The best chance for a clothing rental company to make money is to provide clothing within a niche market, such as specific sportswear, and to work closely with the suppliers and clothing manufacturers.
- The argument comes through the findings of a study led by researchers at Chalmers University of Technology, Sweden, which highlights the measures that can make clothing rental a success.
THE OBSERVATIONS: By interviewing founders, managers and other key people from nine Swedish companies, the researchers gained an understanding of each company's situation.
- Although there was a willing customer base for renting clothing in this way, several other challenges that made it difficult for companies to achieve profitability.
- Companies also struggled with high costs for warehousing, logistics and laundry.
- Especially for the subscription models, there were also difficulties in obtaining venture capital to be able to survive financially through the first phase of building the company
- Some of the business models worked better than others.
- Companies that focused on a specific market, such as outdoor clothing, were more successful and sustainable. Especially if they also had a local connection to an outdoor recreational area.
THE METHODOLOGY: The researchers analysed nine Swedish companies that have either tried and failed, or are ongoing in the process of creating a sustainable and desirable clothes rental company. They identified three main business models for renting out clothes:
- Membership model: customers become members and can then borrow clothes for a certain period of time, similar to a library. This model often had an enthusiast as its founder, with a focus on sustainable consumption.
- Subscription model: customers pay a monthly fee to rent a certain number of garments. These startups worked on scaling up operations and attracting venture capital.
- Individual rental model: the company would provide specific types of clothing to rent out, often in combination with other equipment, such as outdoor clothing paired with ski equipment.
The researchers did not investigate the environmental and climate impact of the business models specifically, but in general, the environmental effects of our clothes have already been well mapped.
RECOMMENDATIONS FOR INDUSTRY Based on the study's results, the researchers give a number of recommendations to those who intend to try renting clothes as a business model:
- Focus on niche markets based on target group and product type where the need is clear
- Develop partnerships with suppliers to improve products based on rental experiences.
- Think about logistics and transport in the rental model right from the start to be able to get the model scalable.
THE RESEARCH: The scientific article "Exploring renting models for clothing items – resource interaction for value creation" has been published in the Journal of Business & Industrial Marketing.
- The authors are Agnes Andersson Wänström and Daniel Hjelmgren, University of Borås, Maria Landqvist, Rise, and Frida Lind, Chalmers University of Technology.
- The study has been financed with funds from the Swedish Energy Agency.
