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Rental and Resale Were Supposed to Be the Future. Could Coronavirus Change That?

While the whole apparel sector is challenged by the ongoing crisis, fast-growing of rental and resale platforms may be uniquely and disproportionately impacted.
Source: Shutterstock
By
  • Cathaleen Chen
BoF PROFESSIONAL

NEW YORK, United States — For her best friend's wedding in Miami earlier in March, Brooklyn-based magazine editor Margaret Abrams chose to rent her bridesmaid dress and a few other outfits from popular platform Rent the Runway.

Abrams, who is 30, now finds herself stuck in Florida, waiting for the spread of the novel coronavirus to stop so that she can head back to New York City. Luckily, she's from the area, so she is quarantined in her parents' home. While she's there, she'd like to pause her Rent the Runway subscription. But in order to do so, she must first go to a UPS office to drop off her rented items — something that she doesn't plan on doing out of safety concerns.

She has yet to reach out to Rent the Runway. “I guess I’ll have to,” Abrams said. “Although it would've been nice if they automatically [froze] accounts because no one is going outside these days.”

(A Rent the Runway spokesperson told BoF that UPS can schedule at-home pickups.)

Across the country in Los Angeles, Gaby Loguercio is facing a similar customer service dilemma with luxury consignment platform The RealReal, from which she bought a white lace gown that she said turned out to be completely different from its description online. Normally, she would return the piece at The RealReal's West Hollywood store, but because of the virus, the 26-year-old marketing freelancer has no choice but to pay $12 to mail it back — a fee that The RealReal declined to waive.

Surely, Rent the Runway and The RealReal are not the only retailers to confront a deluge of customer service inquiries in recent days as retailers and consumers alike grapple with the effects of Covid-19. The entire apparel sector is disrupted severely: Retail sales dipped more than 30 percent in the second week of March compared to the same period last year, according to research firm Cowen. But rental and resale services, once primed to be the future of retail, may now be uniquely and disproportionately impacted by the ongoing crisis, industry sources say.

Shoppers that use rental and resale services may have less disposable income than those who purchase luxury fashion at retail.

On the rental side, demand for workwear and occasionwear is quickly drying up as conferences, weddings and other events are being canceled across the board. (Nova Octo, an evening wear rental service, saw its new rentals dip more than 90 percent last week, according to founder Silje Lübbe.) Resellers like The RealReal and Vestiaire Collective, meanwhile, may see supply affected as well as demand as consignment appointments with sellers are being cancelled and stores remain closed. The RealReal told customers Monday evening that consignment processing times may be delayed by up to four weeks, and while processed items are still for sale on the site, shipping may be delayed as well.

Vestiaire Collective has seen an increase in product deposits, according to chief executive Max Bittner. "People are spending more time at home, giving them time to clear out their wardrobes," he said in an email statement. "On the sales side, orders were initially decreasing but again as more people are spending time at home, we’re seeing increased engagement on our app." The Paris-based company, nonetheless, has closed its New York warehouse over the weekend, per Governor Andrew Cuomo's executive order for all non-essential workers to stay home.

Shoppers that use rental and resale services, additionally, may have less disposable income than those who purchase luxury fashion at retail, according to Neil Saunders, managing director of GlobalData Retail. This means that they are likely to cut non-essential purchases out of their spending habits if they feel a squeeze on their wallets.

“I don’t see any scenario where [rental and resale] wouldn’t be worse off than the rest of retail,” said Sucharita Kodali, a retail analyst at Forrester. “The last thing people want right now is pre-owned merch — even if viruses don’t survive on fabrics beyond a few hours...people want to minimise any risk.”

So far, medical experts are not entirely sure how long the coronavirus can survive on soft surfaces. Transmitted through respiratory droplets, certain exposed surfaces could be infectious for hours and even days — according to Harvard Medical School’s Coronavirus resource centre, the virus can survive on plastic for up to three days and on cardboard for 24 hours.

Rent the Runway, meanwhile, said its cleaning process after each rental “are designed to kill viruses such as the common cold and flu,” as stated on its website’s FAQ section. “Based on current guidance, we have no reason to believe that our processes are ineffective against COVID-19.”

You can keep things going for a few weeks and ruin your company or you can rip off the bandaid and hopefully still have jobs for people when everything is over.

The New York City-based rental service — the largest of its kind — also told BoF last week that it has yet to see members pause and cancel the service en masse. But some of its competitors have said the opposite. Armoire, a Seattle-based rental startup, saw such a significant number of cancellations starting two weeks ago that Founder and Chief Executive Ambika Singh cut her pay to $1 to save cash. Now, she’s asking her staff for voluntary salary cuts as well in exchange for equity in the company.

Soon after she closed its stores, Nova Octo’s Lübbe said she began reducing staffing.

“We immediately decided to cut costs because the whole thing just went into a halt,” she said. “You can keep things going for a few weeks and ruin your company or you can rip off the bandaid and hopefully still have jobs for people when everything is over.”

Singh said since last week, cancellations began to stabilise. “We saw a lot of cancellations around the events evaporating but we’re seeing a second group of customers with intent around ‘let me now embrace that this is my new life’ and ‘let me build a routine that works for me,’” she said.

Customers, indeed, are sticking around. Online shopping overall may see a boost by work-from-home habits. According to retail customer service platform Hero, e-commerce purchases made between the hours of 9am and 6pm jumped 52 percent in the second week of March compared to the same period last year. Some rental users, in fact, are embracing dressing up at home rather than for the office.

Like Abrams, 39-year-old Miriam Shwartz from the Boston, Mass. area had rented a couple of dresses for her stepdaughter’s wedding two weekends ago. The wedding didn’t happen, but she’s keeping the dresses for a few days and hanging on to her Rent the Runway subscription as well.

“I’d rather keep the money with Rent the Runway and keep their people working,” she said. “I thought about wearing one of my gowns on my Zoom calls.”

We’re tracking the latest on the coronavirus outbreak and its impact on the global fashion business. Visit our live blog for everything you need to know.

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State of Fashion 2023
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State of Fashion 2023