Does the rental of fashion provide a hire purpose?

In October 2022, John Lewis announced the launch of a rental service for its womenswear, joining the likes of large names including Ralph Lauren.

Having created a specific collection which is available to rent, John Lewis’ commercial director, Kathleen Mitchell, believes the rental platform encourages its customers “to support a more sustainable way to shop”. Do rental platforms therefore offer the solution to sustainable fashion? Can lawyers expect to see an increase in their workload for fashion clients including the reviewal of hire purchase contracts and even the restructuring of brands’ business models depending on the extent to which they outsource their services?

A surge in demand for rental fashion

COVID-19 provided consumers with plenty of time to consider their fashion choices and conduct a wardrobe clear out which may have even revealed long-lost items that still donned their tags. Couple this with an environmental crisis and rising living costs and it’s no wonder that Lyst saw a 66% increase in searches for sustainable fashion in 2019 from the previous year, which has no doubt increased further since COVID.

The ability to temporarily rent clothes and accessories instead of having to permanently purchase seems to offer the perfect solution to sustainable fashion. It reduces waste whilst still satisfying consumers’ demand for on-trend outfits. Consumers can benefit from items at a fraction of their original retail price (for example Hurr Collective’s rental prices range from 10-20% of their original retail price). On the face of it this provides consumers with a cost saving on an item which likely serves the same, or at least similar, purpose as if purchasing the item brand new. Furthermore, multiple consumers can benefit from each item as they are returned in order to be rented again instead of being lost to the depths of a wardrobe or sent to landfill, thus also reducing the environmental burden. However, there are hidden costs and the environmental impact to consider.  Dry cleaning has to be done, clothes have to be transported to collection and drop off points. Then there are the legal costs incurred if a rental platform or trader wishes to minimise risk in the relationships.

Legal services

Where do lawyers fit into this? The rental relationship should be documented in clear terms and conditions so that everyone understands what their responsibilities are and the consequences of failing to carry these out. Lawyers may need to draft and advise on the supply terms with traders where it is a platform facilitating the rental and the rental terms and conditions applicable to consumers . Whilst a standard contract of hire may suffice, more bespoke contracts may be required for specific high-end items or garments used for a particular purpose. Legal dispute resolution services may be required if the provisions of a hire purchase contract are breached or items are damaged or lost.

Renting involves more touchpoints between a brand’s customer service team and consumers than the simple sale of goods. Consumers may enquire about the waitlist of a sought-after item or wish to swap an item which they currently rent. This ongoing relationship obviously provides more scope to engage and up sell but equally a poor service by a retailer can be disastrous to a brand. Investment in customer service teams is likely to be key and employment law advice necessary.

In addition, high end or branded goods must be authentic to maintain customer trust. If particularly high-end expensive items are offered, it may be worth the company/renting platform offering an authentication service to assure customers that they are renting the real item which they are paying for.

At present, there are three recognisable business models of fashion rental services. The first includes platforms, such as Rent the Runway, which keep most of the rental process in-house, including dry cleaning garments ready for the next consumer and delivering them. The second model, utilised by the likes of Banana Republic, outsources cleaning and delivery services to third parties, such as CaaStle. The third category functions in a similar way to peer-to-peer e-commerce company, Depop, in that the platforms operate as marketplaces and so only take commission from the sales that occur on the platform. The product listing, marketing, communication, cleaning and postage is left down to the users while the platforms, such as By Rotation, only become involved to resolve serious issues. Corporate and restructuring lawyers may therefore be called upon to assist and consult on the proposed business models of rental platforms, with the commercial team later becoming involved to advise on subsequent outsourcing contracts.

Is this the future of fashion and thus the law within fashion?

Reduced waste and decreased costs sound idealistic, but unfortunately this doesn’t quite represent the reality of the fashion rental space. Whereas retailers usually aim for as few returns from their customers as possible, a rental service results in a 100% return rate meaning that for every transaction two transport services are required: one for delivery, one for return. Not only is this polluting, but it may soon become unfeasible for many businesses as they attempt to cut costs amidst a surge in raw material costs. Retailers offering a rental service may therefore be short-lived.

For rental platforms who adopt either of the former two business models described above, they will require significant storage facilities to house their inventory of rentable items which again comes at a cost. To justify both the cost of the storage facilities and the capital cost of each item within the inventory, most items would have to be rented multiple times. Peer-to-peer platforms avoid these costs but cannot adopt a strong brand identity in the same way that the other business models can as control over which items their platform hosts lies with the users of the platform as opposed to the retailers/platform themselves.

The jury is out as to whether rental fashion is the next holy grail. Whilst it will no doubt reduce waste and curb the fast fashion industry, it unfortunately may not alleviate the fashion industry’s burden on the environment as much as is hoped due to the delivery and returns process.