When Flyrobe, the fashion rental service received venture capital funding and raised US$7 million in two rounds from Sequoia Capital, IDG Ventures and Tokyo based GREE Ventures, the Indian retail sector took notice and saw an opportunity. Globally, earlier this year, Rent the Runway entered the unicorn club with a valuation of US$1 billion with Alibaba Chairman, Jack Ma investing in the company.
These developments are leading to the emergence of a new market category – fashion rental.
The service is targeted at men and women who have disposable income but not enough to buy new clothes for every single occasion, clothes which they will probably wear just a couple of times. The fashion rental service caters to customers who love to dress up but believe that spending an enormous amount for a one-time-wear is a waste.
Aimed at fashion forward, social media savvy, well-traveled youth is The Clothing Rental. Shilpa Bhatia, Founder, The Clothing Rental says, “Today, people care about being presentable and looking well groomed. At present we are offering services to age group 15 to 60 years. If the market is lucrative, we might venture into the younger age bracket too. In future, we believe, we will be catering to an even wider range of demographic.”
Stage3, a company which focuses on millennials, caters to fashion lovers who are inspired by celebrities and media feeds. “Whether it’s setting trends or simply following them, our customers use clothing to express their identity. They lead an active digital life across various social media platforms and have an active social life as well,” explains Sanchit Baweja, Co-Founder and COO, Stage3.
Ease of online retail is an accepted fact. The rapid growth in Internet penetration, growing popularity of online shopping portals and advancement in mobile internet technology has helped the growth of online fashion rental market.
Growing at CAGR of 10.6 percent year-on-year, the Indian fashion rental market is touching Rs 12,000 crore, says Aanchal Saini, Co-Founder and CEO, Rent It BAE.
“We are increasingly moving towards shared models, which call for switching to renting and borrowing instead of sticking to the archaic models of ownership and re-selling at tarnished rates. Millennials today want a fancy lifestyle and do not believe in ownership. Fashion is one such industry that is showing signs of shifting away from ownership. This shift is completely disrupting the industry and our relationship to clothing,” she states.
Growth Drivers
According to Saini, fashion rentals have been in the country for a while now but largely in an unorganised manner. “However, over the past few years the tables have turned drastically with renting portals moving into niche labels and brands, having a mixed variety of fashion categories including dresses (from bodycon to sequin to casuals), work formals, ethnics (lehengas, sarees and more), jewellery, handbags, clutches, sherwanis, Indowesterns, sunglasses and more. You may rent out the latest fashion trends. The market is maturing and there is tremendous potential in this hardly explored space,” she says.
She further explains that with increase in internet penetration, e-commerce has witnessed a massive boost in the way business is done. Also, owing to the increase of social media influencers, consumers today have openly switched to renting from the old-fashioned buying.
“Nobody wants to repeat outfits today. The idea is pretty much impossible. Aside from this, consumers religiously follow bloggers, influencers and celebrities, all of whom play a major role in establishing fashion trends and everyone wants to crack celebrity style or look,” she says.
Stage3 has noticed an increasing pragmatism amongst customers, where they are embracing fashion rentals not just to flaunt a designer label but also because it’s a smarter way to go.
“Once they grasp that, they open their minds to the idea of fashion rentals for more low-key events as well. So, in addition to lehengas, sarees and gowns, we will bring in statement pantsuits, structured jackets, tailored dresses that will be great for workwear,” says Baweja.
“We’ve partnered with leading designers from across the country and are adding to our inventory from international designers as well. In addition to already-established designers, we also tap into young designers that aren’t as well known, acting as a discovery platform for them,” he adds.
Rental Model
Rent It BAE offers a plethora of brands and designer labels at 10 to 15 percent of the retail price. The product offering includes westerns, ethnics and accessories. It caters to on-demand rentals [4-days or more] and monthly fashion subscriptions. It partners with designers and customers who own A-list designer labels and share rental revenues with them. Its key clients comprise of men, women, media houses, photographers, make-up artists, bloggers, tourists, NRIs, etc.
The Clothing Rental buys products based on current trends and dominating demands. The rent is based on 25 percent of the retail price. “As a standard, we must rent a garment 6 times before we turn profitable. We need 4X rentals to cover just the cost of the product and then we have other expenses like laundry, stocking, rent of space, salaries, marketing, product shoots, etc., those are costs that we try to cover in the next 2X; it’s only when we cross the sixth rental that we start to make a profi t,” explains Bhatia.
Another fashion renting portal, The Stylease, offers high-end designer outfits and jewellery for men and women. Usually available for a 4-day period, the portal relaxes these norms for a wedding, allowing up to 8-days’ rental. The garments are custom fi t along with a network of established stylists who help curate a complete look instead of just renting an outfit. It is the only rental platform that ships pan India with no cap on pincodes. All logistics such as dry cleaning, marketing, photoshoots are handled by them.
The Stylease either buys apparels straightaway or ties-up with owners of high-end garments on a profit-sharing model, where the owner receives 30 to 50 percent of the rent of each garment. It also has its own in-house label, Stylease Exclusive that rents one-of-a-kind exclusive garments. The average price point is between Rs 4,500 to Rs 6,500 for a 4-day rental.
