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The concept of renting clothing presents a viable method to mitigate the substantial environmental footprint of the fashion sector. However, challenges remain in developing effective business models within this market. Research from Chalmers University of Technology in Sweden indicates that rental services are more likely to succeed when they cater to specific niches, such as specialized sportswear, while fostering close partnerships with suppliers and manufacturers.
The fashion industry ranks among the most environmentally harmful, contributing up to ten percent of global greenhouse gas emissions. Notably, in Sweden, over 90 percent of the climate impact associated with clothing can be traced to the purchase of newly produced items. In this context, researchers from Chalmers University of Technology, the University of Borås, and the research institute Rise have been exploring sustainable alternatives to traditional business models in the clothing industry.
Frida Lind, a professor at Chalmers and one of the study’s researchers, states, “Many individuals own garments that sit idle in their closets. Renting clothing can prolong the lifespan of each piece, promoting a more sustainable mode of consumption.”
The study analyzed nine Swedish companies that have attempted to establish or are currently developing sustainable clothing rental services. From this investigation, the researchers discerned three predominant business models:
1. Membership model: Customers pay to become members, enabling them to borrow clothes for designated periods, akin to a library system. Founders of these initiatives often have a strong commitment to sustainable consumption.
2. Subscription model: Customers pay a monthly fee to access a specific number of garments. Startups using this model generally aim to scale operations and attract venture capital for growth.
3. Individual rental model: Companies focus on renting particular types of clothing, sometimes in conjunction with related equipment, such as ski apparel paired with skiing gear.
Challenges in Achieving Profitability
Despite a noticeable demand for clothing rental options, several obstacles hindered profitability. The complexity of the rental process requires meticulous handling and inspection of clothing before it can be rented out again, which is time-intensive. Additionally, companies faced high expenses related to logistics, warehousing, and laundry operations. Subscription models, in particular, encountered difficulties in securing the venture capital necessary for sustaining business growth during their formative phases. “All of this underscores that these business models need time to gain traction in the marketplace,” Lind adds.
Niche Markets Show Promise
Ultimately, certain business models have shown more promise than others. Firms that specialized in niche markets, such as outdoor apparel, tended to perform better and be more sustainable, especially when they had a local connection to recreational activities.
“These companies appear to have carved out a niche by addressing specific consumer needs that they are willing to pay for whenever they require that type of clothing,” says Lind.
The research also highlighted the value of collaboration with various stakeholders. Companies that partnered closely with clothing manufacturers and suppliers, particularly those with a focus on sustainable practices, benefited significantly by having direct feedback on popular clothing types and essential quality insights.
The Need for Structural Change
This latest study did not specifically measure the environmental and climate implications of the various business models. Nevertheless, existing research already provides substantial evidence regarding the environmental impact of clothing. Earlier findings from Chalmers indicate that the production phase alone accounts for approximately 70 percent of the climate impact associated with a garment over its lifespan, while 22 percent arises from consumers’ shopping trips. In the European Union, around five million tonnes of clothing are discarded annually, translating to about 12 kilograms per person; in the United States, the average individual generates approximately 37 kilograms of textile waste each year.
Lind emphasizes the potential for significant environmental advantages through reduced purchases and increased longevity of existing garments. This shift is particularly impactful if it can be accomplished with minimal additional travel implications for consumers.
While some business attempts from the study have not endured, Lind asserts that every initiative contributing to a sustainable transition is crucial. Such efforts can shift societal attitudes toward clothing consumption and enhance awareness of effective practices.
“Our findings could significantly inform the fashion industry’s move towards sustainability by illuminating possibilities for new business models. We hope this research influences policymakers who are in a position to create supportive frameworks and funding mechanisms for advancing sustainable practices within the fashion sector,” she notes. “These innovative models necessitate time and a long-term strategy for successful establishment.”
Recommendations for Entrepreneurs
Based on the study’s findings, researchers have outlined several recommendations for individuals interested in exploring clothing rental as a business concept:
- Concentrate on niche markets where the target audience and demand are distinctly defined.
- Foster partnerships with suppliers to enhance product offerings based on rental data.
- Integrate considerations for logistics and transport into the rental model from the outset for scalability.
Further Insights from the Research
The scientific article “Exploring renting models for clothing items — resource interaction for value creation” has been published in the Journal of Business & Industrial Marketing. The authors include Frida Lind from Chalmers University of Technology, along with Agnes Andersson Wänström, Daniel Hjelmgren from the University of Borås, and Maria Landqvist from Rise. The research was funded by the Swedish Energy Agency.
Key Facts About Textile Consumption
- In the EU, approximately five million tonnes of clothing are discarded per year, amounting to around 12 kilograms per person, while the average American generates 37 kilograms of textile waste annually.
- Over 90 percent of the climate impact from Swedish clothing consumption is related to newly produced items, with 80 percent attributed to the production phase.
- Transportation to shops affects consumers’ carbon footprints; opting for walking or cycling instead of driving can lower it by more than 10 percent.
- Consumers can significantly lessen their environmental impact by extending the lifespan of existing garments. For example, if a T-shirt is used 60 times instead of 30 before being replaced, its associated climate impact can be halved.
- Extended use can originate from a single owner maintaining a garment for longer or by sharing ownership among multiple individuals. Methods for enhanced utilization include renting, second-hand shopping, organizing clothing exchange events, and donating clothes for continued use.
- A previous Chalmers study underscores that garment production contributes to 70 percent of the climate impact from clothing over its entire life cycle, with consumers’ shopping trips accounting for 22 percent, distribution for 4 percent, and laundry for 3 percent.
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