Dream closets don’t exist — unless one argues that rental and subscription rental models are bolstering gaps in the modern consumer’s wardrobe, so that whatever the desire — there’s a rented option.
“The rental economy is here to stay,” said Ashwini Asokan, founder and chief executive officer of Vue.ai.
Vue.ai is an end-to-end AI-powered platform for retailers — and it’s also the data force behind ThredUp’s subscription offering, “GoodyBox.” The company’s styling and outfitting solutions, as well as personalization algorithms, are designed for fashion retailers — and resellers, as is the case with ThredUp, which offers its boxes on the basis of “Make Your Own,” “Box of Favorites” and even “9 to 5 Styles,” among others.
Shoppers fill out a questionnaire to which Vue.ai’s platform does all the backend grunt work. Vue.ai matches each shopper’s style profile to the available inventory, ensuring products are curated and matched with shopper intent. Information is pulled from a shopper’s visual style preferences, brand affinities, price sensitivities and more. This technology allows brands to improve speed-to-market, capture trends in real time and enact a matchmaking service in each rental through personalized recommendations.
Rentals Versus Subscriptions
Whether it’s a one-off rental for a short period of time or a monthly fee dedicated in a subscription rental — the model can drive customer engagement and retention for retailers, (but it may risk cannibalizing existing retail segments), according to Fashion for Good’s The Future of Circular Fashion Report, a proponent for sustainable fashion innovation.
“We’ve gone from discount-driven shopping to living in a Marie Kondo world, where everyone wants to enjoy many different experiences in life, without the clutter and hassle of having to own, manage, store it all,” reiterated Asokan. Attributing this adoption to Millennials and Gen Z-ers who want to experiment with trends and brands without the commitment of ownership, Asokan believes the meaning of value shopping has changed.
Similarly, Urbn, which announced its Nuuly subscription rental offering, has been tracking the consumer shift toward access and sustainability. “We’ve been supporting our consumer’s shift into e-commerce, omnichannel and mobile experiences, and more recently we’ve seen a growing interest in subscription and sharing-economy models,” said David Hayne, URBN’s chief digital officer and Nuuly president to WWD.
“Customers are looking to add newness and excitement to their wardrobe, in a sustainable way,” reiterated Hayne. Nuuly is seeking to the “fill the white space as a full lifestyle brand,” improving adoption and leaning into technology to attract two main customer groups, the first being women aged 25 to 35; and the second being women aged 35 to 45. Access will also be allotted by an expanded size run.
Tackling Rentals With Tech
“As far as challenges, rental is a logistics and tech-heavy business model,” said Hayne. “In building Nuuly, we had to do considerable testing of things like our laundry and inventory management systems to ensure we are tracking and caring for clothing in a way that ultimately maximizes each item’s life cycle,” he reiterated. With these processes in mind, luxury markets may be more poised for offsetting the costs of laundering, operations, etc. as opposed to value markets.
A pioneer in the subscription market, Rent the Runway prides itself on being a technology company first, powering business growth by technology and product innovations that scale both technically and operationally. So, too, does Birchbox rely on technology — using its proprietary algorithm to package beauty products for its customers based on their unique profiles and preferences. And traditional retailers such as American Eagle, Ann Taylor, Express are already experimenting with subscription-based rental services, alongside the DTC brands.
Asokan warns that with rental market growth, the same challenges persist. Despite the acceleration of e-commerce — creating more options and inventory visibility than ever — shoppers can become disgruntled by choice.
Personalization and Style Profiling
“Being able to identify the style profile of each and every shopper, cutting out the clutter and giving them exactly what they want, for the occasion they want, for the moment they’re in — is both a huge challenge as well as an opportunity for rental retailers,” said Asokan. Through style-based personalization, Vue.ai has seen an uplift in revenue and site visits, with Asokan arguing, “No two shoppers are the same, so why should you be the same to the thousands of shoppers on your site every day?”
Rental retailers are not just advancing the rental experience with style profiles. Where online is the go-to-market channel for the rental service, speed-to-market is especially crucial — even more so important wherein products are unique (ThredUp, which has more than two million unique items in inventory — automation helps uncover the “needle-in-a-haystack” item in its boxes). According to Asokan, automation is the answer.
Staying ahead of the competition in the rental segment means staying on top of trends. “Rental retailers have an advantage in terms of being able to tap into real-time live fashion events and trends driven by celebrities and influencers, and source similar items from the market,” said Asokan, who said rental retailers are able to dismiss traditional timelines and the headaches brought on by a long supply chain and manufacturing cycles.
Expanding Curation With Automation
Regardless of price point, curation and styling will be an element of differentiation, where Asokan argues — artificial intelligence and machine learning is crucial to streamline image recognition, site merchandising and other tasks.
Box curation may be strengthened by a wide assortment, although the customer may not want to deal with picking the items themselves. Nuuly will include a mix of Urbn’s in-house labels such as Anthropologie, Urban Outfitters and Free People, but it will also invite a breadth in assortment through access to hundreds of additional third-party brands and even vintage pieces — a unique departure for traditional retailers entering the rental service space.
When asked of the size of the apparel rental market, Hayne cited a recent statistic from GlobalData Retail, whereby the rental market has been growing more than 20 percent annually. The apparel rental market was valued at $1 billion in 2018, and the market is projected to surpass $2.5 billion by 2023.
There’s an opportunity for traditional and emerging brands to create access for consumers if the technology is embedded at its core.