In Telligence

Subscription fashion: more Japanese renting clothes and bags

Fashion subscription
  • Millennials do not care much for car or home ownership, but for smaller purchases like fashion they have tended to follow the habits of generations past.
  • With mobile technology making sharing so much easier and the practice more familiar, more are turning to fashion rental services, and now major retailers like Marui and Aoki are adding their weight to the trend.
  • With one site claiming 70% of customers are new to the brand, renting offers clear marketing benefits to brands too.

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Fashion rental services are proliferating in Japan. For a fixed fee, they offer consumers the chance to rent a set number of clothes and accessories over a month or longer. The new services emulate those in the West, such as Rent the Runway in the US, which claims 6 million users and sales of US$100 million, and there are numerous start ups in this area.

There are two main types of fashion subscription: one where customers choose the items themselves, and the other where the rental service selects product based on preferences.

Start Today’s Omakase Teikibin, which launched last month, uses the latter model, with stylists selecting new items based on customer profiles that are sent automatically to subscribers on a regular basis.

Customers can then choose to buy or return the items they receive. Whatever the type, almost all services offer customers the chance to keep renting an item in their possession.

Fashion rental services offer brands a great way to attract new customers who might be afraid to invest in a purchase, particularly if it is a high ticket item, or just because it is a new type of style they are not used to.

For true fashion lovers on a limited budget, renting means being able to wear many more brands than would be possible by purchasing, and, for busy mums/working women, renting via online services is quick and almost risk free, obviating time spent in shop changing rooms.

In Japan, there are also many other categories of product being offered for rent. Recent new services include Flect from Dinos-Cecile, which rents furniture for periods of up to three years, and Rentio, which specialises in rentals of high end cameras and scanners, with pick up and returns via convenience stores.

Stripe International has been offering fashion rentals through its Mechakari service since September 2015. Its claim that, since starting, 70% of customers are new to Stripe brands shows just how beneficial fashion subscriptions can be as a marketing tool for a retailer or brand – a marketing tool that consumers pay for to boot. There have been 600,000 downloads of the Mechakari app to date although only around 10,000 users pay for the ¥5,800 a month subscription.

Stripe can even rent items that are hard to sell, such as pure white coats and jackets which customers would normally baulk at buying for fear of getting dirty. Since rental services include cleaning fees, this doesn’t seem to be a problem. Unlike other services, Mechakari only rents out new clothes – returned items are cleaned and then sold on Stripe’s website as used clothing.

Laxus and Karitoke are two of the most well-known fashion rental services, with Laxus specialising in high end bags and Karitoke in watches. Although the core customers are in their 30s, both firms see a significant number of younger subscribers on lower incomes signing up for the chance to own a slice of luxury even if only for a month – thereby also creating potential customers for luxury brands in the future.

Both services claim they are able to rent the much gaudier items that luxury brands say sell in much smaller quantities, and often the gaudier the better – i.e. the lack of long-term commitment makes consumers much bolder.

Laxus’ app was downloaded 400,000 times in 2017, and garnered gross transaction values of ¥15 billion. For a flat monthly fee of ¥6,800 it now rents 25,000 products from 54 brands ranging from Louis Vuitton to Jimmy Choo, and claims a bag can be rented in 20 seconds using its mobile app. A new idea is to encourage users to send in their own luxury bags to rent out to others; Laxus cleans them up and then gives owners ¥2,000 a month for each bag rental.

Air Closet, which launched in February 2015, offers a styling service like Omakase Teikibin, each month sending a package of items selected from 100,000 SKUs covering 300 brands. 70% of its customers are women in their 20s to 40s, and 40% have an average income of more than ¥7 million a year.

Most are typical select shop customers, but Air Closet’s surveys of its customers suggest around 80% like items or brands sent to them that they wouldn’t normally consider if they were purchasing.

Air Closet now claims 150,000 members, but does not reveal paid subscribers – although to encourage more subscriptions, from February it offered a money-back guarantee to customers who are not satisfied after one month.

Edist.Closet is similar to Mechakari, but with the added benefit of having professional stylists in place to select the merchandise offered, although customers retain control of what they rent. It has 10,000 members, mostly non-paying subscribers, of which 50% are mothers. While not revealing how many paid subscribers it has, Edist claims 90% of those who do subscribe remain after three months.

Businesswear retailer Aoki Holdings launched its own take on the rental market In April. Called Suitsbox, the service offers subscribers Aoki suits along with shirts and ties, with a minimum monthly fee of ¥7,800, but rising to ¥15,800 and ¥24,800 – not a bad return given the top priced suit on Aoki’s online store is only ¥79,000.

The basic service includes one suit, shirt and tie, while the most expensive service delivers three suits, four shirts and two neckties a month. As with other services, cleaning is included in the price.

As rental services have increased in scale, they are becoming a fund of useful data. Air Closet for example makes it easy for customers to give feedback on items rented, sometimes encouraging them with points, helping Air Closet build a database of consumer opinion on brands and items. Stripe International does the same with Mechakari, passing the customer comments back to its product planners.

SC developers and major retailers are also interested. As reported recently, Marui is a firm believer in the sharing economy and wants to see 5-10% of its sales from such services longer term. It also wants a slice of the fashion rental market, and has started opening up corners in its stores for rental services like Laxus and Karitoke. SC developers are also offering tenancies to Laxus and Air Closet – the latter has created a styling store in Harajuku where customers can get advice from shop stylists, which it intends to roll out to SCs .

SEE ALSO : Richemont launches a new product to target millennials

All of which is very positive, but with many services still reluctant to reveal the number of paid subscriptions they have, it is hard to gauge the sustainability of these businesses longer term. Even Stripe International admits much more growth is needed to make services offer a decent return.

Even so, with the likes of Marui and Aoki on board, fashion rental subscriptions look like they are here to stay. They are particularly suited to those millennials with a lower propensity and desire to own stuff, and are another sign of the increasing assimilation of the sharing economy in mainstream society.

 

Michael CaustonMichael Causton is the co-founder and partner at JapanConsuming, a specialist research firm on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market to help subscribers keep up to date with the latest trends and data. JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and consulting on market strategies and future trends.

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