The new collaborative, sharing economy has given us everything from sharing rides, (Uber) to sharing houses, (AirBnB) and now according to Christine Hunsicker, it is time to look in our closets and share our wardrobe. Hunsicker is the CEO of five-year-old Gwinnie Bee clothing rental service. Hunsicker notes that the $2 trillion-dollar fashion industry is ripe for a technology disruption. The “sharing economy” as it has been labeled has disrupted every large business from taxi companies to hotels, and looks like sharing clothing is going to be next.
“A lot of people can’t afford the timeless brands new but they still appreciate the quality,” said Erin Wallace, director of marketing for Crossroads Trading and its sister store Fillmore & 5th, which has opened six boutiques since 2012.
Many of these new businesses are getting funding from traditional sources like individuals and private equity firms including Bain Capital Ventures but also from startup platforms such as Onevest.
Highland Capital Partners, which has more than $2 billion under management, has invested in a number of businesses including Rent the Runway and ThredUp, which focus on Millennials and the shared economy, said partner Dan Nova. “Just about every major industry is likely to experience disruption (because of the sharing economy),” said Joe Atkinson of accounting and consulting firm PwC, whose April report that found that Millennials are among the most enthusiastic about sharing and account for almost 40 percent of those who have provided something.
Big Players Take Notice
Clothier Louis Vuitton, with revenue at €30 billion annually is not likely anytime soon to feel the effects of millennial consumers’ clothes sharing schemes. However, large retail outlets like Patagonia have taken notice. Recently the outerwear retailer has started the “Worn Wear Rack” program, enticing customers to trade in used clothing that is in good condition for later resale. More telling of what may come in the future is that venture capital financier Highland Capital Partners has invested millions in many of the new fashion sharing startups. One of their investments, Rent the Runway, rents high end designer clothing for a subscription fee. With Forbes magazine estimating that the sharing economy has surpassed $3.5 billion since 2013, the possibilities of a large slice of the haute couture pie could be missing from the big retailers’ bottom line soon.
Not Everybody is a Fan
With disruption of economic models comes backlash. Rioting Parisian cabbies last Summer were angry at the Uber invasion in France, and the government of Singapore confiscated flats that were shared with tourists because of regulatory conflicts. This is to be expected in industries who up till now have randomly set their own prices. Entrepreneurs know that their small piece of an extremely large pie can grow. Accountants Price Waterhouse and Coopers estimate total sharing economy revenues to grow to $ 335 billion by 2025, and PwC’s Joe Atkinson theorise that every major player in the retail industry today will be disrupted by the sharing economy.
Community Comes First
Though there is profit to be made, millennials in particular want to be a part of a bigger community. This is one of the reasons they look to connective technology more when purchasing personal items. Rachel Botsman, author of the book “What’s Mine Is Yours: The Rise of Collaborative Consumption believes that millennials look first at personal connection with any business or corporate entity. With the rise of technology that can cut out middle merchants like retailers and other gatekeepers, the empowerment of younger consumers comes with the feeling that they are part of a bigger peer group.
Environmentalism is also a major driver of this trend. “Instead of paying for something and getting rid of it with no value when you are done – swap and resale gives Millennials the ability to extend the value,” says Jamie Gutfreund, chief marketing officer for Deep Focus (youth trends market research firm. “It’s efficient and it’s green.”
Indeed, 59 percent of Crossroads shoppers said “being an environmentally friendly way to shop” was one of their favourite things about the store.
Investment Precedes Profits
With Uber and AirBnB now valued at over $10 billion one can only imagine what the next few years will bring into the sharing economy. Tens of millions of dollars in capital is being now raised for the sharing of clothing, housing and other staples, with firms lining up to get into the fledgling industry. With the right kind of management, sharing pre-worn clothing can be the next big boom in this new, collaborative environment.
And, as we have seen time and time again, trends that take hold off-shore are soon replicated in Australia – what will it mean for our much loved traditional fashion retail brands?
Magellan Logistics is a locally owned, Melbourne based freight forwarding and logistics company with offices in Sydney and Auckland and a specialization in freight forwarding and 3rd party logistics for the textiles and fashion sector. Contact 1300 651 888 or visit www.magellanlogistics.com.au for more information on how we can assist you.