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South Korea: promising market for luxury rental services

Fashion subscription

A growing community of Korean women primarily in their 20s to 40s prefer renting high-end goods from subscription services such as Series Eight, The Closet and Reebonz Korea.

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Asked why they chooses to rent their wardrobe, they said the introduction of luxury goods rental services helped her prioritize living expenses and limit unnecessary spending on personal shopping.

By paying a monthly subscription fee of 79,000 won (US$70), Reebonz customers, for example, can rent up to two bags a month. Customers opting for pricier premium plans are given the option to rent a bag from the most expensive or popular brands for up to 10 days for prices ranging from 9,800 won to 19,800 won.

“Subscription-based business models have not seen much success in the local market compared to other countries. But, because luxury goods’ prices are so high compared to the low purchasing power of Koreans in their 20s and 30s, the (subscription) services are expected to see substantial growth in South Korea,” said Choi Kang-sik, a professor of economics at Yonsei University.

Choi said that with more women wanting to rent luxury goods, rental companies must better communicate with luxury brands in order to bring better products to the table.

“The power of luxury brands will always see an upward trend. The difference, now, will be that consumer groups won’t be women visiting department stores. It will be the luxury rental companies who will be supplying the bags to the original customer base,” he said.

Even though popular American designer rental services such as Bag Borrow or Steal and Rent the Runway launched a decade earlier, designer subscription services garnered attention from local consumers starting in 2016, according to Series Eight CEO Kim Tae-hyun.

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Kim, who co-founded Reebonz Korea with current chief Ha Dong-gu, left Reebonz to launch the startup Series Eight under the Value Art Architect Group last year.

On the surface, the two companies share similar concepts with regards to lending customers a hand in renting high-end products.

If Reebonz sticks to a subscription model, Series Eight and its six-member team envisions a shopping platform beyond just a rental service where women can rent high-end bags whenever and for however long they please.

“We essentially did not want to give the idea of pressuring women to pick a bag every month just because they are paying a certain amount. The pressure in itself ruins the shopping experience,” Kim said.

In order for a business to be successful on a subscription-based model, it needs to provide convenience, value for the money and personalized experiences. Consumers will cancel services that do not deliver unique, excellent personalized experiences, according to Choi.

Park Sun-young, juggling being a mom and public relations director at an ad agency in Seoul, appreciates such unique value from subscription services. Unlike her younger colleagues who seem to have time to go shopping, Park would rather save money and time by renting her wardrobe online.

“I think young women may feel it’s weird to rent designer clothing and carry handbags that are ultimately not theirs. But, look inside your closet. How many bags are just sitting on the shelf collecting dust?” Park posed.

“Being a mom and having a job, the rental services make my shopping experience something I look forward to at the end of the night before I go to bed. Just scroll down, look through the catalogue and click order.”