Growing up in the shadow of the “sharing economy,” millennials around the world are now questioning all prevailing ideas surrounding ownership, and the luxury market is no exception. Renting luxury products is now a legitimate option for consumers, and the luxury rental business was a hot topic at the WWD Retail 2030 Forum at The Japan Society on April 3. At the conference, representatives from many Western brands listened intently as executives from luxury rental companies Rebag and Rent the Runway discussed how they’re preparing for the future of renting luxury. But when asked about their expansion plans in China, both companies said they were still focused on gaining market shares in the U.S.
Founder and CEO of Rebag, Charles Gorra, said that China is the biggest pool of luxury supplies and the second largest market in terms of product, but that counterfeiting is still a concern for them. Maureen Sullivan, the COO of Rent the Runway (a company that received generous backing last year to develop in the Asia market from former Alibaba Chairman Jack Ma) shared that the company has hosted many focus groups with Chinese millennials that responded positively to their brand’s selection, but that she thought product fulfillment issues in China might need to be tackled first.
So are they missing out on a big potential market? Chinese shoppers are known as heavy luxury consumers, accounting for 30 percent of all luxury goods purchased worldwide. But would their enthusiasm for purchasing translate to rental interest? And would more luxury rentals in China take a bite out of the luxury sales market there? In other words: If they rent, will they still buy?
Surprisingly, the fashion rental scene in China is already fairly crowded with local companies. Chinese startups like Y-Closet, Starlux, and Ms. Paris have all emerged since 2014, and most are heavily backed by venture capital. But they don’t appear to have a lock on the market, as consumers have many complaints with these companies, particularly that there is a lot of false advertising and that garments are out of date or even sent to customers dirty. That being said, consumers in China are interested in renting luxury products, even the ones that can easily afford to buy them. A report from one of these luxury rental platforms, Starlux, showed that their rental demographic overlaps with luxury buyers. Among their 10,000 users, more than 40 percent of them are already heavy luxury goods buyers whose consumption of luxury goods is annually above $30,000 (RMB 200,000), and 25 percent of those are office workers whose monthly salary is between $1,490-2,980 (RMB 10,000-20,000).
Like it or not, luxury rental a new global movement that should only grow in China. Here are four reasons why Jing Daily believes that the luxury rental concept will start catching on with Chinese millennial shoppers:
1. The debt-owners
Multiple reports have shown that most Chinese millennials are deep in debt, but that they’d still be willing to splurge on luxury items — even though they don’t earn enough to truly afford them. A survey from HSBC shows that the debt-to-income ratio of China’s post-’90s generation (people born from 1990 and 1995) has reached an incredible 1,850 percent. Even though being an only child grants these people a bigger financial safety net from their parents, their money may quickly burn out at this rate of this consumption. Add to that the daunting state of China’s local economy and many luxury lovers may soon tighten their belts and learn to be more realistic about their purchases. Luxury rental would then become a smart option for buyers on a budget.
2. The experience seekers
More often than not, the Chinese consumers we interviewed used the word “experience” to describe their luxury rental journeys. Lena Xu, a 27-year-old Chinese woman working in a creative agency in Beijing, emphasized the sense of discovery she felt while browsing online for the hundreds of rental options. “Suddenly I have tons of choices,” she said. “To be able to constantly change my wardrobe is a refreshing and empowering experience.” In fact, it’s the idea of unlimited choice that’s most compelling to first-time luxury renters. The COO of Rent the Runway, Maureen Sullivan once described their service as “an extension of customer’s closet,” powering them to access their entire inventory on the cloud. Millennials love the idea of being able to change their look without checking the price tag, an experience that feels liberating to them.
3. The self-fulfilled shoppers
On a deeper level, Chinese millennials consume luxury with a different motivation than their predecessors: one that eschews flaunting wealth for self-fulfillment, which shifts the stigma with rental luxury. Sarah Liu, a millennial who works in a marketing and PR agency in Shanghai, expressed that she often needs to dress up to impress her clients and renting luxury bags is a cheaper alternative for meeting those demands. She added that she wouldn’t purchase luxury goods outright and would rather spend that money on high-end skincare products.
4. The green generation
This changing mentality isn’t just about smarter investments — it’s also about making ethical choices. Fashion is one of the most wasteful industries today, and millennials have come to question whether they should contribute to environmental problems by constantly buying new clothes. Ultimately, rental luxury is about reused fashion, giving millennials an alternative way to enjoy high fashion that they can feel good about.