Rent the Runway Files for IPO, But Is Clothing Rental in the Eco Hot Seat?07/21/2021
Clothing rental is gaining steam and its leading players are gaining traction.
On Monday, Rent the Runway confidentially filed paperwork with the Securities and Exchange Commission for an initial public offering. The company declined to share details with WWD Tuesday, but, according to the release, the number of shares to be offered and the price haven’t yet been determined.
Despite the growing clothing rental market and its credit as one of the more sustainable sectors of fashion, a recent study condemning it has unearthed new unknowns.
Finnish researchers at Lut University found renting clothes had the highest climate impact of all clothing behavior (compared with buying less, rewearing, reselling, recycling and modes of disposal).
The scenario follows the same pair of jeans across different uses scrutinizing key points of impact along the apparel value chain including manufacturing, delivery, use, end-of-life and alternative production (if not landfilled). Using life cycle assessment, researchers compared the global warming possible in each use case.
As with report cards condemning fashion’s sustainability “offenders,” the attention on rental is earned by the model chalking up the highest impact due to delivery, in the study. However, one of the report’s coauthors Jarkko Levänen, assistant professor of sustainability science, emphasized that the findings are “not claiming that all renting/sharing options are unsustainable,” but meant to flag the complex issues within circular fashion models.
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Founders of rental start-ups, who have been seeing their businesses skyrocket post-lockdown and offering up rental as the solution to the industry’s fast fashion issues, are unanimously responding to the study while raising broader questions on circularity.
“We believe that rental needs scrutiny to make it as ‘green’ as possible — but encouraging people to throw clothes away doesn’t help the industry, let alone the planet,” said Tamsin Chislett, cofounder and chief executive officer of Onloan, a rental start-up that operates with a subscription model.
Although the study based conclusions on a single rental business in Finland (and the assumption that each customer drives up to a mile in a private car to collect their rental clothing), the reality is that rental businesses often rely on the postman — and the constant deliveries and returns have a significant footprint. Many companies, however, are endeavoring to address the transportation impact by choosing carbon-neutral delivery partners, carbon offsetting and hyper-local peer-to-peer models.
“In Onloan’s case we even use the carbon-neutral (delivery service) DPD,” Chislett said. “The study also looks at carbon emissions via transportation at a consumer level, not other aspects of environmental impact, such as land use, water usage, dye pollution — all of which occur during the production value chain. Extending the life and increasing the wear of a garment spreads these impacts over more wears.”
Onloan makes use of wet-washing and ozone technology to clean its rental garments, as do most U.K.-based rental businesses like By Rotation, My Wardrobe HQ, Rotaro and Something Borrowed — meaning the generalization of the study that all rental companies use harmful dry-cleaning processes doesn’t quite stand.
“Rental isn’t the perfect solution, we’re not arguing that at all and we like to be challenged. We need to work collectively and openly to effect change and constantly improve,” Chislett said, pointing to the study’s conclusion that rental can have a low global warming potential “if delivery can be arranged without impacts.”
Georgie Hayatt, founder of rental platform Rotaro, echoed her thoughts and highlighted how her business is working to create a low-carbon ecosystem.
“When we started Rotaro in 2019, we already knew [about the carbon footprint issue] and have always taken every step possible to mitigate this. We stock everything centrally, we use a carbon-neutral delivery partner, and toward the end of the year will have our own fleet of hyper-local London electric vehicles. We have been using recycled and recyclable packaging, and are about to introduce luxury reusable garment bags to truly be zero waste,” explained Hayatt, who works with brands like Alexa Chung, Rixo and Shrimps.
Another assumption in the study was that purchased clothing is being worn up to 200 times, while data from the Global Fashion Agenda and Boston Consulting Group supports that the real average wear per garment is more like 10 times (the sizable difference is attributed to an assumption by report authors).
Perhaps more accurately, some rental platforms say garments are currently being rented between 50 and 75 times “and still going strong,” according to Rotaro.
