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How the Mail Room at Seventeen Magazine Proves the Case for Fashion Rentals

If you’re skeptical about the state of subscription rentals in apparel, just listen to what Nancy Berger has to say.

As senior vice president/publishing director and chief revenue officer of Women’s Health, Cosmopolitan, and Seventeen magazines, Berger, an alum of Marie Claire, has a bird’s eye view into how the staff of largely 20something millennial women dresses and behaves.

“The mail room is absolutely packed with returns from rental companies,” she revealed at a gathering of retail luminaries in New York City Wednesday night. “They are returning what they had for the weekend and restocking for the week.”

Young urban professional women “depend on the rental market to be able to change their wardrobes every day and also to try new brands,” Berger added.

This behavior plays into the “clear consumer movement toward choice and access,” said John Donoghue, SVP of corporate development for CaaStle, the technology firm that helps fashion retailers launch their own subscription businesses. Americans have demonstrated this affinity and preference for access across numerous consumers categories—think Spotify, Netflix and Uber—and “we’re beginning to see that with apparel,” he added, describing CaaStle’s core customer as 28-42-year-old working women with “decent” household incomes.

Subscription rentals offer a way for shoppers to “access a brand more deeply” and experiment with products they otherwise might not dare to buy, and Donoghue backs up that assertion by citing the 90 minutes the average subscriber spends each month browsing CaaStle-enabled mono-brand rental sites, including Vince, American Eagle, Ann Taylor, New York & Co., Rebecca Taylor and Express.

“Rental immersion takes work,” he said of the time commitment involved in scrolling through page after page of apparel options and prioritizing the ones you want included in your delivery. That consumer effort pays off for retailers, as Donoghue added, “We have a lot of data to suggest that people who rent end up spending more on the brand after they rent, across all channels.”

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There are attractive upsides for retailers, including much-needed margin boosts to counteract a historic downward trend in store footfall.

“Because you’re monetizing a piece of clothing 12 times to 14 times in a year versus selling at a discount once, you’re operating at a much higher margin,” Donoghue said.

Overall, CaaStle is finding that the average rental subscription customer wears about 100 pieces of a brand’s clothing a year. “That’s very different behavior” relative to what’s happening in traditional retail, Donoghue said. The company estimates that just 750,000 U.S. women have jumped on board the apparel rental bandwagon, “so it’s still early days,” he added.

Though direct-to-consumer rental subscription services are often lumped together with a company like Stitch Fix, which picks items for customers versus allowing shoppers to control their choices, Donoghue was quick to point out the difference.

“We can maximize utilization of the inventory and send to you [exactly] what you want” while ensuring stock is balanced across the retailer and the subscriber base, he explained.

“That is the arbitrage opportunity both on the retailer’s side and our side,” the CaaStle executive continued. “We don’t take possession of inventory…but we can help retailers monetize inventory at four times to six times the level of a standard retailer.”

While women are clearly interested in experimenting with their wardrobe options and using rentals to flirt with new trends and styles, subscription clothing rental services for men’s wear present a “different use case,” Donoghue noted, adding that CaaStle launched its first men’s brand just weeks ago.