The Rise of the Sharing Economy

Why buy new clothes when you can have a rotation of new ones shipped right to your doorstep? This is the question rental clothing companies have been trying to impress upon female college students for the past few years. With the accessibility and opportunity supplied by the internet the rentable clothing industry has metamorphosed into a national experience that targets the ensembles of the everyday woman. 

Millennials have been moving toward a sharing-based economy, From Uber, to Airbnb, to Doordash, it seems only natural that this model has been applied to the clothing industry as a whole. This rise of product-service system based businesses is impossible to ignore; in a 2015 study conducted by PricewaterhouseCoopers companies that operate off a sharing-based business model are predicted to increase global revenues from $15 billion in 2015 to an unbelievable $335 billion by 2025. 

The product-service system of a sharing economy can be applied to countless commodities; in the case of companies like Rent the Runway and Le Tote, this model has been adapted to fit the industry of rentable clothing. These businesses are essentially libraries of clothing. The system works like this: you set up an account online where you have to pay a monthly fee ($139/mo. for Rent the Runway, and $49/mo. for Le Tote,) and then your choice of up to around 5 garments is sent to you, once you wear and enjoy them you simply send them back and wait for your next cycle of new garments. This rotation of everyday clothing makes sense; besides from the necessary staples in one’s closet what is the need to actually own anything else? Specifically, in regards to formal attire, many women often find themselves feeling as if they can wear an outfit once because of how it becomes permanent in photos on social media like Facebook. As trivial as that sounds, it holds true with many female college students. 

In 2013, Rent the Runway introduced a partnership with L’Oréal as an effort to promote their business model with female college students called “Rent the Runway: On Campus.” The company used 1,000 student brand-ambassadors across 200 U.S. campuses to promote the functionality of the pricey $139/mo. system. Although unclear as to whether or not this partnership was successful in increasing subscribers, the program seems to have stopped sometime in early 2015. One can only assume that $139/mo. was an unrealistic price to ask college students to pay, especially since many would not be spending more than $139/mo. on regular, non-rented clothing in the first place. 

It will be interesting to see how the business models of subscription-based rentable clothing companies evolve to fit the needs and budget of college students. Looking at business models like that of Rent the Runway, it seems like this subscription-based rentable clothing model may could be more applicable to a working women who need to dress appropriately for work each and every day, not the average college student with no specific dress code to adhere to.