The first few years out of college are an awkward time. You realize that life no longer contains summer or winter breaks, you decide to learn how to cook because the dining hall (which you so often took for granted) is gone, and you start to think that going to bed at 11 p.m. doesn’t sound like such a bad idea. But probably the biggest shock to your system is that practically everyone you know gets married.
My former college roommate was invited to a wedding a few weeks ago. When she asked the bride what the wedding attire was, the bride had a one-word response: “Designer.” Now, I don’t need to tell you that weddings are already crazy expensive. There’s the attire, the gifts, the bachelor/bachelorette party, and the travel costs. All of these expenses can quickly chip away at an entry-level budget. So instead of buying a dress that she would only wear once, my collegiate comrade rented her gown from Rent the Runway—a membership-based site that rents out designer clothes and accessories for a four-day or eight-day period at a fraction of the purchase price.
It turns out that my former roommate isn’t alone in her renting inclination. Thirty-seven percent of adults 18 to 28 years old have rented instead of bought in the past year, according to “Walker Sands’ 2014 Future of Retail Study.” This number is expected to surge to 63% (a more than 52% jump) in 2014. In fact, 18- to 25-year-old consumers are 90% more likely than those 60 years old or older to have rented a product instead of bought one last year. But that doesn’t mean that millennials are the only ones jumping on the renting trend. According to Walker Sands, 27% of consumers across age groups (ranging from 18 to 61 or older) rented instead of bought last year and 56% intend to do so in 2014.
Given that many millennials have lived through the recession and are now graduating from college with loans, their tendency to rent makes sense from an economic perspective, says Tory Patrick, account director and lead of the retail technology practice for Walker Sands. She also notes that millennials tend to be more willing to adopt new technologies.
“The 18- to 25-year-old age group has grown up with cell phones, Facebook, and Instagram,” Patrick says. “So for them to go to an app and rent something, it seems more second nature than a 60 year old who’s used to balancing a checkbook and trying to come to terms with [new technology].”
According to the study, some categories are experiencing more rental growth than others. The tools category is expected to experience 129% rental growth in 2014, and the sporting goods and luxury categories are expected to grow by 123% and 113%, respectively. Consumer electronics (90%), books (69%), and clothing and apparel (48%) are also expected to see high rental growth in the new year.
Boutiques and small etailers seem to be driving this trend, but the big box retailers have yet to catch up, Patrick says. She attributes this divide to the notion that major retailers would have to implement new technology that many smaller companies have built their foundation on.
And renting has many benefits. Besides being cost effective, renting can alleviate common shopping pain points. For instance, 76% of consumers have ordered a product online that didn’t meet their expectations. But out of those consumers, only 59% returned the product, meaning 41% did not, the Walker Sands study notes.
Rent the Runway addresses these pain points—like fit and quality—by having customers share their own garment experiences through photos and reviews. For example, my former roommate submitted a picture of herself at the wedding along with the following: age, height, body type, occasion, size she usually wears, size she ordered, and a description of how the dress actually fit. She also included a star rating and wrote a paragraph about what she liked and disliked about the dress. Customers can also flip through a digital look book to see how other customers wore the garment and click through to rent the featured outfit. This allows customers to find the right items by relating to others who share a similar body type.
Patrick says that, like Rent the Runway, it’s important for marketers to keep customers’ needs and wants in mind when creating a rental strategy. “When we talk omnichannel and what retailers can do for consumers,” Patrick says. “It’s [about] responding to what the consumer wants.”