After Cars And Furniture, Is India Ready To Share High-End Fashion?

Once a luxury enjoyed by celebrities, designer-wear today is making its way into the lives of fashion-conscious youngsters across socioeconomic backgrounds in India’s biggest cities. Designer lehengas, haute couture fashion, runway-ready outfits have become the go-to choices for weddings and other events. Of course, it’s not like thousands of Indians in cities can suddenly afford designer-wear that often carries a sticker price of no less than a lakh, especially when repeating outfits is becoming more of a sin?

Fashion rental startups are trying to resolve this pain point of millennials by bringing designer wear to their tables at affordable prices. The fashion rentals scenario in India is currently pegged to be between $3 Bn-4 Bn. Owing to changing consumption patterns and massive social media usage, the global online clothing rental market is estimated to be $1.96 Bn by 2023.

With social media playing a pivotal role in the success and failure of brands these days, fashion rental startups appeal primarily to millennials who are aware of the latest trends and the best designers. Rentals thus help consumers save money, time and the headache of storage and maintenance.

Why Are Indians Flocking To Fashion Rentals?

Thanks to the emergence of platforms like Uber, Netflix and Airbnb, Indians seem to be embracing the sharing economy across sectors with ease. New-age consumers are turning to shared services as a smart and convenient way to focus more on experiences.

“Collaborative consumption has enabled people to differentiate between what they want and what they can afford. With the power of technology, we are creating a sharing economy for fashion consumption,” Sanchit Baweja, cofounder, Stage3 told Inc42.

“It enables people to experiment with fashion without having to worry about the commitments of a piece,” Baweja added. Another reason for opting for rentals is the increase in ease of use of online shopping. The rental model is convenient, reasonably-priced and sustainable and provides free delivery and pick-up. Stage3 delivers to more than 16 cities in India and has two offline stores in Delhi NCR. The startup will be opening a physical store in Mumbai shortly as well.

Renting is also a better option than settling for cheap duplicates. “People are becoming more fashion-conscious and aware. They don’t want to repeat outfits already posted on their social media or want to dress like their favourite celebrities and renting is an inexpensive way for them to do that,” Jheal Shah, founder and CEO of The Stylease told Inc42.

Founded by Jheal Shah, Juhi Shah and Tarang Shah in 2016, the Mumbai-based startup claims to have seen a 30% hike in sales month-on-month during the peak season. “It is also the changing mindset of the younger generation wherein they would rather save that money and use it for something more important to them than garments that are used and thrown for them,” Jheal added.

Space shortage, fast fashion and the fact that people don’t stay in the same city forever now are also factors contributing to fashion rentals. “Fashion lifecycles are becoming shorter. Everyone wants to be in sync. Instagram and Facebook bring fashion to everyone faster. Time, space, cash — all resources are scarce. We’re a solution for the high consumption world and help save cost and space,” said cofounder of Wrapd, Neeraj Wadhera, while speaking to Inc42. The Delhi based startup was founded in 2009.

“Change is very fast. It’s becoming difficult to own and be in sync with fashion. If you are moving cities every three-four years you don’t want too much stuff,” she added.

Startups such as Stage3 and The Stylease are also rising on the back of the changing consumer mindset when it comes to larger issues around fashion. Young buyers are becoming more and more environmentally conscious and realise the value of slow fashion as well as sustainability and understand that renting clothes is in many ways the more sustainable approach. People usually do not repeat the high-end designer garments anyway.

“We are promoting the idea of a conscious closet, where you borrow items you will wear only a few times and embrace renting over owning,” said Stage3’s Baweja.

Revenue-Sharing, Fashion Rentals, Ecommerce And Other Models

Most of these platforms have two business models in place — a rental model and an ecommerce model. For instance, Stage3 allows users to rent expensive designer outfits with high social obsolescence (i.e. largely meant for one-time use) at a fraction of the MRP, and buy from a collection of basics that could be repeated codeveloped by designers and celebrity stylists, leveraging data insights.

The startup has over 70K signed up users and about 50% of them are transacting customers who have contributed close to 40K transactions till date.

Most of these startups have brought on board a community of designers such as Abhinav Mishra, Abu Jani Sandeep Khosla, Arpita Mehta, Anushree Reddy, Anamika Khanna and more. They also offer new categories such as maternity wear, workwear and designer bags.

An Overview Of Fashion Rentals In India

• CAGR: 10.6% YOY
• Expected CAGR by 2023: 11.4%
• Size: $3Bn-$4Bn
• Average number of users: 50K-70K
• Average rental price: INR 4K- INR 7K for 3-4 days
• Security deposit: 50% of rent
• Target age group: 25-35

“The business model is quite simple. We rent what we think people won’t wear more than once. Basically, things that are costly and not cost-effective. You want to have fun wearing clothes not stress owning them,” said Wrapd’s Wadhera. Wrapd is largely offline as it feels India is not yet ready to rent online because of size and fit issues. The startup has stores in Delhi, Hyderabad, Jaipur, Faridabad and delivers within an approximate radius of 500 Km.

