Did Covid Crush Rental?
This morning I woke up to a piece in Business of Fashion titled Rental or Resale: Where should brands place their bets? It was well written with all valid points, but I felt compelled to share my opinion with Vikram, the articles author, on why I (obviously) believe the rental market is on the verge of getting hot. You can find Vikram's article here which is definitely worth reading.
Vikram, I enjoyed reading your piece on rental versus resale and fully appreciate the merits of nearly everything written. As the founder of Tulerie, a peer-to-peer clothing and accessory rental company, I follow both markets closely and recognize that my point of view isn’t coming directly from a fashion house perspective rather more from a consumer point of view.
I agree that resale provides a powerful gateway for first time luxury customers but I would suggest that rental does that even more so. To purchase a second hand Gucci dress from even the past four seasons, a secondhand shopper will be paying upwards of 70-90% of retail. Whereas the rental consumer can borrow that dress, while in season, for 10% of the retail price, thus allowing them to experience a greater variety of luxury brands.
You are right in saying that the secondary market supports the sale of new goods as the ultimate cost for the consumer being sticker price minus eventual resale, I have been shopping that way for years. However, our consumer goes a step further and views the ultimate cost as sticker price minus eventual resale minus potential rental income while she continues to enjoy the item. The Tulerie user understands that she can earn far more on current season items, thus puts them into the communal closet immediately upon purchase significantly increasing the chances of lowering that final ultimate cost and even possibly earning a return. This in turn makes these shared items even more valuable assets than second hand items. Further, those consumers who are purchasing second hand are often the ones who will be quickest to list their items into the rental pool. They are the consumer who wants to earn on their purchase.
I recognize that the clothing rental market is still a nascent industry but strongly believe that the potential is there, keeping in mind that resale used to be equally as small. Yes there have always been consignment stores, thrift shops and eBay played a roll, but it wasn’t until a financial crisis in 2008 that resale boomed and even then it took years for the stigma of resale to evaporate. We, at Tulerie, have seen a rapid increase in new renters and lenders requesting to join our rental community preparing for the end of this crisis. They have mentally committed to borrow more, buy better and buy more resale. Covid shed a new light on many consumers habits. They look at all of the clothes they bought preparing for summer of 2020 only to have them hang with tags still on and they finally recognize the wastefulness - both dollars and material - of always buying new.
We have also witnessed a tremendous rise in available items to rent during this last year of Covid. More consumers have come to see the value of renting AND reselling AND buying second hand. The rental and resale models are not silos. They can and do work in tandem. The brands benefit from greater accessibility and exposure. (Have any brands stopped to consider the potential revenue of lending past season clothes rather than burning them?) Consumers benefit from greater choice with less risk. And most importantly, our planet benefits each time an article of clothing is worn more than once.
So yes, you are correct when you say that the pandemic crushed the rental business, but I view it as only a minor setback. After listening to our community, I am confident that we are only scratching the surface and we continue to expect explosive growth. Once people are vaccinated, the cancelled events are rescheduled and leisure travel rebounds renting will soar. It will be reminiscent of the way resale soared after the economic crisis just over a decade ago.
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