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Clothing Subscriptions Shed Members as Economic Challenges Demand Reprioritization

apparel

Across the clothing subscription industry, key players are losing members as they turn their focus to driving more revenue from their existing users.

Take, for instance, Rent the Runway. The clothing subscription and a la carte rental company shared in its third-quarter 2023 earnings results Tuesday (Dec. 5) that, at the end of the quarter, active subscribers were down 2%, and total subscribers were also down slightly.

“We believe that the sub count is a result of our strategic decisions to hold the line on lower promotions and lower marketing spend to prioritize inventory and stock rates,” Rent the Runway Co-founder and CEO Jennifer Hyman told analysts on a call. “In other words, we acquired fewer customers by design, but the customers we have acquired are more profitable.”

Similarly, apparel subscription platform Stitch Fix shared in its earnings report Tuesday that its number of active clients (i.e., customers) fell by 15%, a figure that amounts to 515,000 people, year over year.

“We are building a healthier client base by more precisely targeting high lifetime value clients that we expect will help us expand our client base over time, and … we are developing a long-term strategy to better serve the clients we have today and those we intend to attract in the future,” CEO Matt Baer told analysts.

Moreover, consumers are even cutting back on clothing subscriptions for their children. Kidpik, a company in the space that focuses on clothing for those ages 4-16, shared in its third-quarter 2023 earnings report, released last month, that revenue from subscription boxes fell by more than $440,000, a decrease of 15%. The decrease comes as the company focuses on reducing expenses and selling off its inventory amid ongoing financial challenges.

“We have substantially reduced purchases on new inventory and are focused on increasing sales from our current elevated inventory level, which we believe will support our cash flow needs in the short term,” CEO Ezra Dabah said in a statement. “We are also working to increase our proprietary brand sales through our own eCommerce site.”

These findings are somewhat surprising, given that clothing subscribers tend to be loyal to their providers. The PYMNTS Intelligence report “Subscription Commerce Readiness Report: The Loyalty Factor,” created in collaboration with sticky.io, found that the 30% of retail subscribers who are loyalists account for nearly 80% of merchants’ revenue. Fifty-one percent of these subscribers prefer subscriptions that include clothing items.

Still, a significant share of clothing subscribers already knew last year that they planned to cancel amid ongoing inflationary challenges. According to the PYMNTS Intelligence and sticky.io report released last November, “Subscription Commerce Conversion Index: Subscribers Seek Affordability and Convenience,” 1 in 4 clothing subscribers said they would cancel their subscription in the next 12 months.

As such, and as other financial headwinds impact the economics of the clothing subscription model, providers are turning their focus to creating more profitable businesses in the long term rather than acquiring and retaining customers.