Retailers using Resale, Rental and Subscription Services to drive Sustainability

In the world of fashion, circularity involves many ways to extend the lifecycle of our garments. An emerging avenue for collaboration is the partnership between luxury brands and retailers and rental and resale platforms. The working relationships between the entities are rapidly growing, and the customers are very excited.  Thus, traditional fashion brands are open to developing deeper relationships with rental platforms in efforts to rent out their garments and provide conscious customers with sustainable options.

However, is this model actually sustainable?

Why rental platforms?

As mentioned, brands, especially traditional brick & mortars, are looking to get more out of their inventories. Their objective is to introduce customers to a truly circular model, while generating new streams of revenue. Many brands have entered the growing markets of fashion rental and resale. As upcoming generations of shoppers emerge and current customers’ consciousness grows, retailers believe that online rental and resale services will provide shoppers with more sustainable choices.

During the pandemic, people had no choice but to stay home, among all their things.  So many of us realized that we had lots of stuff, but not as much space for it.  There were record spikes in people donating and decluttering their homes. Also, during this time, many conscious fashion advocates encouraged consumers to “buy less, buy better”.  In theory, this idea is phenomenal. If you buy better quality items, you won’t have to shop as often.  However, we are all know the magical release of dopamine we experience when shopping and/or acquiring new things.  To feed our appetite for newness, the online fashion rental market catapulted.  The US garment rental market, which represents less than 1% of the total clothing market, grew 24% during this time.  This industry captured value creation and configurations to renegotiate the perception of new.     

Rent the Runway

As one of the first direct-to-consumer online fashion platforms, Rent the Runway (RtR) started in 2009.  During its early years, the company purchased large wholesale orders from designers and place items on their platform for rent.  Shortly thereafter, brands took notice – they wanted in on the partnership.  They realized the possibility of optimizing their inventory, as well as giving customers more ways to shop.

 RtR offers big brands, designers and retailers two partnership program options.  The first is the [co-manufacturing/co-production program].  Designers can use RtR’s data and metrics to produce specialty collections based specifically on shoppers’ demographics.  The Designer Collective (Derek Lam, Jason Wu, Victor Alfaro, Prabal Gurung, and a few others) adjusts design styles, colors, and materials according to information provided by RtR. 

 The second partnership program is the [revenue sharing model].  Here cost-per-wear determines revenue.  The brands provide RtR for the products at no charge, and splits revenue every time a piece is rented.  Brands included in this program are Ganni and Ralph Lauren with up to 200 other brands projected to join this year.  These luxury brands participating in this model hope to widen their market and reach customers who can’t splurge on luxury items.      

RtR’s model allows rentals from between four and 20 days, with clothing conveniently delivered to customer’s home.  

BORROW

BORROW is digital innovation technology integrated directly into a retailer’s e-commerce website.  BORROW is powered by Caastle, a company whose innovative focus is providing retailers with the tools to transition from “clothing as a product” to “CaaS, or clothing as a Service” models.  The technology handles logistics, shipping and cleaning for retailers.  With just the click of a button customers are offered a transactional rental option instead of buying.  Through a partnership with BORROW, retailers offer their customers a prepaid rental period. This is because they can wear their rented items as many times as they would like.  During this rental period, daily fees are applied as a discount towards the items that the shoppers may use towards the buy price if they decide to keep the rentals.  If daily fees are equal to the purchase price, there is no penalty for the shopper.    

Rebecca Minkoff, Vince, Rebecca Taylor and Derek Lam are just a few of the first luxury retailers to partner with CaaStle and feature BORROW.

Rental Subscription Services

We’ve established the many sustainable benefits of digital rental platforms. We’ve also established how they reduce waste caused by the inexorable disposal of unwanted clothing, while furthering the lifespan of clothing appropriate for most occasions. Surprisingly, there is even more innovation and insights that provide consumers with cost-efficient and convenient alternatives to shopping without having to go out and shop.  Subscription services provide personalized experiences for customers by offering a variety of niche products mailed right to your address. These subscription services are extremely versatile with product customizations, and payment options. As the online rental subscription market becomes more visible, its value is also recognized by retailers and designers seeking partnerships. In 2018, the market was valued at $1 billion, and is expected to grow to a $2.5 billion in 2025.

