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The End of Ownership

From Uber to Spotify, ownership is giving way to on-demand services. What does this mean for fashion?
制图:Jan-Nico Meyer
  • Lauren Sherman

LOS ANGELES, United States — Serial entrepreneur Kristy Caylor knows that the world has enough white T-shirts. But that didn't stop her from launching For Days, a new basics line that uses a membership model to encourage customers to upcycle their garments.

Customers pay $12, $24 or $36 a month for access to three, six or 10 recycled-cotton T-shirts in various silhouettes and colours, which they can exchange for new ones at any time. (They can also choose to pay for one year of membership up front, which brings down the monthly cost a bit.) The returned garments are recycled.

“The role that our wardrobe plays in our life is changing,” said Caylor, who joined the World Economic Forum's Global Future Council on Consumerism in 2016. “If you can make lives easier and better… that’s really our job.”

Whether or not Caylor — best known in the fashion industry for co-founding ethical luxury label Maiyet — can convince enough customers to plunk down that fee remains to be seen. (Since launching in May 2018, 2,000 people have signed up for the service, and 85 percent have chosen the monthly option.) But her ambition points towards a sea change in consumption patterns that could mean the end of the fashion industry as we know it.

In other sectors, from transport (Uber) to music (Spotify) to entertainment (Netflix), on-demand services are replacing ownership, especially among young professionals living in cities. With millennial consumption expected to account for 45 percent of global luxury goods spending by 2025, what does this mean for fashion?

"I think that a huge portion of what we wear in the future is going to be comprised of things we don't own forever," said Jennifer Hyman, chief executive of Rent the Runway — often dubbed "the Netflix of fashion" — which was valued at $800 million in early 2018, according to Recode.

Hyman has said in the past that she plans to "put Zara out of business," arguing that young consumers would rather have unlimited access to designer goods for the price of one Zara garment than to own the garment itself.

“That is how consumption in every industry has evolved," she told BoF. "Fashion has been the slowest.”

Perhaps the reticence toward renting fashion has to do with it being an extremely intimate and emotional purchase that touches the body, serving sometimes as a marker of individuality, sometimes of belonging. Clothes can also mould to the body, becoming a perfect fit one-or-two years into ownership.

Will consumers ever be able to fully surrender to the idea of not owning a closet full of things that are theirs, and theirs only? Maybe if they have affordable access to a virtually infinite wardrobe, much like Spotify lets subscribers listen to almost any song in the world.

However, with a physical product like apparel, operating this kind of service still presents huge logistical challenges. Sure, there is an opportunity for rental services to make more money on a single garment than a traditional retailer would. But they must clean and maintain each garment — Rent the Runway now runs the biggest dry cleaning operation in the US — and factor in costs for shipping, handling and returns into each delivery. Recruiting customers through marketing is also expensive.

And yet, fashion companies leaning into reduced ownership — from resale sites to rental services — are gaining a new level of relevance. The RealReal, which sells second-hand luxury goods online, is on track to resell $750 million worth of product in 2018. Subscribers used Rent the Runway's unlimited service an average 150 days in 2017. (It now accounts for 50 percent of the rental platform's revenue.)

Upstart rental services continue to emerge, including Flont (which deals in fine jewellery) and Eleven James (which specialises in luxury watches). Next month, new entrant Vivrelle will launch, offering luxury accessories — such as Chanel and Hermès bags, and jewellery from brands like Van Cleef & Arpels — for a monthly subscription fee that ranges from $99-to-$279 a month.

And even some traditional brands and retailers are moving, albeit slowly, in this direction by promoting circularity. Major brands including Eileen Fisher and Patagonia, but also Stella McCartney and Theory, have established programmes that reward consumers for returning old garments, which are then resold, donated to not-for-profits or recycled.

“Taking risk out of ownership makes the new retail models very, very attractive, allowing a low-growth, low-profit and low-tech industry to become something more productive,” said John Thorbeck, chairman of supply chain analytics firm Chainge Capital.

But how far can it go?

“If fashion got to leasing products and had a different ownership model, it would completely blow up the industry,” said Sucharita Kodali, an e-commerce analyst at Forrester Research. “In a good way. But it would explode.”

That tipping point, however, may not happen for some time. Consider this: While the online rental market is set to hit nearly $2 billion globally by 2023, the global market for apparel will reach $821.83 billion that same year. Such a dramatic shift would require both individual brands and multi-brand retailers to drastically change their business models.

"For industry players, it will be critical to consider how components of these newer models can be leveraged to create business value...," wrote the authors of a World Economic Forum report on the future of retailing, published in 2017. "They will need to build the right capabilities to ensure they are ready for success in this new world. Societal challenges ... need to be tackled head on. To overcome these hurdles, partnerships (intra-industry, extra-industry and public-private) will be critical."

Stores are already tapping rental services: Neiman Marcus brought in Rent the Runway; Browns has begun renting some of its stock via upscale rental service Armarium. However, these partnerships are designed to boost ownership, not reduce it.

Browns, for instance, rents some of its past-season “novelty” styles through Armarium in the hopes that the renter will fall in love with the brand and outright buy another item. “What we really encourage our clients to do is to take a risk and experiment with new trends,” said Armarium chief executive Trisha Gregory. “That look is usually not a black blazer... we’re a complement to full-price retail.”

So while most ownership may end down the line, it seems that the fashion industry still has a few years to reckon with the concept. However, it is likely that we will see an increasing number of new businesses trying to solve for this problem.

That may mean more rental and resale services, yes, but also back-end solutions such as open-source design, sourcing or logistics platforms that allow companies to share what was once proprietary information, creating cost-cuts along the way. “Is the end of ownership the insight to fashion’s transformation?” Thorbeck asked. “My reaction is that it applies end-to-end, not just to consumers.”

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