Sharing Rents, Can You Reinvigorate Yourself?

According to foreign media reports, the US online clothing rental platform Rent the Runway is seeking a round of financing of at least $25 million from Asset Management Co T. Rowe Price Group Inc.. But the company has struggled in the past few months as a result of the outbreak of the retail industry. In April, about 35% of the employees were officially paid off, and nearly 10% of the employees were dismissed. The company's valuation has shrunk from less than $750 million to $1 billion.

In fact, Rent the Runway, like this, has reduced the offer to private investors in exchange for valuable funds for Internet start-ups. Sequoia Taylor, executive partner of Spry Ventures, the fund and consulting firm, explained to Bloomberg that Rent the Runway and other fashion start-ups are experiencing a decline in valuation at the present stage, because "their customers are coping with the new changes brought about by the epidemic. From their point of view, dress is the most unnecessary thing to consider now." In the face of the persistent outbreak of the epidemic, are people willing to wear clothes worn by others? In the wedding and festivals have been canceled, the whole nation to open the home office mode at the moment, sharing renting industry can hold on?

The epidemic has hit the retail business, and the apparel leasing business is the first to bear the brunt. Vision China

Once stood at the draught

Before the epidemic, "clothing leasing" was once considered by the market to stand on the draught of the times. According to the McKinsey fashion market survey, nearly 41% of respondents said that compared to 2018, the fashion rental industry in 2019 was "more direct and direct" for their lives. The demand for high quality products and services, as well as the lower income status compared with earlier generations, makes the leasing and secondhand resale of the market a competitive alternative to modern American young people. Whether it is to solve the consumption dilemma of Internet users who are ridiculed by netizens for the Internet age, or to deal with the clothing requirements of the millennial generation concerned with sustainable fashion, sharing rents can undoubtedly catch the pain of modern people's needs and provide the best solution for the "chopping hand for a while".

Rent the Runway, the originator of the United States sharing renting clothing, was established in New York in 2009. It was mainly rented by dresses, and since 2015, it has been operating daily clothing rentals. Up to now, it is still the largest enterprise in the United States. According to fibre2fashion data, the scale of garment rental market in 2018 reached US $1 billion 100 million, and it is predicted that the compound annual growth rate of the industry will reach 10.9% in five years, and there is no limit to the future imagination. In March 2019, under the fanatical pursuit of the shared economic wave, Rent the Runway also completed a round of $125 million in financing, and its valuation exceeded $1 billion. This can not help reminiscent of the phrase, which is regarded by many entrepreneurs as classic: "standing on the draught, pigs can fly."

However, when the wind and water had not yet started to rise, it was caught unawares by the sudden outbreak in 2020. According to Forrester survey data from the market research firm, in the past two months, the focus of American shoppers' consumption is mainly on daily groceries. For integrated retailers, sales of clothing and accessories decreased by $17 billion in April, down 79% compared with the same period last year. In addition, this year's personal luxury consumption market share is expected to shrink by 20% to 35%. "In other areas of the retail industry, there is no such thing as the renting and resale industry," said Sucharita Kodali, a retail analyst at Forrester. "The last thing people want now is second-hand goods, even though the virus can only survive for hours on the fabric." People want to minimize risks. "

Emergency brakes

After becoming the Rent the Runway unlimited member in February of this year, Margit Malcreda quickly became a loyal supporter of the rental clothing sharing economy. As a member of public relations work in New York, she chose the reason for online renting, like most users, who could enjoy thousands of designer costumes for only 159 dollars a month. And when it comes to brand promotions, prices can even be more favorable. Margit can change six new clothes every month, so she can choose her own heart every time, so she thinks that the membership she buys is very good value for money.

But with the outbreak in mid March, Margit could only work at home every day, and she began to doubt whether it would be meaningful to continue paying the service. "I don't have much demand on clothes at home," she told Fortune magazine. "I found myself getting upset about these clothes, considering whether I need to suspend the hire of clothes or even cancel my membership."

