Fashion Rental Customer Journeys Show The Importance of Shopper Objectives

Rack of  colourful  dresses

The rental business for a long time was an edge case in retail – something Blockbuster did, and U-Haul, and not much else. But the rise of digital retail upstarts included using technology to tackle the rental market in new ways – and bring it to fashion categories in particular.

The early entrants like Rent the Runway have market awareness. But as the model has evolved, it has expanded beyond making high-end designer clothing available to the aspirational market. In fact, business models have arisen to address three distinct consumer objectives, and this will ultimately pull the market in three different directions.

Objective 1: Life Events

The O.G. of fashion rental (mainly Rent the Runway) revolved around making luxury clothing available to people who would otherwise never be able to afford it. While there is a certain minimum expectation in keeping up to date, there is as much value here in vintage – or even “last season’s looks” – as there is in the latest fashions, which makes this approach work. Young women seeking once-in-a-lifetime prom or wedding dresses pay a fraction of the cost, wear it once, and send it back. And because the fashion doesn’t have as rapid of an expiration date, Rent the Runway can get several rentals out of it before they have to retire it.

This kind of rental has expanded to a broader category of life events. If you’re going to spend a summer going to wedding after wedding and you don’t want to show up in the same outfit every time, rental has you covered – for the same price as one whole nice dress, you could hit the proverbial 27 weddings and never have to wear the same dress twice.

Rent the Runway has since expanded their offering, including a monthly fee-based service that focuses more on professional clothing. This newer offering falls into serving consumers who have the next objective: keeping it moving.

Objective 2: Keep It Moving

With this objective, consumers find appeal in both not having to have the hassle of cleaning/caring for their items, and in having high-churn inventory that they don’t waste. They’d rather pay a monthly fee and not throw anything out than buy things, have them clog up their closet space, and then stop wearing them and eventually have to get rid of them or donate them.

Gwynnie Bee is probably the best known here, with a monthly subscription plan that really does aim to be the overall closet. The clothing items are not as expensive as you’d find on Rent the Runway, and tend towards more casual, but are still on the pricier side of brands. FashionPass is another offering, with a heavier emphasis on accessories alongside clothing. Both companies emphasize trading out as often as you want, as well as no dry cleaning or obsolete clothes.

Another model for customers interested in trading out rapidly is the model found at Trade My Bag, which sells luxury handbags, but offers a big credit towards a new purchase any time you trade in your old bag. So even though consumers are paying up front, the system of credits bring them back to something pretty close to a rental fee.

This model is a bit more focused on what’s new and stylish, because it’s more dependent on seasons and on bringing consumers back to fill in their closets – their preferences for what might be next. But that means that logistics play a role in making sure there is enough inventory available to meet consumer wants and desires, and there is a certain logic that has to go into the price offered if a customer wants to keep an item instead of shipping it back. That pricing logic, however, exposes a third type of customer objective: a monthly rental fee, but with the objective of owning.

Objective 3: Try To Buy

I don’t believe it is any coincidence at all that the founder of Gwynnie Bee is also the founder of CaaStle (CaaS as in “Closet as a Service). Basically, the underlying technology platform that services Gwynnie Bee customers is now available for other brands and retailers to create the same kind of offering for their own customers. Notable early adopters include Ann Taylor and Loft, New York & Co, Express, and now American Eagle as well.

It’s notable that all of these companies are their own brands (vs. Rent the Runway and Gwynnie Bee which feature multiple popular brands). It’s also notable that they all fall into a lower price point than all the other models described above. I tried New York & Co’s service for several months, and found myself sucked into a value equation of: yes, I may be paying a monthly subscription fee, but the ability to actually try and wear the items is way better than a fitting room experience, and if I end up buying something for 75% off retail price, in the end when you add the monthly fee back to what I bought at 75% off, I’m buying things I like a lot better and know for a fact fit well, and don’t feel guilty if I turn around and send some – or even all – back, because I know I didn’t waste my money on something that really would end up sitting in the back of my closet.


Inventory management and demand management are crucial to success in this market, as well as skills in reverse logistics. You don’t have to be an expert in demand forecasting because consumers tell you what they want – Gwynnie Bee and CaaStle customers all require a minimum number of products in the customer’s wish-list closet. They select which items to send you out of your preferred options, but that gives them both visibility into high-demand items and well as some control over how to still serve customers even when the high-demand items aren’t available.

Pricing is essential as well. For someone like Trade My Bag, the purchase price and the redemption credit are both essential, based on an assessment on supply and demand. Enough credit needs to be awarded to consumers for when they trade in bags to keep them going, while also not accumulating bags that aren’t in high demand and aren’t going to be any time soon.

For the CaaStle companies, pricing is even more essential, since consumers have the option to buy the item rather than return it. In the early days of an item, demand is going to be high so you’d want to tag an item with a higher purchase price, if only to acknowledge the opportunity cost of selling the item out to a customer vs. being able to rent it 3-4 more times before you’re ready to “retire” it. And towards the end of a product’s life, you’ll want to be more aggressive to encourage a customer to keep it instead of ship it back – with all of those associated costs.

Finally, you need to be a pro at reverse logistics. This isn’t just about shipping things as cheaply as possible. You need to keep enough inventory on hand to have some on offer to customers, while also covering the inventory that is literally sitting in customers’ closets at home. You have visibility into what’s coming back before it gets there, but if the item has to be laundered or even repaired then that will extend the amount of time before you can put it back into circulation. That makes returns important, because the longer an item is in your possession but not rentable, the more inventory you need to have in order to meet your needs. Every item waiting for disposition is an item costing you money, instead of making it.

I think one challenge in moving from the Gwynnie Bee model to the closet-as-a-service model is that Gwynnie Bee is not a chain retailer with a physical presence, and many of the brands who have signed on with CaaStle are. The distinction there is that stores can be a place where fit could happen, so that you don’t have to spend a couple months of sending things back that don’t fit. It’s one reason why Gwynnie Bee is pretty aggressive about applying intelligence to fit estimates to help you narrow in on sizes, especially across multiple brands.

But stores set expectations in other ways. They could be a pickup and return point, rather than using the mail. This might even let the retailer use reusable totes instead of poly shipping bags, which while they can be reused, they are not “green” at all. And it could be a challenge to deal with customer expectations of “why can’t I swap out some things here instead of wait for them to be shipped to me?”. It also seems like a missed opportunity not to promote the rental service in the store. I know why these brands don’t do it – they want consumers to buy what’s in front of them. But that’s not very customer-centric thinking.

The Bottom Line

Rental appears to be here to stay in fashion. Retailers need to understand which objective they can serve best – the life event model, the keep it moving model, or the try to buy model. Some of that is determined by price point and the kinds of fashion you sell – cocktail dresses aren’t going to do well in the try to buy arena, for example, and price point definitely plays a role.

But that shopper objective then shapes the business model that follows. If you’re going to support try to buy, then you need to be good at the discount pricing on offer to entice a customer to buy vs. send it back. If you’re going to do life event rental, one, you’ve got to be on time in getting it there. And two, you have to be pristine in fit prediction and also laundering/refurbishing items. A cocktail dress has a lot more exposure to laundry requirements both from a fabric perspective, and from a “what was it exposed to” perspective.

Ultimately, this is why understanding shopper objective is at least as important on deciding the brand value proposition of the products you sell. How those two things play off of each other drives the underlying capabilities that a retailer needs to be good at. And far too often retailers approach this completely the other way around: they define the products, they develop their competencies, and then they try to force customers into the journeys they need customers to take. And that is not customer centric at all.