Fashion of the Future: Rebecca Taylor RNTD Clothing Rental Service

On November 15, 2018, Rebecca Taylor became the latest designer to enter fashion’s booming rental scene.

Their new rental service, a $159 a month subscription model, makes the brand the latest in a long line of fashion rental services. Others include Glam Corner, Girl Meets Dress or, most notably, Rent The Runway. Even Northwestern has joined in on the fashion rental sector with Cats’ Closet, a free service that rents out donated clothes for interviews.

Clothing rentals, particularly of expensive items, appeal to people because it lowers commitment to items one may only wear a few times. Michael Munger, Duke professor and author of Tomorrow 3.0, a book about the sharing economy, writes: “The reason someone buys a suit, or shoes, or a gown, is to have easy, inexpensive access to the stream of services that item provides. If it’s possible to rent, one can enjoy that stream of services for a brief period.”

Tuxedos and prom dresses might be the first to come to mind, but as the Rebecca Taylor service has shown, rental can also allow people to wear luxury brands out of their price range, if only for a day or two. Even for those not interested in wearing expensive clothing or luxury brands, fashion rental allows people to constantly change their style or stick to current trends without amassing piles of unused clothes.

The value of fashion rental is clear, and the industry only seems to be growing. The Brookings Institute defines the sharing economy as “the peer-to-peer-based activity of obtaining, giving, or sharing the access to goods and services, coordinated through community-based online services,” Uber and Airbnb are popular examples. Could “sharing”, be successful in the fashion industry as well? The sharing economy, when applicable, can be a cheaper market than rental for the consumer as no firm owns the product rented. Rather, households that already own the items can rent them out when unused whereas a third party service merely providing software to make the transactions possible.

The sharing economy works best with items of high cost and low usage. Munger uses the example of drills in his book. Drills are both expensive and not used more than an hour in their entire lifetime for most owners. Although there are currently around 115 million drills owned in the United States, a sharing economy may be able to bring that number down to just a few million. Clothes mostly follow the same constraints; many people own $50+ items of clothing that they wear less than once a month. These garments would be prime items to be rented out by owners when unused, which benefits both owners of the rarely worn items and consumers looking for a new style or a cheap way to dress for a night out.

Rentez-Vous

Fashion may be conducive to a sharing economy in many ways; in the United Kingdom, Rentez-Vous, is an early example of a company using a peer-to-peer platform for fashion. However, there are some additional qualifiers for a successful sharing economy, which are qualities fashion potentially lacks. Arun Sundararajan, a professor of NYU’s Stern Business School lodges the critique, “Every peer-to-peer marketplace has the challenge of getting enough people in so that they actually have sufficient inventory.” Many more people would need to share their clothes versus drills, because while almost all drills do more or less than same thing, clothes must both be stylish and fit the consumer. In order to fit both a consumer’s style and size, hundreds of articles of clothing would have to be in the inventory of a sharing platform.

This issue segways right into perhaps the most important constraint of a sharing economy: low transaction costs. On the podcast EconTalk, which is hosted by Stanford economist Russ Roberts, Munger and Roberts discuss how transaction costs can make or break a sharing economy. In the case of drills, since a large portion of homeowners own a drill, there is more than likely a drill on every block. This makes transaction costs minimal, possibly being as low as a short walk. Clothes, by nature of having multiple styles and sizes, have much higher transaction costs; it’s far less likely the clothes a consumer is looking for would be just blocks away. If the coveted clothing is far enough away, the transaction cost of sharing clothes is no longer cheaper than the rental economy that is currently present.

Arun Sundararajan

So can a fashion sharing economy work? Right now, the consensus seems to point to no. The logistics and transactions costs at the moment would be much higher than Uber, AirBnB or even drills. Additionally, Sundararajan believes the idea of renting fashion at all is a fairly new concept, one years away from the kind of support needed from the general populace to allow for a peer-to-peer rental system.

Yet this does not mean it will not eventually be possible. Prevailing views and renting out clothes can and probably will change, and self driving cars may drive transaction costs down to a point where the sharing economy overtakes the fashion rentals. For now though, if you want to rent Rebecca Taylor, you will have to get it from their website.