Margit is not the only one who thinks this way. In fact, in this unprecedented global crisis, hundreds of thousands of consumers who use rented rental services are also planning to give up sharing with others. On the one hand, they are concerned about the hygiene and disinfection. On the other hand, as the economy is affected, people are more inclined to save money than consume.

The most direct impact of consumers' confidence in leasing costumes is that the daily operation and maintenance of the leasing platform is in an unsustainable situation. With the abolition of large-scale conferences, wedding ceremonies and other activities, the demand for uniforms and special occasions is rapidly drying up. The rental platform has to maintain daily rigid costs through layoffs and salary cuts. Armoire, a Seattle based leasing company, has received a large number of customers' notice of cancellation of service since April. The founder and chief executive, Ambika Singh, has reduced her salary to $1 and asked employees to voluntarily reduce their salaries in exchange for company equity so as to maintain basic business operations. It is also difficult to develop new customers. According to BoF, Silje L Lu BBE, founder of Nova Octo, the evening rental rental service company, said in an interview that its new customer leasing business fell by more than 90% last week.

Some companies that are interested in sharing platforms also have doubts about the future of leasing, and the leasing business ready to develop urgently "step on the brakes". Last year, Urban Outfitters's leasing project Nuuly was seen as the main growth force of the company this year. But in May 19th this year, chief executive Richard Hayne said it would "vigorously reduce investment in Nuuly projects and try hard to turn it around." Gene Bornac, vice president of enVista retail department, a supply chain consultancy, told glossy analysis: "although retail industry will gradually recover from the clockwork caused by the new crown pneumonia outbreak, consumers' willingness to rent clothes will probably weaken in the future." He said: "the high unemployment rate and unsold clothing in 3 and April have been discounted, so that the price advantage of rented garments is no longer obvious. In addition, retailers who are in financial difficulties due to epidemics may reconsider the profit sharing relationship with leasing companies, which may lead to a deeper dilemma for the garment rental companies.

The poor will change, let the lease fly again for a while.

Although most of the garment rental companies have been hit hard, there are signs that the industry has also quietly recovered. By expanding the business layout or changing the leasing rules, leasing the clothing market is still a blue ocean with great potential.

Since the end of March this year, the domestic epidemic has been controlled, and restrictions on various activities have also been relaxed. China's Rent the Runway YCLOSET clothing two or three, which has obtained strategic investment from Alibaba recently, has made gratifying changes in its recent sales data. Liu Mengyuan, founder and executive director of the company, expressed confidence in the recovery of the market. She told Vogue: "with the gradual progress of the resumption of work, the number of people coming to lease is expected to grow." At the same time, she also suggested that after the epidemic, clothing rental companies should also change their existing business models. Since September last year, Yi Ersan has also added resale business to clothing. Liu Mengyuan said that since the economic downturn in 2008, the demand for second-hand resale has increased significantly, because people with cash shortages will be more inclined to cash in on valuable goods. It is expected that the momentum of the development of second-hand luxury goods this year is expected to return.

After experiencing the baptism of the epidemic, the rental platform is "poor to change", and now they not only want to let consumers pay, but also may bring extra income to the platform users. Considering that many people have time to organize wardrobe while staying at home, Hurr Collective, the famous British clothing rental platform, has encouraged people to hang out their idle clothes online. "People now have time to lose weight for their wardrobe," explains Prew, founder of the platform. "In the past few weeks, we have set a small bonus to encourage people to share their clothes. If customers hang out three costumes, he will get a credit line worth 15. The more clothes you wear online, the greater the credit limit in return. Prew believes that since the outbreak of the epidemic, people have become more and more accustomed to returning to a simple lifestyle, which will have a long-term impact on consumers' shopping habits. Therefore, attention to environmental sustainability will continue to be a major concern in the future. This also means that leasing mode is still unlikely to disappear as a replacement for direct purchase of new clothes.

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