core profitability. We felt like this access model is a huge complement to what they’re doing on the retail side, and should ultimately drive higher profitability for them. The data looked amazing.”
Hunsicker is a Princeton graduate who was previously president and chief operating officer of Right Media, which was sold to Yahoo for $850 million in 2007. Today, most of the 500 employees of Caastle have equity in the business, and almost half of them work within technology, product and data science.
She said Ann Taylor and New York & Co. have found that half of those signing up are completely new to the brand. “It’s a really great way to tap into a consumer who wasn’t previously coming into the store and coming to their e-comm for buying. The scary part for a brand is it means 50 percent of people signing up are current customers,” she said. “Is that 50 percent my top spenders moving over? Am I taking $1 of retail and turning it into 80 cents of rental?”
On the contrary.
“What we found was that out of the people who are their current customers, spend is up 100 percent. It’s been a huge share of wallet increase. The reason for that, which was our theory, people buy differently than they rent. This is why it’s a complement. You buy your basics and your staples and things you’re going to wear again and again, and be a permanent part of your wardrobe. You rent the fashion. The stuff that we see people renting is not the same things that they buy. Our theory was this should increase share of wallet because they are still going to buy the way they’ve always bought, but now they’re going to start experiencing more of the fashion and trend items from each of the brands, so it should be accretive.”
For example, “instead of just buying the black blazer from Ann Taylor, you’re now renting tweed and the blazer with some interesting trim on it and a bright red blazer. It’s been a great way for these brands to better monetize the fashion and their trends — the stuff they have a harder time selling, but they need to have,” she added.
Caastle builds the web sites all the way through logistics for pick, pack, ship; returns processing; cleaning and inspecting, along with all the technology that makes it run efficiently. Each of the companies has a separate web site for the rental business, such as Express Style Trial, Infinite Style by Ann Taylor, New York & Co. Closet, Rebecca Taylor RNTD and VinceUnfold.com.
Caastle makes money on each subscriber that comes in, said Hunsicker. So if VinceUnfold.com charges $160 a month, Caastle takes a percentage of it, which she declined to divulge.
“It’s important that we pick brands that we think will be successful,” she said. “Because we don’t charge a set-up fee, and there’s no commitment. We’re so confident in the model. We’re willing to take that risk and put our work in up front and make it up for volume long-term.”
Ann Taylor charges $95 a month for three items at a time, New York & Co. charges $50 for three items at a time, Express is $69 a month for three items at a time, and Rebecca Taylor and Vince charge $159 and $160, respectively, a month for four items at a time.
The customer can then buy the item at a discount if she chooses. It can be discounted anywhere from 10 to 80 percent, depending on where the item is in its life cycle.
“The brand promise is that it comes looking and feeling brand new. The second it doesn’t, it has to get pulled out of rotation,” she noted.
Hunsicker, dressed in a Vince leather jacket that she’s currently renting, explained that her first box of Vince Unfold had $2,500 worth of clothing in it. The second box, which she got a week later had $1,000 worth of Vince clothing. “I feel if I manage the subscription right, I could get $4,000 to $5,000 worth of Vince clothing a month,” she said.
Ultimately it’s the retailer or brand’s decision on what they want to offer for rental. Vince, for example, puts 60–70 percent of its inventory up for rental. Shearling gets a worn feeling after you clean it, so Caastle advises against renting such items.
If something rips or gets a stain, it’s part of the fee. “This is everyday clothing. Occasionally stuff happens. We have six years of data from Gwynnie Bee and we know how people treat the clothing. The interesting thing is, when you’re in these types of services, you treat clothing pretty well. It’s not like a one-time car rental where you don’t slow down at the speed bumps. It’s much of a community and a membership. It doesn’t mean stuff doesn’t happen, because it does. We can lift most stains, and things that can be fixed, we fix. That’s part of the service,” she said.
Caastle has two warehouses with cleaning plants in Columbus, Ohio and Phoenix. “We dry clean as little as possible and launder nothing. There’s a third type of cleaning, wet cleaning. Dry cleaning is really gentle on the clothing, but it doesn’t actually clean very well. It has a hard time with odors. Your at-home laundry does an exceptional job cleaning but is actually very hard on your clothing. Wet cleaning, invented by the Germans, takes the best properties of dry cleaning and the best part of laundry. It’s exceptionally thorough from a cleaning perspective and is very gentle on the fiber itself. As much as we can put through wet cleaning, we do,” she said.
She explained that wet cleaning has the solvent composition of dry cleaning, but is injected with water as well. “Depending on the solutions we use, we use hydrocarbon-based solutions that are significantly better for the environment than perc, used in dry cleaning. Hydrocarbons are much gentler on the environment, and the machines themselves are really efficient, but it has significantly better cleaning properties than a pure organic cleaning,” she noted.
The actual drying of the clothing is done through steam tunnels that remove most of the wrinkles. “When you blast that kind of heat on something, there’s a last bit of sanitation. It removes wrinkles from 97 percent of the garment. We don’t have to hand-press,” she said.
Caastle has custom-programmed all the machines to specialize in particular fibers and weight of the garment. “The name of the game is durability and that’s where you get a lot of sustainability from. You’re taking this one item that sat dormant in someone’s closet, and you’re getting significantly more utilization out of it,” said Hunsicker.
Hunsicker advises brands about what types of fibers would work best for rental. “You want people manufacturing clothing that lasts longer,” she said.
To be sure, the whole perception of renting clothes has changed over the past several years. “Renting special occasion items, such as tuxes or dresses for proms, have been around. We were the first company to do this Netflix-style everyday rental in 2012. Le Tote did it in 2013, and then Rent the Runway launched in 2016 with Unlimited. People said, ‘I get this for special occasions, but why would you do this with everyday wear?’
“Now, six years later, people think it totally makes sense for everyday wear. There’s more receptivity to the concept. We haven’t hit the inflection point with consumers yet. I think that’s still a year or two away. We do attitudinal research annually and that’s significantly shifted — the openness to rental. The openness and understanding of how it would fit into their daily lives is markedly different than it was six years ago. You’re talking about changing centuries-old behavior. It’s not an overnight thing,” she said.
Yet in the next five years, Hunsicker believes that all brands will want to have their own rental channel. “The consumer’s going to want it. The brands want to be where the modern customer is.”