Banana Republic said Friday it will launch an online rental service for women in September. The monthly subscription, "Style Passport," will cost $ 85 a month, and women can rent three different pieces of the brand at a time. Customers will be able to choose from around 100 different styles a month and may choose to purchase any of the items. Banana Republic says it plans to add a men's rental program in the future.
With foot traffic to malls and bricks and mortar stores declined, Banana Republic is looking for ways to evolve.
CEO Mark Breitbard believes a hiring service will attract new customers, expand existing customers' expenses and help Banana Republic remain relevant.
"This is a way to keep track of customers' ever-changing, moving lifestyles," he said. "It will only help us in the long run to maintain the health of a brand that has been in business for 40 years."
The rise of subscription rental
Banana Republic & # 39; s relocation to a rental subscription is part of a broader shift among traditional companies trying to take advantage of rapid growth in the niche market. The clothing rental market is estimated at around $ 1 billion today and will hit $ 2.5 billion by 2023, according to GlobalData Retail.
These startups signaled to old retailers that many younger buyers are eager to put on new looks often and are not always keen on buying expensive outfits to wear just once or twice, said Alex Fitzgerald, chief of the consulting firm AT Kearney's consumer and retail practices.
Rent the Runway also gave many women access to luxurious dresses they otherwise could not afford. It then expanded the range of everyday wear. The success of Basic Look proved to companies like Banana Republic that consumers are interested in renting clothes over wedding dresses.
"Rent the runway at home by developing the consumer's desire to rent versus owning," Fitzgerald said. "They really institutionalized this model."
Concerns about environmental sustainability in fashion have also driven socially conscious buyers to rent, rather than own clothing. Over the past 15 years, clothing production worldwide has doubled, although the average number of times people wear their outfits has fallen, according to conservation organization Ellen MacArthur Foundation.
"Fast fashion has a lot of waste," said Banan Republic CEO Breitbard. "This is a way to be able to have multiple styles without feeling like you need to reject them, donate or give away."
And social media is also driving the rise of clothing rental. "They want a style once or twice and not take a new image in the same dress," Breitbard said.
Risk of Cannibalization
Banana Republic & # 39; s $ 85 monthly rental price is a similar deal as "Infinite Style," Ann Taylor's $ 95 monthly price for three pieces. "Nuuly," rental subscription for Urban Outfitters, costs $ 88 for six items a month. Each of these is under Rent the Runway's core monthly fee of $ 159.
It is complicated to operate a rental subscription service. Retailers need to track clothes, wash and clean them and send them out to customers.
Since Banana Republic has no experience running this supply chain, it is partnering with CaaStle, a company that provides technology and logistics to retailers who want to jump in for rent, rather than building those properties in-house. Ann Taylor and Bloomingdales have also joined CaaStle.
However, Banana Republic should proceed cautiously into the rental market, said Fitzgerald of A.T. Kearney. If current Banana Republic shoppers switch to buying their clothes with the rental program, it will undermine the brand's goal of adding new sales with the subscription.
Breitbard, however, depends on the concerns of the rental program that cannibalizes Banana Republic's primary business.
"We feel the value will be there for the customer," he said. "The financial will be strong for us as well."
– Correction: An earlier version of this story incorrectly provided a quote on how the Banana Republic should come to market.