In recent years, rental fashion has become an effective alternative to traditional retail, grabbing the attention of eco-conscious consumers and the interest of fashion lovers.
The business of rental fashion
The trend started in 2004 with Bag Borrow or Steal. With this platform, customers can rent, buy, or sell luxury accessories, primarily focusing on designer handbags, which became popular thanks to the series-inspired film Sex and the City. The next year, Rent the Runway was born, followed by several similar services.
The market changed in 2019 when Urban Outfitters launched Nuuly, a thrifting and rental subscription service that has gone from an experiment to a successful side hustle. Last year, it achieved US$65.5 million in revenue, nearly doubling its previous year’s $35.3 million. The remarkable growth highlights changes in traditional fashion models and consumers’ increasing focus on a circular economy.
The rise of rental platforms points to a growing market opportunity. According to ThredUp’s Resale Report, the global second-hand and rental market is projected to reach $350 billion by 2028, driven by millennials and Gen Z’s preference for sustainability and affordability. While this market promises a more sustainable and circular alternative to fast fashion, does it align with sustainability goals or shift environmental challenges elsewhere?
The rental fashion market environmental challenges
As of December, Nuuly had over 300,000 subscribers, paying a monthly fee of $98, which allows them to rent six items from an extensive catalogue for the month. When the rental period ends, pieces can be returned or kept at a discounted price. Shipping, cleaning and repairs are all handled by the platform. Customers can also sell pre-owned items on a section called Thrift and earn Nuuly cash, which is redeemable in Urban Outfitters stores.
At first glance, rental fashion promises an alternative to traditional retail: it extends the life of garments and reduces the demand for new production, aligning with the principles of circularity. Yet, its environmental footprint is not as straightforward as it appears.
One of the primary environmental challenges is transportation because the rental market involves a constant cycle of shipping garments to and from consumers, contributing to higher carbon emissions when compared to traditional retail.
Another concern is packaging waste, as rented clothes often come wrapped up like new. Even though some services utilise reusable or recyclable materials, the environmental impact of single-use items and the ecological cost of producing reusable alternatives compromise the industry’s sustainability.
Lastly, another critical factor is garment care, as rented garments undergo frequent cleaning, often involving significant water and energy consumption or dry cleaning, which requires more energy than normal laundry.
An MIT Sustainable Supply Chain Lab study shows that the logistics behind the rental market have a higher environmental impact than traditional retail. When we look at rental subscription methods, the returns, cleaning, and transportation activities of moving all these clothes have a higher impact than just regular delivery of fast fashion clothing. However, there is an important distinction between garments for special occasions, often used only once, and casual clothes used more than six or eight times. Based on the study, for the first category, the CO2 emissions per wear calculated for different models indicate that when a person needs a garment to wear only once, they should rent it instead of buying it. However, casual clothes should be purchased instead of rented.
The rental business model’s potential to lower the ecological footprint depends on changes. Innovations in logistics, such as localised warehouses and carbon-natural shipping to mitigate transportation emissions or collaboration between rental platforms and other sectors, such as renewable energy providers, could further reduce the industry’s footprint and enhance its environmental benefits.
Furthermore, its sustainability is connected to consumers’ intentions, behaviours, and habits. People commonly rent clothes to increase wardrobe choices rather than replace normal purchasing. As a result, renting doesn’t prevent the production of new products or waste but slows it down.
The consumer’s perspective
Although most clients don’t know about the ongoing issues, platforms like Nuuly or Rent the Runway share information about their sustainability efforts, which pays off. Nuuly has a strong retention customer base: nearly 45 per cent stay after 12 months and 40 per cent after 36 months. It is solid evidence of its commitment to creating gratifying customer experiences, forging lasting relationships and helping them maximise their subscriptions through ongoing engagement.
Despite the current issues, the rental fashion market is blooming because customers experiment with new styles, access luxury brands at a budget-friendly price and refresh their wardrobes while saving money. Nuuly’s exceptional growth and the success of various rental platforms highlight the ongoing shift in consumer behaviour towards circular fashion. Nevertheless, to maintain its success, the platform will need to improve, innovate and pay attention to user feedback. In the next five years, customers will become increasingly aware of its environmental impact and will expect more efforts toward achieving a sustainable future.
Greener alternatives to rental fashion
For shoppers who seek more sustainable options, here are some suggestions:
- Second-hand purchases.
- Repair and upcycling.
- Clothing swap or sharing platforms.
- Capsule wardrobe.
Further reading: Surprisingly affordable ethical clothing brands from Canada.
