A growing segment of fashion-forward millennials is adopting a new way to shop for clothes. The increase of closet-sharing apps and rental services, including Rent the Runway (RTR) Unlimited and Poshmark, exemplifies the “no-ownership” consumerism trend characteristic of the millennial generation.
By definition, a “shared economy” is a system that facilitates the sharing of underused assets between individuals. Collaborative consumption, however, accounts for the shift in consumer values from ownership to access. For the consumers who want an endless wardrobe and designer labels, collaborative-consumption provides an alternative to traditional retail by allowing its users to share, rent, lend, and swap for clothing like never before.
About 60% of millennials prefer renting versus owning goods, according to a 2013 survey from the Organization for Economic Co-Operation and Development. “The value proposition of borrowing and trading clothing is rooted in their ability to leverage their wardrobe investment,” explains business strategy consultant Neeta Singh. In other words, people can finally have it all, without buying it all. The shared-economy has revolutionized transportation, hospitality, and music industries, but is the ripe opportunity in the fashion world next? Although some millennials are opting to pay for rental access or pre-worn clothing, traditional retail is unlikely to go out of style.
It’s 1PM at the Ralph Lauren corporate headquarters in Times Square— lunchtime. Claire Yingling, the blonde-haired, blue-eyed associate merchandiser for the Polo line pulls out her home-packed red quinoa salad and logs into her RTR account. She’s wants a new Elizabeth and James blazer for a business conference next Thursday. As an RTR Unlimited subscriber, she doesn’t worry about the cost. She chooses, clicks, and orders. Within two days, her selection will be at the door of her fourth-floor walk-up in Murray Hill.
RTR, which started by renting black-tie gowns, now offers a rental service for business-casual clothes too. For $139 a month, subscribers rent three designer dresses, tops, skirts, or accessories at a time and keep them as long as they want. “It’s more bang for my buck,” says the 25-year-old who formerly shopped at H&M. “I have access to the clothing I can’t afford.” For millennials in a career that requires them to dress on trend, services like RTR are a necessity.
“Customers have embraced a ‘rent vs. own’ mentality to gain access to the items they covet but can’t afford to buy,” says Singh. “The rental economy is part of a growing, post-recession movement to value experiences over possessions.”
Fashion on loan also allows experimenting with new looks. About 40% of millennials like to share because it gives them the opportunity to try new products and have access to more options, according to a poll done by Penn Schoen Berland.“Millennials crave ‘discovery before ownership,’” says Singh. “Being able to return clothing makes it easier to try new styles without being stuck with something that may not be right.” Finally, people can wear a skirt with a pineapple on it without actually buying it.
Jordana Buring, a 23-year-old who works in party planning, loves ordering one-of-a-kind statement pieces she wouldn’t want to invest in. “My wardrobe used to be all black,” says Buring, the Connecticut native with curly hair. “Black is safe. Now I can try funky accessories I would never buy in the store.”
RTR Unlimited will account for 20% of the company’s total revenue this year, which is larger than $100 million, according to Forbes. Within three years, CEO of RTR, Jennifer Hyman, predicts that revenues for clothing subscriptions will surpass the dress-rental business.
The clothing rental economy thrives in a niche market of fashion-conscious millennials who can afford to pay the extra cost for renting. Many millennials have grown up with parental support and relatively comfortable lifestyles, but approximately 20% of American millennials living in poverty have not been as privileged, according to a report by the U.S. Chamber of Commerce Foundation. Sometimes all their money is spent on shelter, food, and education.
Even if people have the dough to blow, having on-demand rental clothing can be perceived as a luxury service. 27-year-old Maggie Feldhiem can afford the cost, but finds the concept unnecessary. “I don’t need trendy clothes every season,” says Feldhiem, who would rather allocate her money towards her savings. While collaborative consumption in fashion could be seen as a looming inevitability, it only appeals to those who care enough about their wardrobe. There will always be millennials like Feldhiem who prefer to spend their cash in other ways. Feldhiem also stresses that renting online comes with it’s own challenges of psychological anxiety as well. “I never know how or if it will fit,” says the curvy Chicago native.
In addition to renting, the rise of thrifting through “closet sharing” is driving the collaborative consumption marketplace. The number of consignment stores selling consigned or used clothing has also increased by 7% in 2010 and 2011, according to a report by First Research.
The explosion of consignment-fashion apps makes selling used-clothing easy, accessible, and social. Poshmark, an app where people sell used goods including high-end brands from Louis Vuitton, Prada, and Gucci, has recoined the term “consignment” with “closet sharing.” The “closet sharing economy” is about liking, commenting and sharing your style by social networking through the application. Instead of paying for something and tossing it when you no longer want it, the swap and resale options give people the ability to extend the value of their wardrobe.
By connecting customers and like-minded shoppers that want to share closets, PoshMark brings the social nature of shopping to the digital world. Rachel Love, a 25-year old production assistant, sells her old cashmere sweaters on the app, for 30-50 bucks apiece. Sometimes, users leave comments asking to trade pieces directly. “Once I swapped an old Saint Laurent card case for a Louis Vuitton wallet.”
Poshmark sold more than $200 million worth of merchandise in 2015, according to The Fashionista. The company boasts 700,000 sellers, many who have built lucrative businesses out of their Poshmark boutiques.
About 35% of millennials rely on product recommendations from social networks, according to a report by McKinsey. Rachel Botsman, who wrote, “What’s Mine Is Yours: The Rise of Collaborative Consumption,” discussed in her 2010 TED Talk how the importance of social interactions creates a community feeling that drives engagement.
While some millennials have reinvented the shopping experience through collaborative consumption, traditional retail isn’t going anywhere. Emily Donahue, 23, engages in collaborative consumption in a completely different way. The Chicago transplant living in Colorado sells old pieces on Poshmark only to go shopping. “I take the money to shop in my favorite stores for new clothing more relevant to my life in Denver.” That said, not everyone buys into the idea that retail will cease to exist. “Sharing clothing” could just be seen as just a trend!