“There is so much waste when it comes to the closet - most women don’t use 80 or 85% of what they have. What we offer is newness and variety,” said Rent the Runway CEO Jennifer Hyman in a recent interview with The Washington Post. The online platform, which allows consumers the ability to rent designer clothing and accessories, is part of today’s sharing economy, where access is favored over ownership and experiences over assets. And for those businesses and commentators who may have viewed so-called collaborative consumption as a temporary distraction or passing fad, the fact that the sector has attracted an estimated $23 billion in venture capital funding since 2010 proves that the concept is very real and highly relevant.
The sharing economy has taken old market behaviors such as sharing, swapping, lending and renting, and with the help of modern technology made them fit for today’s consumer. Before the internet, renting an item from someone else was feasible, but typically troublesome. But technology has made sharing assets easier, as well as cheaper, and therefore possible on a much larger scale. And it’s easy to understand just why the concept has flourished in recent years. Not only does the sharing economy release the value of unused, or underused assets and save us time, effort and money, it also appeals to customers who cannot afford to own a product or do not have sufficient need to do so; and in tune with the times, fosters a spirit of sustainability.
Seen as a pioneer of this new approach to consumption, Airbnb, launched in 2008, was valued at about $31 billion in its March 2017 funding round. And the company’s disruptive influence has been felt across other sectors, particularly transport, with start-ups such as ride sharing services Lyft and RelayRides now commanding substantial market share. But the sharing economy has extended its reach far beyond rides and room rentals, and technology-based companies have and are continuing to challenge traditional consumer behaviors across a wide variety of industries, including fashion.
Founded in 2009, New York-based Rent the Runway began as a rental service for formal gowns, cocktail dresses and bejeweled accessories. But last year, it extended its service to include everyday items, not only to appeal to more women, more often, but encourage them to pare down their day-to-day wardrobes by renting instead of buying each season. Currently valued at nearly $1 billion, with $100 million in sales recorded in 2016, the company’s success, as with others in the fashion field, has been fuelled by social media, which as Rachel Saunders, director of strategy at research agency Cassandra explained to The Washington Post, "Has created an atmosphere in which, yeah, you could wear the same thing twice, but you’d rather not if you can avoid it.”
And it was social media, specifically Instagram, which inspired Eleena Png to set up London-based Oprent, which rents out designer clothing to women looking for show-stopping pieces for special occasions. The former investment banker used the platform to launch her brand, and continues to use it to both inform and grow the company. “A lot of women don’t want to wear the same thing twice, especially once a photo is taken of them wearing it,” she said in a recent interview. “I hope people will see us as a new way to shop premium fashion.”
While studies currently show that at present, the principle reason consumers buy into sharing services is that they provide great economic value, and that it’s the access to better products and services and the ability to have a unique experience that are paramount, the fact that this new way of shopping also offers a sustainable solution to our quest for the new is increasingly capturing the public’s attention. By allowing people to share more and buy less, sharing economy companies contribute to a lifestyle that generates less waste while still providing a positive consumer experience, and it is this particular aspect which prompted Carmen to invest in several players in the sphere, including Armarium, Flont and VillageLuxe.
The sharing economy does pose many challenges, not least because we expect superb service, at low prices and at the click of a button. “Our overwhelming demand for an effortless existence is encouraging the rise of supply at such a rapid pace that we risk losing sight of the basics: protection and regulation,” wrote Josie Cox in The Independent. Just last July, in the first lawsuit of its kind, a woman was seeking to hold Airbnb accountable for an alleged assault, claiming to have been attacked by a host who she believed had not been properly screened by the company. And for those consumers who don’t trust the reliability of sharing platforms or their reliance on social networks to provide a means of verification and to build trust, and also perhaps remain uncomfortable about sharing payment information online, the convenience of ownership will, for the time being at least, remain king.
The sharing economy has had a profound effect on certain sectors, and may pose a terminal threat to others - fast fashion is often cited as a potential casualty. Striking the right balance between value and cost and convenience and risk, while maintaining trust, is key to its continued development, and advances in technology will also significantly influence how the companies operate. Consumer behavior will also undoubtedly shift increasingly in favor of the sharing economy over time. For the sake of creating sustainable industries, and perhaps for the sake of our own personal economic efficiency, we will soon reach a point when ‘need’ will not necessarily mean ‘need to own’.