Categories
data e-commerce Editor's pick Retail

Four effective ways brands are tapping into the rental market

The rental market boom is sending a clear signal to brands struggling to survive in the current retail climate: it is time to adapt to changing purchase behaviors, or risk losing market share.

The numbers don’t lie. Globally, the online clothing rental market is expected to reach $1.86bn by 2023, according to Allied Market. Disruptive fashion rental startup Rent the Runway, one of the first on the scene in 2009, has recently received a $20m funding injection from Alibaba’s founders and is now said to be valued at just under $800m.

The growing appeal of the rental market is largely due to the fact that it caters to such a large audience of consumers: from fashion-conscious shoppers who don’t want to own something they will likely only wear a handful of times, to the sustainability-focused consumer who is trying to do their bit for the planet by simply consuming and wasting less.

Globally, brands are now pursuing their own rental strategies in order to own the ecosystem in which the consumer shops. Whether the consumer is buying one day, and renting the next, they are being given the flexibility to choose while remaining within a brand’s universe, which is key to long-term loyalty. Here, we highlight three effective approaches when choosing to tap into the rental market.

Sustainability
Filippa K's Lease program
Filippa K’s Lease program

Swedish furniture company IKEA has recently announced it is piloting a furniture-leasing program at one of its Switzerland stores, starting with office furniture. The program, which includes refurbishing items once returned and leasing – or even selling – them again, is part of the company’s efforts to develop a circular business model.

Meanwhile Stockholm-based clothing label Filippa K leases its clothes as a way of promoting a more sustainable consumption model within the industry. Customers can rent anything they want for four days at 20% of the full price, with the cost of cleaning the garment included. According to the brand’s sustainability director Elin Larsson, the rental program grew 123% in 2017.  

Like Ikea, the initiative is just one part of the brand’s effort to achieve a circular business model by 2030, which also includes goals such as all garments being fully recyclable, achieving a traceable supply chain, and making the business as a whole more resource-efficient, meaning it will produce only what is needed and purchase the right amount of materials to do so.

Data-capturing
Rent the Runway designer collections
Rent the Runway’s designer collections

Many established brands dipping their toes into the rental market are doing so by teaming with new or more established players in the field in order to gather data about how customers are shopping and behaving.

After years of receiving data from Rent the Runway on how well their clothing is performing as rentals, US designers Prabal Gurung, Jason Wu and Derek Lam are introducing exclusive collections to the platform driven by consumer preferences. For example Gurung’s inaugural line, sold exclusive on RtR, will feature adjustments from different cuts to colors and prints that respond directly to customer feedback.

Another retailer trying to better understand how consumers are behaving is luxury department store Browns, which last year teamed up with rental startup Armarium on a two-week in-store pop-up presenting past season party pieces from designers such as Alexander McQueen and Erdem.

Customer acquisition
Ba&sh's NY store rental
Ba&sh’s NY store

French brand Ba&sh is expanding its US presence and hoping to garner the attention of a wider audience with a concept store in New York offering a rental program where customers can rent pieces entirely free of charge, for the whole weekend. Customers can visit the store and borrow a curated rack of garments from the current collection on a Friday between 5-7pm, as long as they are returned by Monday at 7pm.

With the service, the brand’s founders wanted to make guests feel like they are borrowing clothes from their friends’ closets. “This is an ideal place to test a concept we’d like to try in other major cities where Ba&sh also has a presence,” said Sarah Benady, Ba&sh’s CEO for North America, to French website, Frenchly.

New revenue streams
Aoki's Suitsbox service rental
Aoki’s Suitsbox service

Express and Ann Taylor are major retailers that have both recently introduced a subscription service for renting their clothes. Following the success of Rent the Runway’s business model and the many alternatives that have flooded the market since, customers to both retailers can rent a limited number of items a month for a set fee.

“The consumer who is more interested in access versus ownership is happening across many industries,” said Jim Hilt, Express’ chief customer officer, in an interview with CNBC. “We looked at this evolution and asked, ‘how do we participate?’.”

In Asia, a region where used clothing often carried negative connotations, brands and retailers are also in on the action, particularly targeting urban workers. Menswear brand Aoki is offering a subscription service, Suitsbox, where for 7,800 yen a month customers can rent a complete outfit composed of suit, shirt and necktie. Retailer Renown, meanwhile, is offering a suit rental service for a flat month fee with a minimum six-month contract. “From the age of buying clothes, we have entered the age of renting them,” said Renown’s corporate communications head, Tomohiro Nakagawa.

How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. The Current Global is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.

Categories
Retail

Ba&sh’s new NY store offers free clothing rentals

Ba&sh in New York City

French label Ba&sh’s new store in New York allows shoppers to borrow the brand’s clothes at no cost, as long as they are returned after the weekend.

The 1,700-square-foot space, located in Soho, aims to act as a “dream closet” and position the brand as a friend the customer can borrow clothes from whenever they have a special event. Customers borrowing clothes can only do so every Friday between 5-7pm, and they must be returned by Monday at 7pm.

