Rental companies have been hit hard by the pandemic as events have reduced the need for party outfits and handbags. But as the bottlenecks lift, brands like Ralph Lauren and Rebecca Minkoff are recognizing the potential of leasing to move inventory and reach new customers, especially for a growing demographic of digitally savvy, digital-conscious customers. durability. However, rental, like resale, has not yet been widely adopted by the big luxury players, so Kering’s investment marks a significant change in mentality, even if it is modest. Kering also took a 5 percent stake in the top luxury resale site Vestiaire Collective in March.
âKering is at the forefront with an investmentâ with its feet in the water âin several new business models: Vestiaire Collective in theâ second life â, Farfetch (via Artemis) in the marketplace, and now in rental. It seems wise to have a chip in these companies, âexplains Luca Solca, luxury analyst at Bernstein. âI do not see any major risks associated with this movement, considering that the Kering brands will be able to set up safeguards to avoid any potential trivialization. On the contrary, I think it’s smart to run low-investment experiments like these, with the prospect of staying at the forefront of innovation.
Despite the tough business time during Covid, “rental models are about to accelerate again in a post-pandemic world,” said Sarah Willersdorf, head of global luxury at the Boston Consulting Group. A recent BCG investigation in partnership with the Altagamma Foundation, found that even during the difficult last year, 21% of Gen Z and Millennials rented products. A greater concern for sustainability and the pursuit of value has made consumers think more about access than ownership, she says. Leasing also has the potential to be a tool for acquiring customers, especially with younger customers, as well as being used to test different products and styles and generate returns on underperforming inventory, adds Willersdorf.
Bath reports The growth of a modern and sustainable luxury business over the next 10 years may depend on rental and resale, with rental accounting for 10% of revenue by 2030.
Contemporary brands like Nanushka and Ganni have become more open to this new consumption model and have become involved through partnerships with existing rental platforms. Hurr, My Wardrobe HQ, and OnLoan all launched white label solutions in May, and Rotaro is in talks with potential launch partners slated for this year. However, many luxury players like LVMH do not offer rentals, and there are no concrete plans yet for Kering’s brands to enter the space themselves. âWe sometimes fear that there will be a negative impact on the brand if it does not fully control the merchandise. If a luxury brand enters the rental market through a partner, there will need to be a guarantee that the products are well maintained between uses, and they must provide exceptional service, âsays Willersdorf of BCG.