Rental and Resell: The New Business Models Driving Denim
Globally, our fashion industry produces about 53 million tonnes of fibre every year and more than 70 percent of that ends up in landfills or on bonfires. With such staggering numbers and consumption showing no signs of slowing, it’s become clear shopping for clothes is no longer a harmless pastime; it is yet another painful frontier between desire and conscience.
Globally, our fashion industry produces about 53 million tonnes of fibre every year and more than 70 percent of that ends up in landfills or on bonfires. With such staggering numbers and consumption showing no signs of slowing, it’s become clear shopping for clothes is no longer a harmless pastime; it is yet another painful frontier between desire and conscience. It is no surprise that over the past few years retailers from Boohoo to Bloomingdales have been jumping on the movement of “sustainable fashion” in order to clean up their brand image and winover eco-conscious Millennials and Gen-Z demographics. Either way sustainability is booming and has become an attractive proposition not to be missed: in 2019 the fashion search site Lyst recorded sustainability, as well as keywords related to sustainability in fashion, increased by 75% from 2018. While brands are steadily introducing sustainable features like organic cotton, recycled fabrics, low impact dyes, a number of innovative labels are thinking about alternative business models that help promote circular fashion. In August, during Copenhagen Fashion Week, Levi’s announced its latest sustainable endeavour in collaboration with Danish fashion label Ganni for a rental-only capsule collection of upcycled denim made with vintage Levi’s 501 jeans. The ambitious project is a continuation of Ganni’s rental concept, Ganni Repeat, a program where customers can rent out various styles for up to three weeks. According to a Vogue article with creative director Ditte Reffstrup the concept was a success in Copenhagen when it launched just over a year ago and proved the label’s prowess when it comes to implementing sustainable practices. Now, the brand is taking the idea across Europe and all the way to America with the support of Levi’s. “We launched our rental program Ganni Repeat last year in Denmark as a project to trial a more circular fashion system.” Reffstrup explained to Vogue in a recent article. “Very early on in our conversations with Levi’s, we knew that we wanted to do a collection that was 100% rental. The idea was to create something worn by many, but owned by none.” The collection titled “Love Letter,” includes garments like button-down shirts, jeans, and a shirtdress featuring beautiful tonal blue patchworks constructed from upcycled Levi’s fabrics. Pricing starts at $55 for a week-long rental, and customers can choose to rent each piece (or multiple pieces) for one to three weeks at a time through the Ganni Repeat website. Each item is shipped using the reusable material RePack and is thoroughly cleaned (according to Denmark’s eco-conscious standards) and stored for up to 72 hours before becoming available to rent again. Of course Ganni isn't the first denim brand to experiment with the concept of rental programmes. Dutch denim label Mud Jeans have been promoting the “sharing economy” since 2013 when they introduced the pioneering Lease A Jeans system, which allows customers to lease a pair of jeans for a monthly fee. The brands model worked on the premise of usage over ownership, so when the jeans are worn out, or if you feel like a change after 12 months, you can send in your jeans and switch to a new pair. The company then recycles the old pairs into new items. Mud’s founders believe that the rental model for jeans could be the secret to making fashion more sustainable. “By leasing jeans and recycling or upcycling the materials, we move to a circular economy in the fashion industry” explains Bert van Son, founder of Mud Jeans. Denim mill Calik is already catering to brands to support their sustainable efforts and move towards Circularity. Their brand new concept E-Denim, that will be launched very soon, is a candidate they are positioning to be the most assertive sustainable product in the industry. The sharing economy has definitely seen an uptick over the last couple of years, with the success of platforms like Rent the Runway, MyWardrobeHQ, Higher Studio and even major retailers like Urban Outfitters and H&M looking to capitalise on the market. In the US, rental has long been a part of the fashion dialogue, with the market expected to reach $4.4 billion by 2028, but it is the peer-to-peer market that is being sold as the ultimate solution for circularity. One step on from renting from a company, the concept of renting from a peer is like the Airbnb of fashion. Small upstarts like Hurr Collective and By Rotation are offering the chance to benefit from another woman’s good taste. Although each of these start-ups have their own unique selling point, they are united in their aim to capitalize off of Gen-Z and millennial behavior. Research by environmental charity Hubbub, for instance, found that 41 percent of all 18-25 year-olds feel the pressure to wear a different outfit every time they go out, while one in six said that they didn’t feel they could wear an outfit again once it had been seen on social media. Additionally, as alluded to