A study reveals challenges faced by clothing rental companies in Sweden while highlighting the potential for environmental benefits through improved business practices.

Clothing rental has emerged as a potential solution to mitigate the environmental impact of the fashion industry, which is recognized as one of the most polluting sectors, accounting for approximately 10% of global greenhouse gas emissions. However, a recent study led by researchers at Chalmers University of Technology in Sweden highlights that the current business models for clothing rentals have not achieved significant success. The findings suggest that focusing on niche markets could improve sustainability and profitability in this burgeoning industry.

The research team, which included experts from Chalmers University of Technology, the University of Borås, and the research institute Rise, undertook an analysis of nine Swedish companies involved in the clothing rental market. These companies, which have either failed or are still navigating their business strategies, informed the researchers’ understanding of the sector.

Frida Lind, a professor at Chalmers and one of the researchers, noted, “Many people have clothes hanging in the closet that are rarely or never used. Renting clothes can extend the use of each garment and thus contribute to more sustainable consumption.” By identifying various business models adopted by these companies, the study proposed three primary strategies:

1. Membership Model: Similar to a library system, customers pay to become members, allowing them to borrow garments for specific periods. This model is often initiated by sustainability enthusiasts.

2. Subscription Model: Customers pay a recurring fee to rent a defined number of clothing items monthly. These startups tend to focus on scaling operations and attracting investment.

3. Individual Rental Model: In this model, specific clothing items, often combined with relevant equipment (like outdoor gear), are available for rent.

Despite these varying approaches, the study revealed significant challenges in attaining profitability. Lind remarked, “What struck us was that it seemed so difficult for them to make their business profitable. Several had had to end their investments for various reasons.” The complex logistics involved in renting clothes, including inspection, handling, storage, and laundering, contribute to operational costs that many companies struggle to manage. Furthermore, subscription-based models face additional hurdles in securing venture capital to support their early phases.

The research indicated that companies focusing on specific markets, such as outdoor apparel, exhibited greater success. “They seem to have found their niche and seen that there is a specific need that the customer is willing to pay for each time they need to use that type of clothing,” Lind explained. This indicates that a localized approach, particularly in outdoor recreational areas, can fulfill distinct consumer demands effectively.

In their evaluation of industry practices, the researchers emphasized the benefits of collaboration between rental companies and clothing manufacturers. Lind mentioned that firms that partnered with sustainable designers received timely insights into customer preferences and product quality challenges, further enhancing their business strategies.

While the study did not specifically assess the environmental impacts of these business models, past research has outlined the significant ecological footprint associated with clothing production and consumption. For instance, it has been established that 70% of the climate impact of Swedes’ clothing comes from garment production, and consumer shopping trips contribute an additional 22%. In Europe, five million tonnes of clothing are disposed of annually, amounting to an average of 12 kilograms per person, while in the United States, each resident generates about 37 kilograms of textile waste each year.

Frida Lind posits that expanding the rental model could yield substantial environmental benefits by reducing clothing purchases and maximizing the usage of existing garments—provided it is managed to avoid unnecessary consumer travel. She underlines the importance of all initiatives that promote sustainability, despite the mixed outcomes observed among the companies studied. “Our study can be an important contribution to the fashion industry’s sustainability transition, as it shows the possibilities of new business models in this industry,” she noted.

Based on their findings, the researchers provided several recommendations for businesses considering a clothing rental model:

• Target niche markets with a clear demand for specific products.
• Establish collaborations with suppliers to refine and enhance offerings based on rental experiences.
• Strategically plan logistics and transportation from inception to ensure scalability.

Lind’s work emphasizes the necessity for a long-term perspective and patience in exploring these new business models, suggesting that gradual changes may pave the way for a more sustainable future in fashion.

Source: Noah Wire Services