Nuuly

Nuuly is a rental subscription service used primarily by URBN brands and their retailers’ private labels.  The platform allows customers to pick six styles to rent monthly for just $88.   Nuuly handles all cleaning and laundry services, and if at any time you would like to stop or cancel the subscription – there’s no additional charge with no hidden fees.

 Stitch Fix

There are over 200 million happy Stitchers in the United States and UK.  Stitch Fix has masterfully rolled a subscription-based personal shopper, home delivery service all up into one on its platform.  With Stitch, there are thousands of personal stylists who match the most suitable items for you based on your budget, style and size.  Customers pay $20 monthly for the service and receive a box full of fashionable “fixes”.  If they want to keep any of the items shipped with their subscription, the $20 monthly fee is applied toward that purchase. 

World of Resale

Reuse and redistribution are the realm of the circularity world that I dwell.  I have been reselling full-time on resale marketplaces like Poshmark, eBay, Etsy, Mercari and Depop for many years.  It’s very sustainable in extending the lifespan of garments, yet lucrative especially if your cost of goods is minimal.  Given that up to 10% of annual global emission stems from the fashion industry, circularity through resale is a more holistic approach designed to minimize pollution and waste.  This specific market is projected to scale up to $77 billion over the next five years by scaling businesses and increasing customer awareness. This resale sector is also driven by Gen-Z and some Millennials, who are the more conscious shoppers and digitally immersed of all generations. 

Types of Resale

• Traditional resale platforms offer peer-to-peer buying and selling of secondhand clothing with a social component. These platforms oftentimes promote in-person exchanges

• Brand enabled direct to consumer resale partnerships differ in that customers are able to shop directly via the retailer’s e-commerce site or in store. 

  • Nordstrom Rack provides pre-loved, pre-worn items for sell in their stores. These items are designed to reach customers who may be hesitant to sign up for rental or subscription services. 

  • Saks Off Fifth has partnered with Rent the Runway to sell their clothing on its website – discounting items for 85% off. This is suitable for customers who have cancelled subscription services due to recurring monthly cost in this inflated economy.   

Conclusion

As we conclude, it goes without saying that every coin is double-sided.  Even though rental, resale, and subscription services are environmentally friendly and convenient for shoppers, in the post-CoVid era, a substantial number of customers are returning to social events and prefer to buy new clothing. Luckily, the younger generations of shoppers are much more sustainable and seek access over ownership. Opting to save money by renting a luxury item over splurging, and risk crowding their closet real estate with rarely evening wear.  And as earlier mentioned, sustainability advocates are hopefully that all remaining generations will adapt to the philosophy of “buy less – buy better”, which encourages shopping for long-term investments which can always be reinvented and expanded upon with renting and shopping secondhand. 

The Fashion Act Bill Revised...what's new??

On November 18, 2022, an amendment and recommitment were entered into Consumer Protection for the Fashion Sustainability and Social Accountability Act ("The Fashion Act"). Previous actions included the bill being referred to Rules (Oct. 08, 2021) and to Consumer Protection (Jan. 05, 2022). The Supporters (including local industry leaders, union leaders, labor and justice organizations, academic institutions, advocacy organizations, and leading apparel industry brands and designers) of the Fashion Act have come together to strengthen the bill and offer even more clarity, which would ultimately increase the odds of the bill passing. Their overall goal is to comprehensively address social and environmental impacts, as well as achieve emission reductions and other supply chain improvements.

Several sections of the Fashion Act were revised. Specifications for water protection and chemical management were updated. Chemical mismanagement in the fashion industry's production is significant. Therefore, efforts to curb wastewater pollution from sites where textile mills are located are being implemented. Other updates will improve biodiversity and expand enforcement provisions. There is currently no binding and effective global accountability mechanism nor international law that holds corporations accountable for their involvement in human and environmental abuses.

Lastly, the updates to the Bill will offer more mandatory due diligence criteria and include brand liability for garment workers’ rights. Joint and several liabilities between fashion sellers and garment workers will be provided. The amendment will add labor protections, allowing garment workers to bring legal claims directly to brands for lost wages. The State of New York and the Attorney General will be tasked with developing regulations for companies to comply with. Companies found to be in noncompliance will have three months to remedy matters or face the possibility of being fined up to 2% of their annual revenue. The funds will be used to benefit the workers and the fashion community.