earlier, renting clothes has the potential to address the pervasive environmental problems that the fashion industry poses. Karyn Hillman, Levi’s chief product officer, sees rental as a viable long-term solution to fashion-industry waste. “Responsible consumption is more important than ever,” she explained to Vogue. “The shared economy gives consumers the opportunity to participate in fashion without requiring the same long-term commitment.” Likewise Bert van Son of Mud Jeans believes that there is a mindshift happening around rental. “We used to have a 50/50 split between people renting and buying. But over the past 12 months the leasing has grown” Van Son said to The Guardian. “People like to take another colour, wash or style after a year. They’re happy to send back their old jeans and get a fresh pair.” As the rental side of the fashion economy grows, so, too, does the proportion of resell. Shaking off the negative connotations often associated with ‘second-hand fashion’, the global resale economy has exploded into a multi-billion dollar market in the past few years. Just like rental, the growth of the resell market has been fuelled by changing consumer attitudes towards sustainability, luxury and the concept of ownership. Consumer interest in resale is expected to grow even further, with the US market alone predicted to reach $41bn ($31bn) by 2022, according to resale marketplace ThredUp. Currently worth $20bn (£15bn), the US resale economy is likely to grow 24 times faster than the retail sector, with 71% of consumers surveyed planning to spend more on resale over the next five years. The growth of the resell economy is largely driven by the millions of savvy teens and 20-somethings who buy and sell pre-owned clothes to build mini businesses online. Gen-Z have been pivotal to the success of online platforms like Grailed and Depop, two of the fastest-growing social media apps which trade in a more social way to the original platforms eBay and Gumtree. According to the Depop, 90 percent of its over 15 million active users are under 26. The number of items sold in the U.S. doubled last year, and there are now 5 million U.S. users. In the U.K., where Depop is headquartered, it is estimated that one in three 15-to-24-year-olds is registered on the platform. Speaking to Forbes last year, founder Maria Raba said young consumers are choosing the Instagram-like Depop because it's solving three of the biggest problems they face: “they want to feel unique, to shop with (and from) friends, and to build their own green businesses without losing a drop of street cred.” Outside, traditional retail is hurting: mass-market and mid-tier chains are closing locations or shuttering altogether. Barneys has filed for bankruptcy. Meanwhile, the resale market is expected to double in the next five years — which would make it bigger than fast fashion, according to some projections. Even the global COVID-19 pandemic has done little to dampen sales and engagement. As buying patterns changed for consumers adjusting to life at home during lockdown, these resale companies have benefited from the uptick both in terms of browsing and buying. EBay, for one, detailed several triple-digit “spikes in interest” across home, entertainment and health and beauty categories for “both used and new” products, while Depop has experienced “record-breaking growth” for its traffic numbers in the U.S., exceeding its original business targets “by a huge margin” according to COO Dominic Rose. And what, or whom, does the market have to thank? For one, sustainability and two, the usual drivers behind the movement: Gen Z and Millennials, 64 percent of which are influenced by sustainability when making purchases, as BCG reports. Vintage fashion is an inherently sustainable option; a recent study suggests that demand is on the rise, with 64% of women willing to buy pre-owned pieces compared with 45% in 2016 – and it is thought that by 2028, 13% of the clothes in women’s wardrobes are likely to be secondhand (Vogue). These changing attitudes to ownership are a hallmark of the gen-z and millennial lifestyle, and reflect why for this cohort of younger consumers, it is more about the idea of experiencing instead of owning. Acknowledging this shift in purchasing patterns, major retailers and brands are introducing their own worn garments in an effort to capture market share. In 2017, Levi’s introduced its Authorized Vintage program, a proprietary resale capsule for which the brand sourced and re-sold a collection of pre-worn Levi’s denim, while brands like Tommy Hilfiger have experimented with special archive capsules curated by respected vintage sellers Procell. Purist brands like Nudie Jeans and premium denim brand A.P.C. have also been reselling their worn and faded raw jeans to denim fanatics who want the vintage look without having to put in the time. “Every brand is currently developing a point-of-view on how to coexist with secondhand,” ThredUp co-founder and chief executive James Reinhart recently told the Business of Fashion. While it is still early stages in the life of both rental and resale, the current insight does paint an aspirational picture for at least one aspect of the industry. It provides an optimism that feels appropriate and worth holding on to, and one that should prompt business leaders to think about new models outside of traditional retail.