American Eagle Outfitters recently started testing a new apparel rental service called “Style Drop”. The service lets subscribers, who pay $49.95 per month, rent three articles of clothing at a time. The products can then be swapped out an unlimited number of times throughout the month. Shipping is free, and subscribers don’t need to wash the clothes before returning them. If customers decide they like a piece, they are able to purchase it at a 25% or more discount.
With fast fashion retailers frequently critiqued about their lack of sustainable practices, is this AE’s knee- jerk response? Or does it signal a long term strategy for the group to compete against the likes of Zara and H&M?
Clothing rental was in the past associated with high-priced apparel like designer dresses. However, several companies started blurring the lines between purchases, rentals, and subscriptions over the past decade.
Ten years ago Rent the Runway was founded, a platform that lets customers rent high-end apparel. It currently offers monthly subscription services for $89 or $159 per month. Stitch Fix charges customers a “styling fee” of $20 and delivers a package of five pieces of clothing based on the results. The customer gets three days to decide to keep or return the items, with the styling fee serving as a credit toward purchased items. Amazon also recently launched Prime Wardrobe, for all its U.S. Prime members last year. The service lets customers order three or more items without an upfront charge, and has a return window of seven days.
While these retailers have so far been successful using a subscription model others have not. This month JCPenney announced its stopping the men’s apparel subscription service it tested in partnership with subscription startup Bombfell. The service, which was live for two years, allowed subscribers to receive a monthly selection of clothes from JCPenney’s “Big and Tall” brands. Gap tried a subscription kids’ clothing service last year but ended it after just 14 months.
Subscription services have major challenges, as retailers are under pressure to sign up more customers every month while convincing existing ones to stick with the service.
Do these subscription services mark the end of fast fashion? Millennials & Gen Z are constantly looking to be on trend and are obsessed with newness yet are more environmentally conscious than other generations. It may take some time for mainstream shoppers to adopt the notion of renting clothes instead of buying them.
“Gen Z is increasingly interested in options that allow them to look great, but have less of an impact on the environment,” Andrew told Marketwatch. “As the test continues, and we learn more about what our customer is looking to rent from us, we’ll adjust the assortment accordingly.”
Time will tell if these subscription models are revenue generating or simply generate good publicity.