Why Traditional Retailers are Beginning to Love Subscriptions

Last January’s launch by American Eagle of its American Eagle Style Drop service may have marked a retail inflection point, the nexus at which two trends – renting and subscription services – unofficially converged, and a new era in clothing history got underway.

Style Drop allows consumers to rent three items of clothing for $49.95 a month and exchange them as many times as they like. Its debut came on closely on the heels on the launch of a very similar service from Express, called Express Style Trial, reports Mary Hanbury at Business Insider.

What makes the news of these new services remarkable is that both American Eagle and Express have roots in the shopping stone age. American Eagle was founded as American Eagle Outfitters way back in 1977, and the first Express store opened in 1980. Imagine predicting 40 or so years ago that both retailers would someday be renting clothes. You would have been laughed at. (But of course, you would have also faced ridicule for predicting that you’d be shopping for clothes on your phone. Who knew?)

Why did two traditional retailers like American Eagle and Express get on the subscription/renting bandwagon almost simultaneously?

Sustainability and the subscription economy

On the consumer side, drivers include the desire of big-spending millennials to live more sustainably while at the same time feeding their craving for new stuff. On the brand side, it’s the recognition that meeting those demands can create a consistent, long-term revenue stream.

So, is renting clothes really going to be a thing? Forbes contributor Cally Russell thinks so. “When it comes to clothes, the idea of wearing something owned by someone else is a line many of us still won’t cross, but with an explosion in options, 2019 might be the year this all changes,” he writes.

Russell cites as signifiers of this trend the growth of several other clothes-subscription services, including the decade-old New York City-based Rent the Runway (“imagine having everything to wear without buying a single thing”) and more recent entries, such as the UK’s FrontRow and WearTheWalk.

Rent the Runway is an interesting case study because, according to Stephanie Cretz at Internet Retailer, although it was founded in 2009 to provide shoppers access to designer apparel and accessories they might otherwise not want, or be able, to purchase, the company didn’t take off until it introduced subscriptions three years ago.

The service, called Rent the Runway Unlimited, which targets professional women, “lets a shopper keep up to four items at a time, which she can keep as long as she likes,” Cretz writes. “Last year, the retailer introduced another, less expensive option called Rent the Runway Update that allows shoppers to rent four items a month.”

Appealing to a new type of customer

Russell suggests the focus of these companies is “underpinned on the emergence of a new type of consumer – the sustainably focused millennial who has now been conditioned by other sharing services to value access over ownership.” In the purchasers’ minds, they are doing good by swapping ownership for sustainability – and in the process fueling profitable long-term revenue streams.

The move to subscription/rental models by American Eagle and Express is just one more indication that the era of the “subscription economy” is now well underway.