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    Opinion

    A closet in the cloud Column retail marketeer René Repko

    Around the globe people become more aware of the trade off between buying fashion items, wearing them a few times, disposing and what it does do our planet. Many new (online and physical) retail platforms have started concentrating on second hand items and renting out. Some even say that the second hand fashion market will outgrow fast fashion by 2028.

    Second to oil, the clothing and textile industry is the largest polluter in the world. The carbon footprint from textiles production in 2015 was greater than the CO2 equivalent of international flights and shipping combined. New circular techniques are being used in the production processes. But in a world where people are more conscious and aware of what and why they buy, it is normal that new retail concepts enter the market place. Enter, second hand and rental.

    Resale and rental are changing the script

    Fashion is big, really big. The world market is estimated around $1,3 trillion, bigger than Russia's GDP. The market of resale fashion is tiny, but  eveloping quite fast. From just thrift stores and buying on platforms as e-Bay, to a vast array of new brands. Resale apparel used to be the domain of bargain hunters, some were treasure hunting. Now early adaptors are browsing the many new (online) platforms entering the market place.

    Why own stuff?

    There are multiple drivers for this massive shift. There is the obvious penetration of social media and the importance of influencers. Female fashion buyers are increasingly savvy on updating their wardrobes to the latests crave of the catwalks. With real buying power mostly being flat, in many economies, this obviously creates tension. Add the increasing consciousness on sustainability and the fact that a new perception has been growing on possession and ownership, it's easy to see why things are moving. Elizabeth Cline, author of the Conscious Closet: 'Resale offers the wardrobe-rotating fun of fast fashion without the guilt or waste. By driving preferences away from disposable fashion towards higher-quality clothes, reuse is a boon for our personal style and the planet.'

    Rental is different

    The US apparel rental market is relatively small, estimated to grow to $4,4bn by 2028, just 1% of total clothing sales. But it grew 24% in 2018 compared to 5% for the wider clothing market, GlobalData shows.

    These rental platforms are buying clothing wholesale from brands, some are introducing revenue sharing models allowing brands to upload items, the platform taking care of cleaning and delivery in return for a share of revenue. Rent the Runway redefined the fashion rental market already in 2009, starting with one offs like a dress for a gala. Many platforms have evolved to a monthly subscription model and are positioned mostly upmarket. Some even IPO-ed recently, because investors love the recurrent revenues of the subscription business model.

    Some examples

    The diversity of brands and formats serving second hand and rental customers is immense. Round Two in the US is a resale outlet, with only two stores.

    Vintage Brands store in Monnickendam (Netherlands) is doing the same as Round Two, though aimed at a different customer. Yearly over 700 women offer their personal fashion and accessory items in consignment in this cosy store. Loyal customer find an extra reason for visiting the store: the social aspect is important. You can sit down and read a magazine, drinking coffee.

    In the US the two dominant platforms are Rent the Runway and the RealReal, both very successful and growing fast. Rent the Runway (valued at $1bn) is a fashion subscription platform offering premium and exclusive fashion and accessories brands. It claims 10 million members. Its 'unlimited plan' at $159 per month will offer unlimited access to as many items as a customer wants. RtR merchandise arrives in a garment bag with a prepaid UPS label for returns. Next to its platform they operate 5 stores and multiple drop off locations, but it is essentially a technology (and logistics) company. With the data being used both on the returns and via its 'virtual closet' RtR is perfectly positioned to personalise its offering.

    Meanwhile high street brands as Scotch & Soda, Rebecca Taylor and Urban Outfitters (with Nuuly) have started renting out items in a comparable scheme as RtR. H&M could rethink it's $ 4 billion unsold stock and put in on a rental platform. They just announced a limited rental service for its new premium collection from recycled fibers in a Stockholm store. Express, a fashion mall brand with 600 stores in the US, started a rental service with a $70 monthly subscription. Ikea even launched a furniture rental service earlier this year.

    Rental and buying secondhand fashion is beyond icky

    So things are definitely moving. This business is beyond the icky feeling people used to have with wearing items somebody else had worn before. It's still early and it is probably harder to persuade consumers to hire affordable apparel than catwalk creations, just because there are just too many cheap alternatives available. Some platforms are growing too fast, causing some hiccups. With young and conscious consumers growing up and becoming more influential this will change. The sharing economy is here to stay.

    Key data US market

     
    • The US resale market will grow from $7bn in 2019 to $23bn in 2023
    • Resale apparel has grown 21x faster than the retail apparel market in the last 3 years
    • 2/3 of all women shoppers have bought or are willing to buy resale
    • Second hand, rental and subscription are projected to be the top 3 fastest growing categories in the 2019- 2028 timeframe
    • In 2018 the US fast fashion market was $35bn, compared to $24bn for second hand. By 2028 the second hand market will have grown to $64bn, whereas fast fashion's growth is projected at $44bn
     

    René Repko is a succesful retail marketeer. He advised renowned Dutch brands as HEMA, Rituals and Action and has strong opinions on retail.

     

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