Preview

The move towards sharing and using instead of direct ownership is often called the Sharing Economy. People are increasingly comfortable using items that others have used before. Specifically for younger populations, owning seems like an expensive burden they don’t want to take on when they can just rent something for a fraction of the price without having to make a lasting commitment. Why buy a ton of movies and songs when they can just be streamed or rented from a large library for a flat, monthly fee?

It is now cheaper than ever to own a proliferation of material possessions and having a ton of “stuff” is no longer a good sign of adulthood or considered evidence of middle class status. Instead of having pride in being a family that owns two cars or a large house, millennials place higher value in having an engaging and fun lifestyle. More than that, people are now aware of the process that goes into making this excess of material goods and concerns about the environment, international worker rights, and not finding fulfillment among their possessions has guided people to feel more secure in buying less material goods and renting more often.

The rental model is most common as a viable business model for cars, homes, machinery, and other highly durable items. While Mom & Pop tuxedo companies and the mass market “Men’s Wearhouse” have traditionally rented out tuxes to men in the past, the rental market has been rather limited within fashion and apparel otherwise. In the last few years, however, renting has taken the fashion market by storm as it becomes a relatively new way to sell consumer goods.

This piece explores the pillars, benefits and pitfalls of a rental model for consumer goods companies. As more brands explore implementing renting as either a core part of their business or as an experiment, there are a number of important factors to pay attention to.

This article is exclusive to Loose Threads Members, who get access to actionable analysis, insights and private events that drive growth.