The opening is part of a bigger expansion strategy from the company in the North American market, as well as a customer engagement push that includes a series of permanent in-store activities.

“It’s an experiential store, the first one designed to thoughtfully elevate the existing experience to a new level. The store was a natural evolution. Our brand has always been rooted in special relationships,” said global CEO, Pierre-Arnaud Grenade, to WWD.

The brand, which currently operates 200 stores globally but only five in the US, hopes the new space also works for customer awareness and acquisition – by making clothes available to rent free of charge, it allows customers to discover the brand more easily. For this launch, a pop-up area will promote other French brands who have no US presence, such as jewelry label Atelier Paulin and luxury candlemaker Baobab.

The space will also offer a series of events that encourage customers to bring a friend, such as monthly supper clubs, weekly French lessons (of which 75% of the cost is subsidized by the brand), weekly complimentary French breakfast and a children’s play area so customers can shop in peace.

As part of the strategy, the brand’s e-commerce team has also relocated to the city. Currently, 20% of the brand’s US sales are completed online, which is higher than the rest of the world.

The moves comes as consumers increasingly look to the notion of the sharing economy – borrowing or renting items rather than having ownership of them. It’s through this that businesses including Rent the Runway have grown in relevancy in today’s market. One  fifth of millennials reportedly now say they would consider renting clothing, according to Hammerson and Verdict.

How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. TheCurrent is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.

Categories
Blocks mobile

Harrods moves from stilettos to sneakers in new gaming launch

Harrods

Harrods has returned to the world of gaming with the launch of a new challenge called Sneaker Wars featured in the September issue of its magazine, within its app.

Following hot on the heels (ho ho!) of Stiletto Wars launched in 2014, the game is a Candy Crush-style format, with players aiming to score as many points as possible in three minutes by aligning three or more pairs of the designer sneakers included.

A £250 prize will be awarded each week to the highest scorer, with the overall winner at the end of the tournament receiving a £1,000 Harrods gift card.

For Harrods of course, the game is a ripe opportunity to acquire new customers through downloads of its app. According to the write-up, the game will enable an “additional level of immersive magic”, engaging new audiences and expanding international reach. Stiletto Wars did much the same when it launched in September 2014, generating nearly half a million gameplays and 36,000 app downloads since.

Sneaker Wars ties neatly to the evolving favour of sneakers over heels in today’s fashion trends. It launches as part of the luxury department store’s Catch Me If You Can campaign, which celebrates the first anniversary of Harrods Shoe Heaven, a dedicated shoe-shopping destination on its fifth floor.

Categories
business e-commerce social media

Search marketing tops customer acquisition tactics for retailers – study 

search

Paid search is still considered to be the most effective customer acquisition tactic, according to the 2014 State of Retailing Online study, released by Shop.org and Forrester Research in the US this week.

A survey of 81 retailers during May and June 2014, showed search engine marketing is considered top by 85% of them, and they’re accordingly spending more of their interactive marketing budgets on it than on anything else.

Also on the list for acquiring customers were organic traffic (41%), affiliate programs (40%) and remarketing/retargeting through online ads (29%). The latter, alongside behavioural targeting, sees display ads now ranked as the second highest area of marketing spend behind paid search.

Meanwhile, social media is also getting increased attention from retailers. Over half of those surveyed said they are dedicating more spend to the likes of Instagram, YouTube, Pinterest, and Twitter in the coming year, while 62% plan to spend more on Facebook interactive marketing efforts this year than last.

“Thanks to the effectiveness and renewed budget focus on display advertising, Facebook cannot be counted out from a retail advertising standpoint,” said Forrester VP and principal analyst, Sucharita Mulpuru. “People think of Facebook as a social network, but in reality it’s another medium for personalised display advertising – likely explaining why Facebook has surfaced so high in planned budget spend this year.”

The study also found that 42% of retailers’ email opens now happen on smartphones, up from 28% in 2013, while email open rates on tablets grew from 16% to 17%.

Categories
digital snippets e-commerce social media technology

Digital snippets: Matthew Williamson, Gap, Amazon, Instagram, Wanelo, Tinder

A round-up of the latest stories to know about surrounding all things fashion and tech:

MatthewWilliamson_Instagram

  • ‘Is it scalable? I think it has to be,’ Matthew Williamson head of digital on customer acquisition through Instagram [The Drum]
  • Amazon launches #AmazonCart (#AmazongBasket), a new way to shop without leaving Twitter [TNW]
  • Fashion world sashays to Instagram for brand-building [FT]
  • Wanelo profiled: like mall browsing, with a click [NY Times]
  • Meet the new wave of Tinder-like shopping apps [Fashionista]
  • Stylect, the Tinder for shoes, finds you a perfect pair [Co.Design]
  • Study shows prevalence of consumer ‘webrooming’; more people researching online and buying in local stores [AdWeek]
  • Tracking is dead: the next wave of wearables is context [re/code]
  • Millennial-focused marketers start to dig in to new SnapChat video feature [AdWeek]
  • Must see: colour-changing fabric uses heat sensitive technology to react to sound files and its surrounds [PSFK]