The idea of renting a Birken bag or a Rolex watch may have seemed bizarre not too long ago. But in today’s world, it’s just as realistic an option as buying it on resale.
While we can say now that resale and rentals are not entirely novel concepts, their fusion within the modern retail ecosystem has created a dynamic transformation and is still relatively new. Resale, or buying and selling pre-owned goods, has gained traction because of its economic viability and ability to address sustainability concerns. Meanwhile, rentals have become an attractive alternative to traditional ownership, allowing consumers to access high-value items for a fraction of the cost.
Impact on Brands and Retailers
Brands and retailers that embrace resale and rental solutions stand to reap multiple benefits. First and foremost, it can help them align their business model with the growing consumer demand for sustainability. Secondly, they can up their sustainability quotient as resale and rental options can extend the lifecycle of their products, thereby reducing overall waste.
Furthermore, these models offer new revenue streams. By participating in the resale market, brands can capture a portion of the value of their products even after the initial sale. On the other hand, rentals cater to consumers who might not have considered purchasing high-end products due to their price tags, effectively expanding the brand’s reach.
Brands should optimize their resale and rental strategies by taking several factors into consideration. Offering or supporting sales of high-value items, especially those with enduring or historic appeal, is a great way to jump into the resale business.
Luxury fashion houses have capitalized on this by creating dedicated platforms for their clientele to sell and purchase pre-owned items with authenticity guarantees. And, of course, third-party platforms like The RealReal and Rebag have also looked to claim their market share.
In an interview with Retail Bum, Trove’s founder and executive chairman Andy Ruben said: “The concept of a rental program works exceptionally well for certain formal scenarios, showcasing strong use cases. But when it is everyday items, having the ability to readily identify products like REI backpacks and confidently anticipate their return after purchase—whether through trial or rental—extends the advantages regarding curbing overconsumption.”
Noting REI, sustainability-focused brands have a unique opportunity to align their messaging with their actions. Engaging in resale or rentals reinforces their commitment to reducing the fashion industry’s environmental footprint. This alignment resonates strongly with consumers who prioritize eco-conscious shopping choices.
Consumer Perspective: Resale vs. Rentals
For many brands looking to grow beyond the traditional retail model to become more sustainable and meet consumers’ demand, the lines defining the rental from the resale model are starting to blur.
“Rental and resale are progressively converging. Imagine when you first buy a vest, and you decide a few months or a year later to bring it back (in excellent condition) and get X dollars back… I don’t know if that’s rental or resale,” said Ruben.
Still, from the consumer perspective, the choice between resale and rentals hinges on several considerations, including individual preferences, financial factors, and usage scenarios. Here is a breakdown of factors that typically influence their decisions:
- Ownership: Buying pre-owned items offers permanent ownership and the freedom to use, modify, or resell the product at will.
- Long-Term Investment: High-quality items can retain value or even appreciate over time, making resale an investment opportunity.
- Sentimental Value: Consumers might prefer to own items with personal significance, such as vintage pieces or heirlooms.
- Variety: Rentals provide access to a diverse range of items, allowing consumers to experiment with different styles without the commitment of ownership.
- Cost-Efficiency: Renting enables consumers to access high-value products without paying the full price tag, ideal for special occasions or infrequently used items.
- Reduced Clutter: Renting helps consumers avoid excess accumulation and live a minimalist, clutter-free life.