Is the party for fashion rental over?

Fashion rental was once touted as the industry’s next big thing, but has the lustre faded, asks Anna Moloney

In case you haven’t been keeping up with your campaign calendar, we’re currently in Secondhand September, which means you might be feeling more guilty than usual about your fashion shopping habits. Launched by Oxfam in 2019, the campaign aims to promote a more sustainable fashion cycle by encouraging people to buy used items (or “pre-loved” ones, as fashion marketeers prefer to say). But while fashion resale is no new trend, fashion rental has quickly become one of the buzziest retail sectors in the last five years.

First gaining momentum in the UK around 2018 with the launch of online fashion rental platforms Hurr and By Rotation, the fashion rental market has only grown in popularity since. Touted as the future of fashion at the time due to its twofold appeal to customers (budget-friendly and eco-friendly), Rent the Runway chief executive Jennifer Hyman’s ambitions were boundless: “I want to put H&M and Zara out of business,” she told Bloomberg in 2017. Scrap that: “I don’t want to… I plan to,” she corrected.

Fast forward to 2024, however, and Hyman might be feeling less confident, with H&M and Zara having gone nowhere. On the contrary, annual revenues at Zara-owner Inditex have climbed by €10bn in that time (from €25.3bn in 2017 to €35.94bn in 2023). Revenues at Rent the Runway are not to be scoffed at (it reported annual earnings of $298.2m last year), but the business is not exactly in good health, with shares currently trading at a 97 per cent discount to their 2021 IPO price and the company forced to lay off 10 per cent of its corporate workforce at the beginning of this year.

The rise of rental

But such optimism from Hyman was not unfounded. The last decade in particular has seen a wider reckoning of the public consciousness with the cost of fast fashion, leading to many consumer-led shifts to more sustainable fashion practices, particularly among millennials and Gen Z. Rental may have been one of the more novel ones, but it suited the zeitgeist in the late 2010s. “As a millennial I’ve never questioned shared ownership, at that time we were starting to rent out homes, our cars and fashion seemed such an obvious opportunity,” Victoria Prew, founder and CEO of major player Hurr, told City A.M. And indeed, furniture rental, art rental, even ‘tablescaping rental’ have all had their alleged booms since. 

Furthermore, in the fashion world, mainstream names were quick to get in on the action due to the evident demand. Oxford Street stalwart Selfridges, for example, began partnering with Hurr in 2020 and still has an in-store popup where customers can swan past the rails of four-digit price tags and pick up the same dress for a fraction of the price. They were only planning on wearing it once anyway, so it’s a win-win. 

Ella Gould, Selfridges’ sustainability chief, said popularity for the service had accelerated in the last few years, while also extending Selfridges’ reach beyond its usual customer base, with almost 20 per cent of its rental customers last year new to the department store. The rental industry can also pitch itself as offering a boost to designers themselves, whose wares can also be introduced to a wider base through the platforms. Arguably for some brands though, such an offering may prove too popular. The Vampire’s Wife, for example, a brand made iconic through many celebrity supporters including the Princess of Wales, remains one of Selfridge’s most popular rental brands, though the business itself went under this year. 

Harrods has also jumped onto the hype, having its own partnership with rental platform My Wardrobe HQ, while less premium brands such as M&S and, as of yesterday, All Saints now also offer rental services.

But does it make money?

That’s all very well, but is the model actually good for business? JDM Retail Consulting analyst Jonathan de Mello said the industry naturally took a “huge hit” during the pandemic, due to rental’s dependence on occasion dressing, but was positive the industry was in good shape again. However, as platforms like Rent the Runway have shown, it’s not so easy being green.

Part of the problem, experts have suggested, lies in the model rental platforms choose. Those like Rent the Runway, for example, which own all the stock they rent out, take on more risk, while UK platforms such as Hurr and My Wardrobe HQ have favoured peer-to-peer models instead (meaning fewer storage and cleaning costs). Indeed, My Wardrobe HQ chair Jane Sheperdson told Drapers she considered the decision not to buy stock as “imperative to becoming profitable”.

Logistic costs pose another challenge, both commercially and environmentally, with transporting dresses to and fro to be with customers for one to three days not the most sustainable in the long term. As a result, many platforms are now looking instead to longer-term rental offerings and shifting their focus from occasionwear to everyday wear. Hurr, for example, said 40 per cent of its rentals last quarter were for its new longer-term rental offering Flex, while more casual items were also becoming increasingly popular (blazer rentals, for example, are up 110 per cent this month).

Likewise, Cocoon Club, a membership-based service which allows customers to borrow different designer handbags every month, has capitalised on a longer-term rental approach, while its focus on handbags, typically more durable than silk dresses, mitigates another key issue for the sector: the wearing out of clothes. The company said profit by this model was more of a “long term game” and required a good eye for identifying high-yield handbags, with models chosen based on an expected life of 36 months and an exit cost (or resale value) of around 90 per cent of the original payment.

London-based startup The Cirkel, which is primarily a fashion resale platform, also said it had found success through its ‘Cirkel Back’ feature – an option which allows customers to sell back their items at 40-70 per cent of the item’s value within six months of purchase. Founder Eliza Batten said this feature was currently proving particularly popular with customers cycling back their summer wedding guest dresses.

So the party may not be over for fashion rental after all, it may just take a little tailoring.