Another trend is for some rental providers to offer subscription rental models which grant their customers access to an array of clothing and accessories, with the option to purchase if they like a piece and want to keep it.

Typically, the age group of the core customer base for fashion rental is 20-40-year-olds and the rental price often ranges between INR 4000 to 7000 for three days. Many also charge a security deposit as a guarantee against damage.

Some startups source outfits directly from designers as well as regular people that have bought high-end designer outfits. They also tie-up with vendors and offer them up to 50% of the rental amount as a revenue share for them to give them their outfits on rent.

“We handle the marketing, the dry cleaning, logistics, fittings as well as basic wear and tear. We don’t buy pieces anymore. The same revenue-sharing concept is applied for our menswear collections as well as our jewellery collection,” said The Stylease’s Jheal Shah.

No Glamour In The Fashion Rental Business

As with any other high-end lifestyle business, the brand image is premium, polished and stylish. But the real hard work that goes behind the scene is often not about style or glamour. So what are some of the challenges in running a high-end fashion rental business?

Recovering The Cost Is Tricky

The base market for fashion rental is usually not large enough to support business at scale. Despite the revenue-sharing, the monthly average of 60-80 orders limits the scope of profit. Unless a single SKU is rented many times, recovering the cost may be tricky.

“Most rental companies face the challenges of the traditional sales-driven fashion system, along with consumer hesitation. There is resistance to rental of lower priced items, which can be easily bought,” Chandralika Hazarika, cofounder, Bigthinx, a fashion tech startup told us.

Secondly, since such outfits are worn for parties and occasions where the core audience of these startups usually mingle and speak about the very dresses. Due to this audience overlap, the potential for a single dress or outfit to be rented multiple times is lower.

Capital-Intensive Business Models

However, that’s not even the biggest problem with fashion rental. Despite a well-stocked inventory, there is no guarantee that most items once worn would be returned safely. It is not easy logistically to source items back from customers and to service new orders. Logistically speaking, it’s a bit more complex than traditional long-term rentals such as electronics or furniture.

Even though startups charge a security deposit, they cannot recover the entire cost of designer wear. Logistics in India is also a big challenge since it’s very unregulated as an industry. Warehouses need to be designed specifically for high-end fashion to manage orders in terms of laundry, alterations and quality checks.

Ensuring The Perfect Fit

The right fit is the biggest challenge for any online fashion business. Though startups have dedicated teams that handle fitting and offer video guides on how to take measurements, getting the perfect fit can be tricky, especially for designer wear. Time is also a barrier for these startups who have to quickly process the order and returns to ensure they meet targets.

Rental players are trying to persuade consumers to switch from ‘wardrobing’ (buying a product only for a one-time use before returning it) to hiring on-demand. For clothing from known brands, it’s relatively easy to know and rent one’s own size. But when it comes to Peer to Peer (P2P) rentals, oftentimes many garments might be of custom made designer-wear, or from a lesser-known brand, or from brands whose manufacturing specifications are not known. In such cases, predicting the right size to rent is difficult.

Cheap Replicas Eat Into The Business

Since the garment rental market is still at a nascent stage in India, converting customers from buying cheap replicas or second-hand copies to renting instead will always be a challenge for the near future. It’s also the reason for the lower addressable market for such startups.

Finally, startups have to overcome the hurdle of stigma. One of the biggest challenges faced in the Indian market is the taboo mentality or social stigma around rented outfits. People are not often ready to look beyond ownership. Despite strong quality control, not many are open to the idea of wearing clothes already worn by others.

“Consumers are aware and want to achieve a more circular fashion industry. However, aspects like the dry cleaning impacts of fashion rentals and alterations amounting to a huge cost can’t be ignored,” said Shivang Desai, co-founder and CEO, Bigthinx.

China and the US markets have been great for fashion rentals due to the different market conditions, the broader base for luxury goods. Rent the Runway, Girl Meets Dress and Chic By Choice have overcome these roadblocks in the global arena, but the Indian fashion rental business is still stuck with getting consumers to overcome their fears. And the problems with logistics and infrastructure are also big hurdles to overcome.

“A clothing rental service can solve the problem of a “one and done” approach to outfits. It’s also the fashion version of ‘reduce, reuse, recycle’. For more consumer engagement, rentals need to be convenient, cheap and fulfil the desire for having something new,” Desai sums up.

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