Can the Rental Economy be a Sustainable Shopping Alternative?
By: Jenny Jungmin Park | Monday, June 24th 2019
It’s not the emergence of a sustainable ownership model – younger consumers are conveniently forgoing the permanent ownership of clothing for the sake of variety and businesses are simply taking advantage of this booming demand.
Heading into 2019, one of the optimistic outlooks for the fashion industry, if not the only, was the concept of “sustainability” would be brought to the forefront of the conversation in engaging consumers. Interestingly enough, experts went ahead and pointed to the growing popularity of clothing rental businesses to refer to this industry shift. From a sustainability standpoint, it is undoubtedly impressive to see rental business gaining traction as it can be interpreted as many consumers are choosing to rent clothes rather than buy them. However, it’s hard to say the fashion rental economy has brought – or will bring – more sustainability into the industry considering the underlying mechanism which brought about this new trend.
It is well established that Millennials and Gen Z care deeply about environmental and social causes. Taking this a step further, they cleverly use their purchasing decisions to express their concerns explicitly. In that sense, as experts have pointed out, it would be fair to say the behavioral change of a new generation towards sustainability has provided a necessary foundation for the growth of the clothing rental business.
But is that really so?
If the rise of value-conscious consumers was central to this shift, similar trends should be seen in other segments – ideally, fast fashion and luxury fashion market should contract as much as the size of the rental market grows in the years ahead. However, ironically, statistics show that the market size of fast fashion, which has been widely singled out as the main culprit of the “throw-away culture” is estimated to reach US$ 44 billion by 2028 from US$ 35 billion in 2018. Perhaps even more surprisingly, despite the negative media coverage on luxury brands’ unethical business practices, the research found Millennials and Gen Z represented 47% of personal luxury goods market in 2018 and will contribute 130% of luxury market growth between now and 2025.
Given these numbers, it would not be reasonable to suggest the rise of the fashion rental economy is driven by a new generation’s passion for social conscience and attitude shift towards clothing ownership. Instead, these numbers merely betray a new generation’s insatiable desire for more variety, fueled by social media, and their limited budget. In other words, Millennials and Gen Z are simply turning to the rental model because what they ultimately seek is access to a wider variety of clothing at a lower financial commitment. And sadly, things aren’t different for businesses playing in this market either.
More and more businesses, most notably, established clothing brands are mindlessly jumping on this “rental” bandwagon just to capitalize on this new trend. Taken collectively, what’s important to note is that the fashion rental economy has only increased shopping options for young consumers and market opportunities for businesses at the expense of society.
Leaving aside the underlying mechanism that has led to this trend, the real issue at stake here is, consumers aren’t planning to reduce spending on fast fashion, and it looks unlikely that fashion brands will radically innovate the supply chain into a sustainable one soon. So, going back to our question earlier: Can the rental economy be a sustainable shopping alternative? I doubt it – as long as fast fashion brands offer fresh-off-the-runway looks at pocket money prices.
Jung Min (Jenny) Park holds an M.S. in Marketing from Johns Hopkins University,
and a B.A. in Consumer Studies from Ewha W. University. Prior to her studies at JHU, Jenny worked at Ewha School of Business, where she strategically managed MBA
programs. She currently does market research for Voicevibes.