Challenges
Jheal Shah, Founder and CEO, The Stylease, says that the Indian market is just getting started with fashion rental. She says the cause of slow pick-up of the business is people’s pre-conceived notions about rental clothes. She feels in India people look down upon those who are unable to afford high-end designer clothes.
“It is sometimes hard to educate customers and make them realise that this concept exists in the first place,” she says.
Baweja further adds to this saying, “India is an ownership driven country and the biggest challenge faced in a business concept such as rental is to create a behavioural change among consumers. There is a certain degree of social stigma attached to renting when it comes to Indian consumers as fashion has come to represent one’s personality, aspiration and one of the biggest status symbols. Their skepticism around hygiene, self-esteem issues, peer-pressure are few of the biggest challenges to break.”
“Educating the market with the newfound ways of renting as against buying was a challenge we faced in the initial months,” Saini also affirms. “When you introduce a new concept, the early adopters embrace the new processes. Later the resistant population joins in, and, under the right conditions, there is a viral cascade of change. At the moment, for fashion rental, you can say that the resistant population has started to join in. Changing the world is always disruptive.”
Shilpa Bhatia too says, “The biggest challenge is convincing the client to shift his/her mindset. If the consumer is open to the idea of renting or wearing a pre-used product only then can you make progress. It’s a process of delayed gratification.”
“Globally renting or buying gently used is not considered a bad thing, however in India we have a certain mental block against wearing somebody else’s worn clothes. People prefer fresh pieces but once they realise the value of the product and the nominal price they pay for temporary purpose, the mindset changes. India is in nascent stages for fashion rentals, but we seem to be open to the idea,” she explains.
Another challenge is ensuring the right fit for every customer besides concern for care-and-handling. “Since they may not be able to try the apparels in advance, consumers worry about renting and wasting money, but we take care of that with offering alterations and customisations with every outfit,” says Shah.
Opportunities
Just a decade ago, renting clothes was limited to occasion wear but as businesses transformed, rental became the new buzzword in retail.
According to Saini, without a doubt, occasion wear is a huge market foranyone doing business in ethnic wear, especially during wedding seasons. “But ‘everyday fashion’ rentals has also picked up pace in India just like the West,” she says.
Rent It BAE is the first one in India to introduce unlimited fashion subscription for women to have access to a rotating wardrobe for everyday fashion needs. “Be it westerns for work, party, vacation, date, bags or other accessories, we have seen a good number of subscriptions from users in Delhi-NCR. As consumers are becoming price conscious, both men and women are reaping benefits of the clothing rental options and there is a huge opportunity to grow up and forward,” she shares.
“The segment that does really well is wedding clothes for family of the bride including cousins,” says Shah. She also feels, the high-end designer wear has the highest margins, but casuals will deliver highest turn due to low value of rentals as well as the recurring nature of how often one wears casuals. “In future, I hope, we can expand our market to casuals as well for men and women as well as expand into specific categories like maternity and kids clothing.”
“Occasion wear and designer wear is the low-hanging fruit at this point, but looking at it from a sustainable point of view, fashion rentals should be embraced across the wardrobe – be it workwear, partywear, casualwear, etc. We’re bringing in statement pantsuits, structured jackets, tailored dresses that would be great for workwear,” says Baweja.
Justifying the rental model, he explains, “We’ve grown so accustomed to fast-fashion that we tend to overlook its hazardous effect on the environment. The rental business allows one to keep up with fast-fashion without causing much environmental damage.”
The Road Ahead
With fast fashion going strong, in the next few years the clothing rental business will definitely pick up and in a few years, it will be a common concept.
“Right now, we have many players in the market, all vying for the same pie. Over time some will burn out and some will sustain. Renting will give rise to secondary retail industry, which is the pre-owned/ second-hand trade/ shared closets and more. Eventually the main stay retail and secondary markets will co-exist,” believes Bhatia.
Shah says till recently, there was no one doing marketing for renting clothes in India. There were small local shops from where one could source costumes, but no one was renting designer pieces at all. Since then there has been a sharp rise in the rental business due to increased awareness by several companies vying for consumers in the same space.
“In the last 3 to 4 years we have gone from people looking down at clothing rentals as wearing used garments or not being able to afford clothes to a more sensible clothing option. People today consider rentals as a viable option to buying garments due to limited storage space in metros as well as reducing discretionary spending among the millennials. People are also becoming more environmentally conscious and don’t want to buy something they don’t have use for over and over again. In the future I do see an increased uptake in rentals, not only for clothing, but in other aspects of our lives as well,” she says.
“We strongly believe that fashion rentals are the future of fashion. We are living in an era where trends change in a nanosecond and shoppers don’t want to repeat outfits they’ve been spotted in. Millennials are embracing the culture of sharing economy across verticals and fashion won’t be behind. Renting fashion is convenient, cheap and accessible and fulfil the desire of shoppers of having something new to wear every time,” concludes Baweja.
