As clothing rental continues to catch on, brands are popping up to serve younger consumers who are interested in renting but have less money to spend on a monthly service.
In May, clothing retail service Caastle launched Haverdash, a $59-a-month clothing rental company for women allowing customers to rent three items at a time and refresh them with a new batch of three on an unlimited basis.
As the online clothing rental space continues to get more crowded, Haverdash hopes it can corner the younger millennial and Gen-Z market, especially women fresh out of college, with its low monthly cost and popular brands like French Connection, Cupcakes and Cashmere, Lush, Moon River and J.O.A. It declined to share current subscriber numbers.
According to a report from Radiant Insights, Inc., the global online clothing rental market is projected to reach $2.1 billion by 2025, with women driving a lot of that growth.
“We saw an opportunity with a market that’s not being served as well as it could be: fashion-engaged millennials who don’t necessarily have the disposable income to spend $159 a month and who are much more focused on fashion as opposed to brands,” said Jessica Kahan Dvorett, gm for Haverdash. Rent the Runway’s unlimited membership, which grants members four items at a time, costs $159 a month. It was recently valued at $1 billion.
Being backed by Caastle gave Haverdash a running start. Caastle helps retailers including Ann Taylor, Loft, American Eagle, Rebecca Taylor, Express, Vince and New York & Company start their own clothing rental services. Brands that provide inventory can work with Caastle to get their service up and running in eight to 10 weeks with no upfront capital investment.
Dvorett said one of the brand’s biggest challenges will include educating consumers on why they should consider renting over buying, and why they should rent from Haverdash as opposed to another player in the space.
The same month Haverdash launched, Urban Outfitters Inc. announced Nuuly, a rental service for women’s clothing that includes all URBN brands, as well as third-party labels and vintage items. A waitlist for Nuuly has already gone out to consumers, and the company plans to launch this week. Subscriptions for Nuuly are $88 for six items a month. After a month, customers return their six items for six new ones.
The key to standing out in the crowded rental space will be in making the rental process as easy as possible, said Benjamin Hordell, partner at digital marketing firm DXagency.
“It has to be really, really stupidly easy. If it’s a pain in the butt and it’s a couple dollars more, it’s not worth it,” said Hordell. “Look at the success of StitchFix — [there] you can get a stylist, and the algorithm starts really nailing what you want, and you’re not doing much browsing, and it really just becomes mindless and effortless. That’s how you’re going to win.”
Another potential challenge Haverdash could face by going after this demographic is dealing with its need for immediacy, said Ronen Luzon, founder and CEO of measurement technology company MySizeID. As the idea of “see now, buy now, wear now,” catches on among younger shoppers, offering them only a select number of items at a time, and requiring to send those items back and then wait for another shipment, could prove too limiting. What’s more, young shoppers tend to go back to brands where they know their size — too many options may be a turnoff.
“The younger generation doesn’t have patience. They want everything now, and they want it to fit the first time they get it. What we see is that, if they are buying or renting a brand for the first time, and they have to send back the piece more than once, they leave the brand and move to the next brand. They want it to fit them the first time,” said Luzon.
Haverdash does have plans in place to take the guesswork out of choosing a size. As part of that, every time a consumer sends back a shipment, they are asked to provide feedback on each style’s fit. As Haverdash gets more of that data, it can advise users on what size to choose when placing future orders.