For about $40 a month, Brooklyn-based children’s subscription rental service Everlasting Wardrobe lets parents keep eight clothing pieces on hand for 30 days, swapping sizes and styles throughout the year to accommodate growing pains.
The company’s founder also questioned the wear parameters.
“I certainly don’t think rental is the only solution or that it can’t be improved, but that study seemed to lack nuance between the different available options,” said Everlasting Wardrobe chief executive officer’s Joshua Luft. “Especially when considering non-traditional cohorts like the children’s market. For example, the 200 wears they base their entire findings on, is near impossible for children in our size range to achieve.”
Luft said Everlasting Wardrobe aims to optimize shipping routes for members from the start by catching the postman on his or her normal route.
While research from consultancies like GFA and BCG supports the idea that clothing rental reduces the need for manufacturing masses of new clothing — so does resale.
Highlighting the ability of resale to displace new fashions and promote garment longevity without the back-and-forth of rental, Tracy DiNunzio, chief executive officer and founder of Santa Monica-based peer-to-peer resale platform Tradesy, believes peer-to-peer business models are poised for an environmental advantage — even if it requires effort to communicate it.
“Our peer-to-peer model has sellers ship their pre-owned items directly to buyers, cutting out intermediaries, warehousing and any unnecessary transport. Most of our sellers use their own upcycled shipping materials or our shipping kits which are made with sustainable and minimal materials…We also encourage and educate customers to buy high-quality fashion that lasts and avoid disposable fast fashion, and to be skeptical about fashion made with ‘sustainable’ materials, as these products often have a similar carbon footprint to mass market fashion when factoring in energy usage, transportation, waste and packaging,” DiNunzio said on the consumer education element that still leaves gaps for greenwashing.
Cautioning that “resale and rental shouldn’t be conflated in terms of sustainability [because] rental encourages one-time and short-term use of items in between frequent shipments,” DiNunzio also raised another interesting point unaccounted for in the research — the nitty gritty of authentication.
With the rise of counterfeits and mainstreaming of resale, authentication flip-flops (and the added back-and-forth between authentication centers) could leave room for expanded research on best practices.
Platforms like Tradesy and Mercari (a Japanese resale marketplace) authenticate products virtually before they’re shipped to buyers which, in the words of DiNunzio, help to “minimize transportation emissions in a number of ways, including reducing returns.” Because of this process, DiNunzio said less than 1 percent of items sold on Tradesy require an in-person authentication review.
Managed marketplaces such as ThredUp, The RealReal and StockX currently require every eligible product to be authenticated by hand.
Under used-goods veteran Ebay’s free “Authentication Guarantee” program, sellers are required to send the item (once it’s sold) to the provided authenticator’s address where it will be reviewed in two to three days. Once approved, the authenticated item is shipped from the authenticator to buyer.
As is the case in any authentication process, it doesn’t matter how good a counterfeit is — once an item fails inspection, it’s useless to the reseller and is shipped back to the seller and the buyer is refunded.
And where e-tailers like Ebay offer broader promotions like combined shipping options (both a cost saver and emission reducer), the option is not applicable to authentication services because each authenticated item is split into its own separate order — further tallying up shipping and transportation impact.
With authentication blunders in question, lines are further blurred between resale and rental solutions.
In early June, rental pioneer Rent the Runway launched its resale vertical after noticing how its subscribers were purchasing rentals at double the pace amid the pandemic.
The step, according to Jennifer Hyman, CEO and cofounder of Rent the Runway, “is critical in stemming the egregious amount of new apparel produced every year and lessening the fashion industry’s impact on the environment.”
Hyman called Rent the Runway’s resale a “differentiated experience” because of guaranteed authenticity and duplicates in inventory (by purchasing directly from designers), in-house cleans and repairs ahead of shipping to customers and a streamlined shopping experience free of the typical “treasure hunt.”
In all the reactions from the rental and resale innovations, the simple point of the Lut University study may have been lost entirely: “Our study shows that to avoid negative rebound effects, new business models are not always needed,” researchers said. “The Reduce scenario requires only that jeans are used longer, and the Reuse scenario can be realized with existing secondhand business models.”
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