Combining the promise of rental with the popularity of resale, new peer-to-peer lending sites could be fashion’s next disruptor.
As consumers adopt an entrepreneurial attitude to their wardrobes, and a sustainable “buy less, wear more” sensibility becomes the norm, peer-to-peer clothing rental sites could become a new disruptor to retail.
Sites are beginning to emerge that pitch themselves as the “Airbnb of fashion”. They allow members to list items for others to rent.
Two examples are Hurr Collective, which launched in March, and My Wardrobe HQ, which launched last month. Both offer members of their online communities the opportunity to rent out their own clothing, and to hire from others on the site. Focusing on womenswear, brands available include Rixo, Self-Portrait and Ganni.
Consumers’ buying mindsets change rapidly, and new business models focused on rental and resale are changing how the industry operates. Peer-to-peer lending sites have the potential to capitalise on the entrepreneurial spirit behind the resale boom, the “sharing economy” mindset of the rental model and the sustainable benefits of both.
Younger consumers are behind the rise of the so-called “sharing economy”, under which Airbnb, Uber and Spotify have soared in popularity as shoppers eschew ownership for rental. If emerging players in the sector can fuse these benefits successfully, they could shake up the industry.
A study by shopping centre owner Westfield in 2016 found that the UK clothes rental market had a potential value of £923m, and more than 25% of Londoners said they would like to rent clothing. Half of 25-to-34-year-olds said they would be willing to spend £200 or more a month on hiring clothes.
Despite this potential, rental has never quite nudged over into a mainstream shopping habit. While awareness of some high-end sites such as Girl Meets Dress or Rent the Runway, both founded in 2009, is growing, there has not been a wide-scale adoption of rental from everyday shoppers. Use is generally reserved for “event” dressing. However, this appears to be changing.
Newcomers to the sector, including Wear the Walk (founded in 2017) and Hirestreet (2018) are enjoying early success. Hirestreet specialises in high street styles, and says it has secured more than £250,000 of investment to expand its operations this summer.
Peer-to-peer lending may provide a potential gateway to scalability for the rental sector by taking advantage of an increasingly entrepreneurial mindset in young shoppers.
The soaring popularity of resale is, in part, a result of this attitude. The market is set to be worth $33bn (£25.1bn) globally by 2021, predicts analyst Fung Global Retail and Technology. Sites such as Depop, Ebay and Vestiaire Collective have built huge businesses thanks to the savvy trading mentality of consumers. Depop, for example, has 10 million registered users globally, and $230m (£175m) in gross merchandise value was sold through the app in 2017.
Thanks to resale, a generation of shoppers has emerged that is actively engaged with the potential value of their purchases. Peer-to-peer lending seems a natural extension of a mentality that craves newness and value in equal measure.
What better way to justify a purchase than the knowledge that it can be rented out to others to recoup some of the cost? Peer-to-peer lending sites could bring a wider array of styles to the market, as users share wardrobe items beyond one-off occasionwear.
The peer-to-peer aspect of the service also adds an additional sense of personal value to the rental model. As customers pay a price to have an item for a limited amount of time, making back some of that cost by renting out their own items could give a greater sense of value to the experience.
Not only this, but the model combines and extends the sustainable benefits of rental and resale, and is likely to appeal to shoppers keen to give clothes a lifecycle beyond their own wardrobe.
If the new wave of peer-to-peer lending sites can provide a simple and secure experience for users, they could certainly compete with, if not unseat, traditional rental models.
After all, shoppers have been lending clothes to friends and family for a long time – why not monetise the practice on a wider scale?