Is the rental market dying?

2020 was rough for the fashion industry as a whole, but the rental market especially suffered. Troubled sales, shuttered stores and services, and a growing awareness that renting is not as environmentally sustainable as previously advertised all led to the question: is the rental market dying?

Clothing renting was gaining popularity.

For more than a decade, clothing renting has slowly become more popular, reaching its peak just before the COVID-19 pandemic set in. Rent the Runway was the first prominent player in the rental market, founded in 2009 and now employing just under 1000 people. Following in its footsteps, half a dozen other companies have reached similar levels of success, and many brands, from Urban Outfitters to Diane von Furstenberg’s label DVF, have created their own rental platforms. The push to make fashion zero waste has helped the rental market’s success. Clothing renting keeps clothes in circulation rather than going to the landfill or incinerator and is frequently marketed as a sustainable option for clothing consumption. The reality is a little less straightforward, with critics claiming the rental market has a less visible but just as damaging effect on the environment. More on that later, but the point is a combination of conscious, trend-hungry, and budget consumers made the rental market a profitable business notion.

Since COVID-19, rental services have taken a hit.

When the pandemic consumed the world, the rental market struggled. Concerns over the safety of wearing clothes that other people have recently worn and handling extra packages led to a drop in interest for rental services and platforms. Even dry cleaning services offered by rental platforms — which can be chemically intensive and damaging to the environment — were not enough to keep consumers confident. Rent the Runway shut all of its physical stores in the spring, and by the end of the summer, the company announced that it would not be reopening them. With consumers going into the office less and wearing the same sweatpants more, rental services found that the customers who were still confident in shopping with them had less need for a rotating wardrobe. Smaller platforms and brand-supported services were hit the hardest from the rental market dip. DVF shuttered its rental service after just one year; having launched the option at the beginning of 2020, the luxury brand found it never took off during the pandemic. Scenarios like that led fashion business analysts to determine that rental was not the best investment for brands to be making right now. The turn away from the rental market may not be the worst thing for the sustainable fashion sector, though.

Some argue rental platforms encourage the fast fashion mindset.

While rental platforms are designed to give consumers a way to refresh their wardrobe without contributing to the waste crisis, some experts argue the idea of renting has an unintended negative impact. In some cases, renting was the perfect alternative to buying, for example, for a formal event when clothes would only be worn for a day or less. But, providing fancy dresses and tuxedos for weddings, proms, and black tie events is not a very lucrative business proposition. As the rental market expanded, so too did the offering of clothing. By mid-2019, fast fashion had joined in on the trend with Urban Outfitters launching its service Nuuly. Suddenly cheap polyester clothing that was already viewed as disposable was now available for even less money, and shoppers were encouraged to wear it for even less time so they could send it back for something new. Meanwhile, the secondhand market has been booming by promoting the long-term value of clothing. As The RealReal’s head of sustainability James Rogers pointed out, the secondhand market is trying to get consumers to view clothing as an investment that can be resold rather than something disposable. That is a view that consumers clearly agree with as the rental market shrinks while other circularity projects boom.

The Bottom Line:

Rental services are a good environmental and economical choice if consumers only plan on wearing their clothes a few times. But, as fashion activists try to change the way consumers view the value of clothing, they argue short term wearing may be sending the wrong message..

Keep Reading:

Buy, Don’t Rent: The Virtues of Owning Clothes (The Business of Fashion)

The Fashion Rental Market Tested and Explained: Who Has the Best Service? (The Business of Fashion)

The Pandemic Cramped Rent the Runway’s Style (Fortune)

Resale Leader The RealReal Takes on Upcycling (Vogue Business)