The shift towards sustainability is evident, and consumers have made it clear that the trend is here to stay. As a result, the resale market has experienced significant growth, with third-party platforms such as thredUP, Vestiaire Collective, and Poshmark — as well as brands themselves — launching their own resale marketplaces. Simultaneously, the rental market, while not a new concept, is seeing renewed traction.
As consumers become more interested in eco-friendly and cost-effective ways to enjoy new styles, rental services are emerging as a popular area for fashion spending. In fact, in 2019, the online clothing rental market was valued at $1.26B, and is projected to increase to $2.08B by 2025. This growth is driven by a younger cohort of shoppers — 80% of Gen Z who have gravitated toward secondhand purchases.
Fashion rental players capitalizing on this opportunity
Big rental service players include Rent the Runway, Nuuly, and Armoire, offering monthly subscription services for renting clothes.
Rent the Runway was among the pioneers in this market and provides an extensive selection of rental options, ranging from formalwear to designer brands as well as everyday wear, with three subscription plan tiers available. Armoire offers a comparable service with similar tier programs, but focuses on providing workwear for women. In contrast, Nuuly, which was launched by Urban Outfitters in 2019, charges a flat fee of $88 for renting six clothing items each month. Additionally, Nuuly has a resale arm known as Nuuly Thrift.
These rental players have disrupted the traditional retail model by offering a more sustainable and cost-effective way for consumers to enjoy new styles without committing to buying them outright. By renting clothes, consumers can experiment with new looks and reduce their environmental impact by avoiding the fast fashion cycle of constant buying and discarding.
When Rent the Runway, Nuuly, and Armoire offer comparable services, it is difficult to discern why consumers would prefer one option over another.
How Rent the Runway is looking to stand out and gain market share
During a recent investor presentation, Rent the Runway expressed its belief that it has only begun to tap into the market potential, as 56% of women surveyed stated their intention to subscribe to fashion services within the next five years. The company estimates that the potential market size for rental subscriptions among women in the U.S. is approximately 44 million. These findings not only present a significant opportunity for Rent the Runway, but it also presents opportunities for other players to gain more market share.
To act on this finding and further its momentum, Rent the Runway has decided to permanently add one additional item to each subscription plan, which may enhance its appeal to prospective subscribers.
Following the announcement, Rent the Runway saw a 13.11% surge in its stock price during Thursday morning trading, reversing a steady downturn since the beginning of February.
But this move now begs the question: will the rental space experience the same boom the resale space has seen? Not a boom of more players emerging, but a boom of brands looking to reclaim their identity in the rental market space?
Why the rental market could have the same promise has resale
The resale and rental markets are interconnected when it comes to sustainable fashion, providing consumers with the chance to don high-quality apparel and accessories while avoiding the environmental effects of fast fashion, which are crucial factors that Gen Z prioritizes.
The resale market allows consumers to sell their pre-owned items, providing a sustainable option for others to purchase and wear. By buying secondhand items, consumers reduce the amount of clothing and accessories that end up in landfills, prolonging the lifespan of the products.
Conversely, rental services enable consumers to rent clothing for a specified duration, offering a substitute for purchasing garments that may only be used once or twice. These platforms have gained significant popularity, especially for formal occasions like weddings and black-tie events where individuals may not want to invest in a high-end dress that will only be worn once. Nonetheless, the rental industry has also become appealing for more relaxed, day-to-day apparel, as consumers have shifted towards more casual outfits since the pandemic.
Together, the resale market and rental market promote a circular economy in which clothing and accessories are reused and repurposed, reducing waste and contributing to a more sustainable fashion industry.
The momentum resale saw and continues to see today
At the very beginning, it was third-party platforms such as thredUP, Vestiaire Collective, Poshmark, The RealReal and even eBay which held a significant share of the secondhand market, propelling its global worth to $184 billion by 2022.
The rapid growth of the resale industry resulted in a broad acceptance of peer-to-peer (P2P) transactions, prolonging the lifespan of clothing and accessories while fulfilling significant consumer demand. Nevertheless, it also generated considerable upheaval for brands.
Fashion news outlet Fashionista documented how Oscar de la Renta scrutinized how their brand was depicted in the third-party resale market, resulting in disappointing and conflicting findings in February of last year. The report highlighted that the Oscar de la Renta team was dissatisfied with how their merchandise was presented in the market, as products were frequently misidentified, raising doubts about the authenticity of the items sold. Consequently, the fashion house introduced its own resale website.
Fast forward just one year later: more brands are now striving to manage their reputation in the resale industry by launching their own resale platforms. Moreover, these brands seek to engage with a different type of customer who has adopted a new approach to shopping for apparel, opting to lease clothing instead of financing it.
High-end brands acknowledge that this mindset is not just a passing trend; it is a permanent shift in consumer behavior, and they want to be part of it. Most notably, branded resale allows brands to maintain an ongoing presence in the shopping dialogue, rather than being a one-time occurrence, as emphasized by PYMNTS CEO Karen Webster in 2022. With that, brands and retailers like lululemon, Patagonia, Eileen Fisher, Canada Goose, and, more recently, Carhartt have looked to partner with branded recommerce solutions like Trove to not only reclaim their identity in the resale space, but also gain market share.
See also: Trove Leads Lululemon, Canada Goose and Carhartt Into Resale Boom
That said, as the fashion industry continues to witness a shift towards sustainability driven by consumer demand for eco-friendly and cost-effective ways to enjoy new styles, the resale market and the rental market will continue to see significant growth.
The trend towards sustainable fashion is here to stay, and brands that embrace it will be the most successful in the long term.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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