This week, an in-depth look at a new, rental-focused venture aiming to drive a necessary “paradigm switch” in fashion. Plus, a members-only shopping club is coming to NYC. And Mytheresa is expanding its resale program created in partnership with Vestiaire Collective.
Renting styles, rather than discounting them, is the business solution brands and retailers never knew they needed.
That’s according to P180. Newly developed by Christine Hunsicker, founder of the rental-as-a-service company Caastle, and Brendan Hoffman, former Wolverine Worldwide and Vince CEO, the company aims to become the ultimate partner of brands and retailers struggling to adapt to today’s retail environment. In short, the founders are exchanging their combined fashion rental and retail expertise, along with monetary investment, for a share or ownership of companies that stand to benefit from the support.
“With P180, [the goal] is selling more at regular price, and rental is the vehicle allowing us to provide that foundation,” said Hoffman. ”Ultimately, it [also allows brands] to make better decisions about early procurement and [right-track] their markdown cycle and return policy — all of which [impact] monetization throughout the lifecycle of a product.”
Many of the recent earnings reports of struggling fashion brands and retailers have one thing in common: disappointing revenue due to lowered margins, owed to discounting to attract today’s budget-conscious consumer. According to Hoffman, P180 partners can expect their gross margin to increase by over 10 points.
“So many brands and retailers are in tough positions right now,” he said. “There needs to be a paradigm switch.”
As described by Hunsicker, Caastle’s specialties of technology, data and yield management allow brands to “make the most profit off a given clothing item at any moment in time.” When combined with Hoffman’s retail and operating expertise and the strong reputations of P180 partner brands and retailers, that capability is especially powerful, she said.
P180 brand and retail partners may choose to eliminate returns on sale products that could be rented as a trial, for example. Or they could rent out styles in single overstocked sizes to resolve inventory issues. Rental styles can change hands for as long as there’s demand and their quality holds up. Styles rent at a rate of 15-20% of their list price, and — in Caastle’s experience — over 50% of rented styles are purchased. Twelve-year-old Caastle’s existing brand partners include Vince, Maje and Rebecca Mikoff.
“While working at retail and brands, one of the things that kept me up at night was that inventory started aging the minute we put it out on the floor — I lived in fear of having to job it out at a tremendous loss,” Hoffman said. “What attracted me to rental [via Caastle, while at Vince] was the ability to [minimize] the liability.”
Hoffman expects other brands will also see rental as “a better alternative than being 75% off all the time,” he said.
On May 7, along with revealing the formation of P180, Hunsicker and Hoffman announced the company’s first investment, in 25-year-old luxury retailer Elyse Walker. Through the partnership, Elyse Walker now offers a selection of styles for rent through a program dubbed Borrow, which Hunsicker said took a month to set up. Twenty Caastle workers are now facilitating the service. In 2002, founder Elyse Walker said her company was on track to reach $100 million in 2023 sales.
Since the announcement, there has been “a lot” of inbound interest from brands and retailers, Hoffman said. And P180 also works to safeguard Caastle.
When tightening their purse strings amid trying economic times, brands often drop goods and services supplementary to their core offerings, thus shooting themselves in the foot — for its part, rental is on track to become a $2.33 billion market by 2030, according to Grand View Research. As such, it seems safe to assume that more rental companies, and also resale, innovative materials and retail technology businesses, will come to make similar deals with brands and retailers in the future.
“As opposed to the other [companies] in the rental category that sell directly to consumers, [Caastle] sells to businesses that sell to consumers. When the industry is hurting, that becomes more challenging for us, because those businesses are, first and foremost, focused on their revenue growth and their store management and their profit,” Hunsicker said. “But with P180, we can be a profit-driving center for them while they are working on some of the bigger issues with their business. We can help phenomenal brands get back to a position of strength, then from [there], we can innovate on the monetization front.”
Fashion girls can rest easy knowing that the rise of rental is keeping fashion with a capital “F” alive, even as more brands and retailers play it safe with their designs and buys — another aim to play to consumer shopping habits, many are focusing on evergreen pieces providing cost-per-wear value but lacking statement-making capabilities. To consumers, high-impact pieces are often seen as one-hit wonders, so to speak. And, as their cost exceeds the perceived value they offer via a single wear to an event, for example, they often end up in the bargain bin. On the other hand, bold styles are thriving in the rental channel.
For its part, the two biggest retail accounts of 16-year-old fashion brand Rachel Antonoff, known for “loud, in-your-face prints,” are currently Rent the Runway and Nuuly, founder Rachel Antonoff told Glossy early this month. The companies buy from the brand at wholesale prices before offering them for rent. Rachel Antonoff has only recently introduced solid pieces to its assortment, in step with its aim to secure a “major” retail partner like Saks or Nordstrom, Antonoff said.
