Some clothing rental businesses are seeing subscribers dwindle

Monthly subscription fees ranging from 79 to 240 dollars for rented clothes may be perceived as an unnecessary expense, prompting subscribers to cancel their memberships.

It is one of the reasons companies like Rent the Runway is banking on clothing from in-demand designers to retain customers and counter recent subscriber losses, while rival Stitch Fix is focusing on private brands. Last week Rent the Runway announced it would reduce its workforce by 10 percent in addition to the exit of its COO and president Anushka Salinas.

This is not the first time the rental platform was forced to restructure after subscribers fell in 2022 resulting in layoffs, and a 24 percent tumble in its share price. Data from the Wall Street Journal (WSJ) said the platform has just 132,000 subscribers as of Q3 2023, well under the 3 million shoppers it has served.

But it is not just economic uncertainty or rising inflation that has led consumers to reconsider their spending habits on rental fashion. Some subscribers have expressed dissatisfaction with the limited diversity in styles and sizes offered by these rental services. “Our subscriber base didn’t decline because of an uncertain economic backdrop, but because we didn’t have the right inventory levels for our customers,” Rent the Runway Chief Executive Jennifer Hyman told the WSJ in a recent interview.

This has prompted rental service businesses to include diverse style offerings and increase availability, in a bid to convince customers to pay monthly fees for rented clothes.

Stitch Fix, aiming for profitability after shares fell 75 percent since its IPO in 2017, is emphasising private brands to lower inventory acquisition costs. The company saw its number of active clients fall by 515,000 in December 2023, a 15 percent drop from a year ago, according to data from Retail Dive. The platform has gone through several iterations, from styling subscription services to e-commerce, with the latter added to counter shoppers being able to make purchases without requiring them to sign up for its styling services.

The emergence of new players in the rental subscription market, such as Nuuly, which is also a re-sale marketplace, and Armoire, provides consumers with alternative options. With more people working remotely, there is less emphasis on regular wardrobe updates and a decreased need for a variety of professional or formal attire. The pandemic hit the industry hard, as social events were canceled, but as platforms pivot to focus on sustainable consumption and expansion of styling services they may counter subscriber ennui. Still, WSJ analysts warn it is going to be challenging for rental platforms to gain subscribers in the current economic environment.

This article has been changed on 18 January 2024 to include data about the number of subscribers.