Measuring the State of Circularity in the UK Fashion Industry
Part 2
Executive Summary
33
Introduction
Part 3
Conclusion
Part 1
Fashion on loan: rental revenue limits
Barriers to growth
The numbers at a glance
Rental struggles to compete with ‘fast-fashion’ for customer demand
26%
Presence within retailer market
1
Temporary use or leasing of items by consumers instead of purchasing them outright. Includes both pay-per-item and subscription models.
63%
Proportion of initiatives in pilot phase
Particularly in the mid-value markets, the impact of changing consumer tastes and ‘fast-fashion’ retailers enables consumers to quickly access new products at low price points without added rental logistics.
13%
Proportion of retailer customer base accessing initiatives
75%
Proportion of initiatives accessing third party support
Limited margin Additional logistics costs incurred by rental initiatives further degrades financial margin. Where items are not ‘designed for durability’, they are less suited to rental schemes as the number of times they can be rented is low. 2
Most common rental business model Pay per item
Revenue
Most tracked KPIs
Marketing and PR support
Most frequently accessed support
Rental business models are challenging and less attractive for retailers across all markets. Demand for rental services is inconsistent, with customers typically opting to use rental for one-off occasions rather than on a regular basis or for everyday items, and brand-led models are particularly unattractive as limited range creates a further barrier for frequency. For retailers, immature rental models coupled with a high dependency on third parties has left rentals with no clear route to scale in the future, bringing it low on the priority list.
Lack of business capacity The intersection of several business functions is required for a rental business model to operate, such as cleaning, logistics, insurance, customer support, etc. These capabilities are typically less complementary to core business and many retailers stated they do not have the business capacity to enable this. 3
Credit: DIPETSA
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