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To Buy or Not to Buy?
By Christian Chensvold
So you need an item of clothing for a special event. The item’s pricey, and you only need it once. So you "buy" the item at the store, wear it proudly to your event, and then return it to the store for a full refund.
It’s like telling a white lie, but hardly uncommon. The problem for the retailer is that they don’t get a fee for letting people "borrow" the merchandise. But now that a host of new entrepreneurial websites are doing just that — renting out clothes and accessories for a nominal fee — brands and retailers may soon realize that they need to get in on the action, however much it seems to undermine the whole concept of selling fashion.
For countless decades men have simply rented formalwear for those rare occasions they need to wear a tux, and no one thought twice either about wearing clothes that countless others have also worn, or that the clothes on your back weren’t actually your own. Now the entire apparel industry may have to start making room for a new slice of the pie that operates just like the tuxedo-rental business.
"Today’s consumers aren’t interested in owning, per se, they’re interested in using," says Marshal Cohen of market research firm NPD Group, who studies the emerging industry of apparel leasing. "Fifty-one percent of consumers lease an automobile as opposed to buying, so the concept of leasing is something they’re very comfortable with. But it’s going to take a different mindset from manufacturers and retailers to embrace rather than resist this, because the consumer’s ready to do it."
Think about it: If you’re a clothes horse or fashion diva and could borrow an endless amount of clothing, how fun would that be to add constant novelty to your wardrobe for a fraction of the cost of buying? Consumers crave options, Cohen says. But just as brick-and-mortar retailers originally resisted the notion of ecommerce, apparel leasing is just the latest development the Internet has enabled that has manufacturers and retailers afraid of change. "Just like a decade ago we saw retailers resist selling on the Internet because it was a threat to their traditional business model, we’re now at the next stage and progressive retailers will realize they can still sell luxury by leasing it, not just selling it."
Leasing is also a way to recover the aspirational consumer in the aftermath of the recession, Cohen says. "This is precisely what the automobile industry did. They figured out how to lease a luxury vehicle to those who couldn’t afford to buy one. Fashion is being out-fashioned by other industries that know how to get product to the consumer."
At Tie Society, trading up
Now in its relative infancy, apparel leasing is providing a great opportunity for young business entrepreneurs. In November 2011 Zac Gittens decided to launch Tie Society, a kind of Netflix service for neckties, just a couple of years into his career as a business consultant for IBM. Gittens and his friends, all recent college graduates wearing suits and ties to work every day, were daunted by the task of having to build expensive business wardrobes. Ties add instant variety to a wardrobe, but they can be relatively expensive and styles change regularly with regards to color, pattern, fabric and width. Gittens and his friends soon began swapping ties on the weekend while watching football together, and from that the idea for Tie Society was born. "We found that almost every guy has a closet with about 20 ties," says Gittens, "but when you really ask them how many do they really like, they’ll say about five or six."
Tie Society operates very similarly to Netflix, with members paying a flat monthly fee based on the number of items they can have out at a time. Plans start at $11 and go up to $50, with most members paying about $25. Tie Society currently has about 500 styles totaling more than 2,000 items. New styles are acquired wholesale and are the current season’s offerings; popular brands include Burberry, Hermes and Giorgio Armani.
Though Tie Society currently consists of just Gittens and two full-time employees, it has been far more successful than he expected. Over Christmas alone he grew by 20 percent as a Tie Society membership turned out to be a popular gift item. "For less than a Burberry tie, you can give someone a membership, which just happens to include access to Burberry ties."
As with Netflix, ties are sent to members with a pre-paid return envelope. So far, says Gittens, "we’ve automated every single aspect that can be automated at this particular stage." Gittens is currently planning upgrades to his post office account that will allow him to be automatically notified as soon as a return tie’s tracking number registers as picked up (as opposed to received by Tie Society), allowing Tie Society to ship the customer’s next item sooner.
Now that he’s entering his 14th month in business, Gittens has noticed a clear seasonal pattern. Tie Society’s members don’t just crave variety in a one-dimensional way. They’re savvy about style, and at the beginning of fall all the wool ties go immediately into circulation, then all come back in to stay in the spring, when all the cotton, linen and brightly colored ones go out. "Customers really use the service to change out their tie wardrobe based on the season," he says.
Next up for the company is a rewards programs as well as more social media interaction with the site and between members. Long-term business plans, such as adding other items (though some pocket squares and cufflinks are currently available) are quickly becoming short-term thanks to the company’s success. “We’re seeing rapid and sustained growth,” says Gittens, “and we’re very close to hitting the point where that becomes exponential, not just linear.”
With Lending Luxury, never wear the same dress twice
In contrast to Tie Society’s flat fee, membership-based business plan, Lending Luxury, which leases dresses at lendingluxury.com, operates more like the traditional formalwear business, charging a per-item fee for five days of usage. This business was also born from a group of friends lamenting the cost of clothing — in this case for fun dresses to wear on a trip to Las Vegas. Women don’t like to wear the same dress over and over, especially now that social media can document the monotony. "Because of social media," says cofounder Jennifer Rosen, "there are so many times when you don’t want to wear an outfit again because photos of it will be posted on Facebook and Twitter."
Rosen and partner Sarah Jon Porreca began working on Lending Luxury in October 2009; between then and its launch the following August, its main competitor Rent The Runway also launched. With investor funding the partners bought their first stock of several hundred dresses in multiple sizes (Lending Luxury currently carries sizes zero to 16). They now attend market week in New York twice per year and secure dress inventory directly from brands and designers.
Rental fees start at $50 and go higher based on the retail price of the dress. Return shipping, dry cleaning and insurance are factored into the rental fee. Customers range from 18-50, and come with a wide range of reasons for needing a fancy dress, from high school prom to gala fundraisers. Lending Luxury also operates a largely by-appointment showroom in Tampa, Fla., allowing locals to browse the items available for renting. Many of them stop by weekly so they can wear a new dress every weekend.
With such an age range tastes vary, and Lending Luxury makes sure its buying trips focus on variety. "We know what our customers like," says Rosen, "and know which new dresses will be perfect for a 50-year-old woman going to a gala, and a girl going to prom." The partners also make sure to regularly acquire adventurous pieces that many women wouldn’t consider buying, but would be willing to wear for one night. "The great thing about renting is that if you’re going through a life change and want to try a new style, there’s something out there for you."
Lending Luxury rents out between 500 and 1,200 dresses per month, and unpopular models are donated to a local charity. Losses are minimal. "We’ve only had two dresses that were never returned," says Rosen, and have never had a dress come back unfixable.”
With previous careers in in gymnastics and payroll management, Rosen and Porreca’s new foray into leasing apparel has allowed them to indulge their love of fashion while becoming their own bosses. The learning curve has been steep, Rosen says, but certainly fun and worth it. "We look back on our first six months and laugh," she says. "The first time we walked into New York with a couple thousand designers, we were like deer in the headlights. Now we walk through like pros."
Christian Chensvold is a New York-based Apparel contributor who writes frequently on style and the apparel industry. He is also contributing editor to The Rake and runs the website Ivy-Style.com.
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