“We want to empower brands to make bolder choices. We’re trying to free them up to do what they’re good at and have fun,” Hoffman said. “When we first visited Elyse Walker, the company was in heavy sale mode, and [we saw] all the prints and the colors that were part of the sale offering. And that is the stuff that does really well as one-time rentals.”
As a proof of concept that complements the Elyse Walker partnership, P180 is set to announce a brand partner within the next 4-6 weeks. For each partner, after the one-time rental service catches on, introducing a subscription model guaranteeing recurring revenue is the goal.
“This is the way [young people] are building their closets,” Hoffman said. “Other [rental services] have been out there validating it. We just bring a different element to it by embedding ourselves within the retailer or the brand. It’s about taking proven technologies and applying them in a new way.”
A members-only shopping experience is coming to NYC’s Fifth Avenue
Nineteen-year-old luxury retailer Steven Dann is bringing a members-only shopping experience to Fifth Avenue, driven by demand.
Owned by its namesake founder, Steven Dann has built its business on its two Long Island stores and an e-commerce site. Several trends informed the development of the members-only concept, which is set to open in September: Many of the company’s clients have moved to NYC, plus its various means of personalized styling have caught on. What’s more, today, “everyone wants to be at a member’s club,” Dann said.
The new space, which Dann described as a “showroom penthouse,” will solely be open for styling appointments and will be unmarked to facilitate client discretion.
According to Dann, 80% of the company’s sales are made to 1% of its customers who overwhelmingly take advantage of its personalized offerings. These include 1-on-1 styling appointments and trunk shows allowing them to place orders for future seasons’ styles. In addition, 95% percent of its shoppers are repeat customers.
Per the plan, before a member’s appointment, a stylist will overhaul the showroom with styles fitting their needs, style and sizes. Thus far, 50 existing Steven Dann shoppers have been invited to become members. In addition, the company’s accumulated a waitlist of 70 people who have heard about the space via word of mouth. Applications to become a member will officially launch in September. While there’s no fee attached to a Steven Dann membership, there is “an unspoken requirement of a certain amount that you will be spending,” Dann said.
According to Dann, personalized experiences are necessary to be successful as a retailer in 2024, when shoppers can “click on anything and have it delivered within five minutes.” Likewise, building relationships with clients and earning their trust — including by styling them in looks that earn compliments — are crucial, he said. And finally, offering exclusive styles is a must. Among the brands that Steven Dann sells are Helmut Lang, Isabel Marant and Giuseppe Zanotti.
Dann declined to share his company’s annual revenue, but he said it’s grown every year, with a 38% boost from 2019 to 2021. He owed that pandemic bump to the comfortability provided by the company’s smaller environment, particularly compared to department stores.
And that intimate environment has always been a draw, he said.
“The woman who’s in the city is on the go, whether she’s a soccer mom or a lawyer,” he said. “Walking into a major department store sometimes is not conducive to her lifestyle.
To date, Steven Dann has offered smaller-scale styling appointments in its stores, as well as consignment-based sales. The latter involves stylists sending a variety of styles to one’s home and working with them via FaceTime-based appointments.
If the first iteration is successful, Dann said he plans to open members-only shopping clubs in Florida and California.
Mytheresa and Vestiaire Collective expand their resale partnership
On Tuesday, luxury e-tailer Mytheresa and luxury resale company Vestiaire Collective announced the expansion of their resale partnership, which started in 2021. Formerly only offered to Mytheresa’s top-spending VIP customers, the opportunity to sell pre-loved luxury styles through Mytheresa in exchange for store credit is now being offered to all Mytheresa customers in the U.S., Europe, and the U.K. According to the companies, to date, 26,000 styles have been sold through the partnership, for which Vestiaire Collective serves as the resale-as-a-service provider.
“The program offers Mytheresa customers a seamless and responsible way of luxury shopping,” said a Vestiaire Collective spokesperson, when asked about the benefits of selling through the retailer. “Store credit can be used for several purchases on Mytheresa’s website until the credit has run out, plus customers can accumulate several store credits and use them on a single purchase on Mytheresa.”
They added, “If a seller directly uploads their item on our [Vestiaire Collective] marketplace, they set their own price and need to wait for the item to sell. Through the Mytheresa partnership, they receive a price offer within two working days.”
According to the spokesperson, Vestiaire Collective’s peer-to-peer marketplace remains its main focus, despite its growing resale-as-a-service business. It now has 11 brand and retailer partners, including Gucci, Chloé, Burberry, Alexander McQueen, Mulberry, Courrèges and Luisaviaroma, among others.
They declined to share the financial setup of the Mytheresa partnership.
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