Vogue Business Innovation Editor Maghan McDowell breaks down what the clothing rental and subscription models mean for logistics. This excerpt is from a story published on November 26, 2019. Read the full article here.
Like streaming movies and music, clothes are now being treated like a utility to which one can subscribe.
Referred to as “clothing as a service” (a play on “software as a service”), CaaS refers to a distribution model in which clothing and accessories are provided to customers on a temporary basis, often through rental or subscription. Rent the Runway is the clear legacy player, having established a market in the US with short-term formalwear rentals in 2009. It has since been joined by Trunk Club, Le Tote and Nuuly in the US, YCloset in China, and dozens of other upstarts across the world. Traditional brands have also recently tacked on rental offerings, including Bloomingdale’s, Ann Taylor, Express, Banana Republic and Levi’s.
CaaS puts brands in the role of a service provider, in which technology and logistics are often the key differentiating factor. In addition to separate inventory and marketing, CaaS requires reverse logistics infrastructure, technology that can anticipate inventory patterns, and a system for cleaning and repairing garments.
Adding in a rental capability on top of an existing system, even if it is flexible, requires significant technical investment, says Donny Salazar, a former retail COO who founded fulfilment technology company MasonHub, Inc. “Your system would have to track unit level inventory and condition of the product, which most systems are not set up to do. Brands are starting to understand that logistics can be a key strategic advantage, but fulfilment partners are struggling to keep up with the necessary innovations to support existing channels as well as the new ones.” He recommends that brands think long- term when establishing a partnership. “Brands think of what they want now, not, ‘Where do I want to be in five years?’”