OVERHEARD: Wait… what just happened in retail-land?
Wait… what just happened in retail-land? We’ve seen large retailers investing in start and scale-ups before – like for example Macy’s purchase of the concept store STORY. However, the deal between Le Tote and Lord & Taylor is a completely different ‘story’.
Le Tote is an online fashion service, providing women access to an unlimited closet. It is a fashion subscription that enables women to rent clothing for a monthly membership fee. The company has grown over 300% per year, for the past 2 years. Now, Le Tote is buying Lord & Taylor (part of Hudson Bay Corporation), a 193-year-old traditional retailer.
You’d have thought, with Lord & Taylor being the larger business, it would be the one buying Le Tote and not the other way around. But today, it is difficult for traditional retailers to obtain capital to make such purchases because their future is unsure.
Subscription and rental models, like Rent the Runway and Stitch Fix, are cleverly tapping into younger consumers’ eagerness to inject more newness into their closets without having to pay for that privilege. Furthermore, business models like these answer the consumer’s need for more sustainable wardrobe choices.
The deal is a sign of how much retail has changed. In fact, it shows who is running today’s retail world. But what does this mean for brands & advertising?
People have a strong sense of ownership over their personal style. Therefore, sharing a closet is not an easy proposition to go mainstream. Although people are used to music subscriptions, and catching a BlablaCar, consumers aren’t used to the idea of renting clothes yet. Only 6% of shoppers have already tested rental out themselves. So, an important challenge for rental retailers is to convince customers to rent their clothes. In educating consumers, advertising is key. This means that advertising gets another message: a more educational message than an inspirational one. But this doesn’t mean that it can’t have both. Le Tote launched a collection in collaboration by influencer Olivia Culpo that was available for non subscribers as well, with the aim to make renting more mainstream.
Another way of educating consumers, is when traditional retailers are also starting to offer rental services. This helps customers to get used to the idea of renting: if your favourite shop offers this service, why not give it a go? Coming back to the purchase of Lord & Taylor, if Le Tote decides to also offer their rental services at Lord & Taylor, that would be a very strategic (advertising) move to help rental go mainstream.
Read the article here.