These provisions will provide further frameworks for the global fashion industry as well as place NYC at the forefront of corporate accountability. Although we have seen several brands and designers step up to the plate to do the right thing, brand self-regulation is not enough. Many businesses have found themselves at a competitive disadvantage, which has caused their costs to rise relatively.  Thus, the absence of legislation is wreaking havoc on the planet and enlarging the enormous environmental and social footprint of the $2.5 trillion apparel industry.

Because many companies are prioritizing their bottom line, wide-reaching legislation is necessary, and lawmakers are needed to prevent loopholes and misinterpretations. Hopefully, with this Bill and others that will follow, they will present stable expectations that will guide investment decisions, as well as offer ongoing incentives to industry players for cooperation and allowing companies to make long-term strategic plans.

Policy - Prevents Greenwashing and Meet Goals

A few entries back, I wrote about “greenwashing”.  We talked about What exactly greenwashing was?, Who does it?, and How it affects us as consumers?  We even talked about ways to avoid it or easily spot it in a business’s campaign or ads. However, in this post I want to touch on the importance of policy and the leverage it has with preventing greenwashing all together.  Policy helps to guide the actions and set guidelines, rules, and regulations for organizations.  It provides company leaders with a predetermined course of actions for managing issues, as well as articulating an organization’s values, philosophies, cultures and strategic goals and objectives. 

In terms of global climate impact, policy helps ensure social and environmental sustainability in the fashion and textile industry through reporting and traceability.  Policy aids in separating legitimate climate commitments from public relations campaigns, and present standards that are necessary to weed out “low quality” climate pledges.

Despite lagging Europe, US regulators are making small strides to tackle greenwashing with policy.  The policies are set in place to determine what governing entities will actually do or not do regarding particular issues or problems. 

• Here we’ve mentioned The New York Fashion Sustainability and Social Accountability Act aka the Fashion Act, and if passed, it would require disclosure of environmental and social policies, processes, and outcomes of US Fashion brands.  This piece of legislation would ensure compliance with global principles and guidelines set by the UN, ILO, and OECD.    

• In 2021, upon entering the White House, President Joe Biden promptly signed for the United States’ reentry into the Paris Agreement.  This would frame the beginning of public consultations that would begin the changes in reporting practices in environmental policies and initiatives.  Ultimately preventing the way companies and brands “embellish” their activities to disguise them as environmentally positive.

• Many states, and even the federal government, require sustainable solutions from marketers of consumer-packaged goods.  The Securities and Exchange Commission (SEC) specifically target ads; as well as scrutinize investment fund advisors who misinform “green” investors and shareholders with misleading data and product labeling regarding sustainability.  Recently, the agency proposed two rule changes that would prevent misleading and deceptive claims by US funds on environmental, social and corporate governance (ESG) qualifications and increase disclosure requirement.  These changes are introduced to require publicly traded companies to disclose how their climate change risks affect their business.  The call for transparency and disclosure by the SEC will encourage companies to provide honest and useful information on ESG matters and help tackle greenwashing.

In Europe, concrete rules and legislative measures are in place to address greenwashing.

• Agencies such as the Sustainability Accountability Standards Board, the Global Reporting Initiative, and the Task Force on Climate-related Financial Disclosures all require organizations to present data from financial and non-financial sources that show they are meeting standards. The gained information must be readily available to all shareholders.

  • The Sustainability Accounting Standards Board (SASB) provides a clear set of standards for reporting sustainability information across a wide range of issues, from labor practices to data privacy to business ethics. More specifically, international companies use the standardized discovery for reporting on sustainability in annual reports, financial filings, and company websites. 

• At UKCOP 26 in Glasgow, shareholders discussed initiatives that would set an international, unequivocal, and unified standard for reporting environmental targets, rather than relying on voluntarism. This would ensure consistent, reliable, and comparable labeling across companies globally. Thus, eliminating unsubstantiated assertions and confusing terms when reporting.

In conclusion, with the global adoption and integration of policies in the fashion and textile industries, this sector and its shareholders will be able to reach sustainability and net positive climate targets.  Policy isn’t necessarily policing, and it is indeed instrumental in achieving effective environmental communication from corporations to consumers.  This adds true value an makes significant impact to the planet.