Although the traditional retail industry in the U.S. continues to struggle mightily, surely there are verticals within it that are largely immune to such troubles by sheer virtue of the fact that they trade in essential items … right?
Sort of, but also — not exactly.
If we break down “essential items” into three categories — food, clothing and shelter — we’re looking at a trio of verticals wherein each one has still had to weather the storm of the current retail climate in its own way.
Yes, people will always need groceries, but that hasn’t stopped chains like Whole Foods from having to reconfigure its business model somewhat while others lower prices, all faced with the reality that just about any retail chain with the right infrastructure — Target, for example — can get into the grocery game and compete effectively.
As for shelter … houses can be expensive, to put it mildly. Therefore, why buy — or even lease through unequivocally legal channels — when you can Airbnb? (Saves you a heck of a lot on furniture, too.)
Of all three “essential” categories, clothing is the one that seems to have made the most serious pivot in the new, uncertain world of retail … and it’s arguably also the change that has best shown to have legs so far, catching on with consumers and — as a direct result — compelling a number of new players in the space to get on board.
Despite having last year reached a historic threshold by becoming the top-selling eCommerce category for the first time ever, overall sales of apparel in the U.S. have been on a steady decline for the past 10 years, according to the Bureau of Economic Analysis via CNBC.
Where clothing is working hard to make up the difference, however, is in the areas of renting and trading — rather than buying.
The business of apparel rental first gained traction thanks to startups like Rent the Runway, which launched in 2009. And while that particular offering did (and does) tend to cater primarily to luxury clientele — or at least to regular folks who make it a point to allocate enough of their disposable income for the rental of high-end (and high-ticket cost) fashion items — the success of its general business model garnered enough attention throughout the retail clothing sector that other companies began to follow suit, albeit with a more consumer-inclusive focus on more moderately-priced products.
One such company is Le Tote, which launched in 2013 while presenting itself as a “Netflix for clothing.” Last year, according to CNBC, the startup — which operates on a subscription model — shipped more than 1.5 million items. With its membership rate increasing at a rate of 15 to 20 percent month over month, the company told the outlet that its revenue has more than doubled since fall 2015.
Another apparel rental startup, Date My Wardrobe, sort of splits the difference between Rent the Runway and Le Tote, dealing in high-end fashion but at relatively affordable prices — a business model achieved, according to BostInno, by virtue of the fact that the Boston-based company does not own any of the clothing it offers and therefore does not have to pay for real estate that would be required to house it.
If Le Tote is the “Netflix of clothing,” Date My Wardrobe seeks to be the Airbnb of it, with founder Amrita Aviyente telling the outlet that her company seeks to replicate what that startup did in the hospitality industry “without owning a single property”; in Date My Wardrobe’s case, it would be to be a hit in the fashion space “without owning a single piece of clothing.”
Offering an even more budget-friendly model than (even the most budget-friendly) apparel rental companies, digital consignment platforms hit something of a sweet spot in addressing the needs of consumers at both ends of the transaction — saving buyers a significant amount of money compared to retail prices and facilitating income for sellers of their own secondhand clothing items (alternately, in the case of straight trades, nobody spends a dime).
The space of online clothing marketplaces is nothing if not a busy one, with companies including Poshmark, Tradesy and thredUP (the latter of whom last year partnered with Target — jeez, Target’s into everything) doing brisk business with everyday apparel, while sites such as Snobswap and The RealReal have found success with luxury fashion — proving that there’s even room for that high-end vertical in the consignment realm.
While any notion that clothing rental and trade companies could ride their current wave of prosperity in perpetuity, eventually overtaking traditional apparel retail for good, is highly unlikely to ever manifest in reality, the success that they have already found proves that at least when it comes to one “essential item” category, where there’s a need (among consumers), there’s a way (for retailers to get those items into their hands), regardless of the state of retail overall.
Now, if only somebody could come up with an effective business model for food rental …