In a new survey, global provider of business applications CGS uncovered a big opportunity for retailers looking to explore rental apparel services.
In surveying more than 17,000 participants, the company found that adoption levels among apparel rental services is still low at just 8 percent who have considered or used a service. Many respondents are completely unaware of rental services or find it “too expensive.”
Although not yet at the moment of mainstream adoption, businesses such as Rent the Runway are bearing the brunt of being a pioneer in a logistically difficult model. But according to Tommy See, director of product marketing for CGS, “early adopters will pave the way,” as more brands and retailers look to capture growth in this market regardless of whether they are digital-first or traditional brick-and-mortar.
Those looking to expand into apparel rental services will need to offer the right mix of price and value, then the adoption rate will increase. The majority, or 72 percent of consumers, are willing to pay $50 or more per month to rent three items. Only 22 percent of consumers are willing to pay at least $100 monthly. And ride-share users are already conditioned to sharing economy behavior as the survey noted, which may present further marketing opportunities for retailers.
From there, companies need to focus on acquiring sign-ups, and more importantly — customer retention.
With 31 percent of survey respondents looking to rent to try new brands, See outlines a few scenarios so brands can retain monthly subscription customers. “Brands and retailers need to continuously offer options that fit the changing consumer needs, adjusting for seasons, new trends, events, etc.,” See said. He also points out the need for “exclusive options” such as cross-brand collaborations or private label lines, the latter being a way to seize better margins and support the business model.
“Companies need to focus on the shopping experience and look at ways to streamline their web site and apps. Look to leverage the data to offer personalized recommendations,” See said.
See also mentioned how sustainability is a “growing priority” for consumers with Gen Z leading the way. The survey found that 75 percent of “sustainably conscious consumers” will pay more to rent clothing, and 64 percent of Gen Z respondents were likely to pay more for sustainable products overall.
“Companies should openly share in their marketing campaigns and product story all the work they are doing related to environmental causes and social sustainability to reach and acquire new customers,” reiterated See.
Macy’s Inc. announced a resale partnership pilot between Macy’s and ThredUp, and a subscription rental offering between Bloomingdale’s and business-to-business rental platform Caastle, in August, attributing the decision as a way to test opportunities in both re-commerce and rental. As WWD reported, Jeff Gennette, chief executive officer of Macy’s, told analysts the trial is “to tap into the changing customer behavior, especially among Millennial and Gen Z consumers.” See believes a pivot into new business models will need to be rooted in sustainability messaging if catered to younger consumers.
Brick-and-mortar retailers can use their store footprints to their advantage to create frictionless drop-off and pick-up locations, thereby further differentiating their customer experience. As for temporary apparel, such as formal or maternity wear, See believes opportunity exists.
When WWD asked if there’s a point that consumers feel “over-subscribed,” See cited a study from nScreenMedia and subscription management platform Vindicia revealing how the average American subscribes to 3.4 video services, which he finds could be similar for apparel once familiarity with the services grows.
Broadly, “subscriptions is a norm today,” reiterated See. “Rentals will allow consumers to rent higher-quality garments and offer the flexibility of an “unlimited” closet without it taking up room or collecting dust,” he added.
And although rental creates a gateway to “unlimited closets” for consumers, still even 45 percent of respondents would consider buying after renting, what See calls a great “hybrid option,” a value-add opportunity and wallet-share buffer that traditional retailers already see as worth testing.
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