[THE INVESTOR] Office worker Kim Ji-young recently attended a friend’s wedding wearing a rented dress.
“I rarely have occasions to dress up, and I didn’t see the need to spend a lot of money on buying something I would probably only wear once or twice,” she said. “I have some dresses I bought before hanging in my closet, and every time I’m cleaning out my closet those are the first items I want to throw out because they just take up space. I don’t want to buy more.”
Project Anne’s rental membership system. SK Planet.
Kim is not alone. As consumers pay more attention to rapidly changing fashion trends and tire of continuously buying and throwing away cheap, low-quality clothes sold through fast fashion, many are seeking to rent clothes for one-time wear.
According to the KT Economic Management Research Institute, the Korean business-to-consumer rental market has been growing 10 percent annually since 2012 to reach nearly 16.9 trillion won ($14.8 billion) in 2015. Consumers in Korea are already well-acquainted with the concept of retail rental, focused mainly on home electronics such as water purifiers and massage chairs.
Retailers have picked up on the potential for expanding the rental market to fashion.
SK Planet, which operates the online open market 11st, launched a new app called “Project Anne” last September, which allows customers to continuously rent and return clothing from over 100 brands on a monthly membership basis.
Through the service, customers can rent items that cost hundreds of thousands of won for 80,000 won or 130,000 won a month, depending on the number of items they wish to borrow.
“We expect that the culture of fashion will move away from simple purchasing toward a culture of experiencing and enjoying diverse fashions to fit each person’s preferences,” said an official with SK Planet.
Other retailers have focused more on providing rental services for high-priced formal wear, reducing the pressure on consumers to spend large amounts on quality items.
Lotte Department Store created an offline fashion rental store called Salon de Charlotte at its main store in downtown Seoul. Salon de Charlotte specializes in renting out party dresses, jewelry and formal business attire.
“As consumers place more importance on consumer experience than on ownership and the perception of rental services turns positive, we decided to create the industry’s first fashion rental store,” said Woo Gil-jo, head of merchandise strategy at Lotte Department Store.
Luxury online mall Reebonz also tackled the luxury rental market with monthly memberships of approximately 80,000 won that allow consumers to rent out handbags from luxury brands like Gucci, Prada and Givenchy.
Retailers are seeing the rental market as a viable spot for growth.
According to the Samsung Fashion Institute, female fashion consumers are shifting their preferences from cheap fast fashion to versatile and high-quality items that provide the most value for money. Rental memberships can also provide this type of cost effectiveness.
Although the idea of fashion rentals has been well-received, it is yet unclear if these new services will be profitable.
Service providers, for instance, must buy high-cost items and keep them available for rent, and be able to run a distribution center that can manage shipping, returns and product maintenance such as dry cleaning.
Established retailers such as SK Planet and Lotte already have warehouse systems in place. Project Anne, for example, utilizes SK Planet’s distribution center in Icheon, Gyeonggi Province.
But smaller startups with the same idea have trouble maintaining such large systems.
For example, Want to Wear started off as a fashion rental company in 2015, but switched to personal styling services after facing difficulties in maintaining delivery and inventory systems.
“Buying the clothes, renting a warehouse and providing delivery is impossible without huge capital,” Want to Wear CEO Kim Jo-eun was quoted as saying in news reports.
By Won Ho-jung/The Korea Herald (firstname.lastname@example.org)