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May 28, 2021

Clothing Rentals: Can It Be Done?

By: Peter Gregory

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With clothing rentals sites like Hurr Collective and HireStreet gaining ground, more and more designers are looking at hiring out, rather than selling, their work. It’s a big trend at the moment, but can a clothing rentals business really  work in the long term? Is the ‘dress hire’ business model really the antidote to fast fashion, and — in a post-pandemic economy — is it even safe?

This week, we take a look at how the clothing hire business works. We investigate the different types of clothing that the ‘hire’ model works best for, and see how it can be applied to your business. 

Clothing Rentals: The Latest Industry Innovation?

The idea of hiring clothes isn’t new. In the weddings industry, customers have been hiring formal wear from established companies like Moss Hire for decades. With the rise of ecommerce, a renewed focus on sustainability and changing attitudes to access versus ownership, businesses are now looking at whether clothing hire can work outside of the formalwear sector. 

Management Consultancy Bain & Co recently released their ‘Vision of Sustainable Luxury’ report, which suggested that the profits in a luxury clothing hire business could be as much as 41% per item by 2030 (see the full report here). Business magazines like Fast Company have published articles on what it might mean from a sustainability perspective (link here). Here in the UK, a handful of rental sites have sprung up that allow cash-strapped fashion fanatics to try on a beautiful range of garments, then return the item in an environmentally-friendly way. 

We can see how, if you want to enjoy a full two-week holiday wardrobe without spending a fortune, or if you’re going away on business meetings for a few days, a clothing hire business model could work for you. If you absolutely adore fashion and you want to experience the finest designs for a fraction of the price of ownership, then a clothing rental club could be a great indulgence. The same goes for anyone who is trying to live small or watch their carbon footprint.

But is it really going to work for everyone? Can rentals become the new normal for the fashion industry? Nobody is going to want to rent a pair of pre-worn yoga pants or baby clothes … are they?

Sectors Where Rentals Works Best

Our bet is that the rentals niche will grow in the next few years, but that traditional retail will still be the main way that people pay for clothes. It all boils down to consumer demand. There are times when a customer wants to own clothes and then there are times when they’re willing to just access the clothes for a short time. Here are four areas where we see clothing rentals growing in the next few years:   

Events: There are times in life where we need to look our best for a short period of time. Weddings are the most common example of this, but formal dinners, local awards and other big parties all count, too.  It’s not unusual for men to hire a morning suit or tuxedo — it’s already happening — but we see events becoming a growth area for the clothing rentals sector. 

Luxury: The expensive ‘if money were no object’ items that we’re used to seeing in magazine advertisements are probably a prime target, too. Sites like Bag Butler and Cocoon already let you rent the handbag of your dreams for a limited period of time, so we think it’s perfectly reasonable to assume that it could work for other premium items like designer coats and dresses. 

Workwear: As more and more of us work from home, the time spent in face-to-face meetings and business presentations is either going away completely, or those face-to-face sessions are getting compressed. If you know that you have a company retreat or conference coming up, you can hire the very best outfit just for those few days at a fraction of the cost of buying a whole new wardrobe. 

Tourism: Many of us already rent clothing when we go away on holidays. Ski fanatics will often rent a couple of extra pairs of salopettes and an extra jacket or two, along with ski boots etc., when they’re hitting the slopes for a few days. The same goes for climbing and scuba holidays. With some of the newest clothing hire businesses offering 14-day and 16-day hire windows, it’s now possible to rent a whole new wardrobe for your holiday, even if you’re not planning on any extreme sports when you’re away.

How does clothing rental work?

Whether they’re offering power tools, bouncy castles or tuxedos, all hire businesses work in roughly the same way. The hire business invests in the very best kit they can afford, then rents this stock out, on a daily or weekly basis, to customers who only need to use the item for a small window of time. 

The renter gets to save money thanks to the pay-as-you-go nature of the transaction, and — as soon as the fees from renting an item exceed the initial cost — the business makes money. The business can also sell items that are approaching the end of their ‘rentable’ life, reinvesting the money into safer, cleaner and more up-to-date stock. 

There’s potentially a lot of money to be made in the clothing hire sector. We studied a lot of clothing hire sites for this article (scroll down for our ‘top seven’ list), and we discovered that a 4-day hire period could cost 16% of the Recommended Retail Price (RRP) of a garment. That rental fee isn’t pure profit — postage and cleaning costs will eat into every hire — but the thought of covering the retail price of a garment in a month or two is pretty tempting!

The risks of renting out clothes

Theoretically you can make a lot of money renting clothing, but you need to have a wide range of stock, in a wide range of sizes. Your stock needs to be in-demand, and it needs to be the kind of thing that someone wants to rent. If you’re making t-shirts that someone can buy outright for £20, for instance, the odds of a customer renting that t-shirt for a few days are probably quite slim. If, on the other hand, you have a bundle of amazing designer dresses worth hundreds (or thousands) of pounds, then there’s probably a good chance that you’ll be able to rent the item out. 

You need to find a lot of customers to make a profit. In traditional retail, every garment just needs one buyer. In the hire industry, each garment needs thirty or more ‘buyers’ who can rent the garment out before you make a profit. 

Garments can get torn, stained, lost or stolen, and you have to be able to foot the bill for those losses. You might need to run a deposit scheme or very tough terms and conditions, which can cost money just to get set up correctly. If you’re working by mail order, your postage fees need to be paid twice — once on the way out and once on the way back. You also have a hygiene bill; every time clothes come back to you they need to be sterilised and cleaned, ready for the next customer. 

Having said all that, there are businesses out there that are running a successful rentals system. Just take a look at the next section!

Clothing Rentals in the UK: Who’s doing it well?

A number of websites and apps are offering a rental or resale service to UK consumers. If you’re interested in clothing hire as a business model, it’s worth taking a look at each of the sites below and learning how they do it:








Setting Up Your Own Clothing Hire Business 

If you want to set up your own clothing rentals business, there are some up-front costs to consider:

Distribution: You might be able to run a bricks-and-mortar rental service, but for most of us, online is the way to go. You need to be able to ship clothes to your customers at top speed (ideally overnight), and you need to get those clothes back at top speed (again, ideally overnight) so that you can sterilise and/or repair the garment in time for the next customer. 

Stock: Multiple sizes are important.You need to know that any size or shape of customer can come to you and choose from a wide range of beautiful garments. That means that you need at least one of each size of each garment available for hire. 

Website: The rise of ecommerce over the past decade has meant that most of us can set up some form of online shop in a matter of minutes. The rental model doesn’t have the same range of options, however. You’ll need to shop around to find a software solution that allows you to manage your rental inventory safely and effectively. You should be able to hold data on multiple renters in a data-compliant manner, and you should be able to see what your stock levels are going to be like at any point in the future. 

Maintenance: Storage and cleaning costs are going to be high in this kind of business, so you have to think about this from day one. You need a reliable, thorough laundry partner that can respond quickly to rush jobs and keep your stock looking brand-new. The same goes for your storage facilities. You need an easy-to-reach warehouse where you can get clothes out into nationwide circulation really really quickly. 

That’s it! I hope this guide has given you food for thought. The fashion industry is one of the biggest contributors to greenhouse gases in the world, so it’s great to think that there’s a sustainable answer in the form of a rentals model. If you have any questions or ideas, please let us know!

Thanks for reading!


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