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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Onlineapparelandaccessoryrentalservicesareproliferating.Apparelrentalmodelsallowcustomerstoborrowitemsforasettimeperiod,typicallyatameaningfuldiscounttotheproducts’retailprice.Millennialsappeartobedrivingthegrowthoftheapparelrentalsegment,andthreekeymillenniallifestyletrendsareunderpinningthesegment’sdevelopment:

1) The“Instagrameffect”—orthedesiretobeperceivedonsocialmediaaslivingafun,interesting,experience-richlife—combinedwithcelebritycultureandtheselfiephenomenonnecessitatethatmillennialshaveanever-changing,on-trendwardrobe.Apparelrentalservicesallowconsumerstowearachangingselectionofmajorbrandswithouthavingtospendasmuchastheywouldiftheyboughttheitemsoutright.

2) Millennialsvalueexperiencesoveracquiringproducts.Apparelrentalsallowmillennialstowearhigh-endbrandsatlowercost,andsofunnelmoreoftheirspendingtowardservicesandleisureexperiences.Meanwhile,thelowprioritythatmillennialsattachtoowningproductsmakesrentingapparelamoreviableoptionforthem.

3) Millennialsareconsideredbudgetconscious,sorentingitemsmakessenseforthem,especiallywhenitcomestohigh-worthandexpensiveitemsthatareusedonlyoccasionally.

DEEP DIVE: Millennial

Lifestyles Drive Growth in Apparel

Rental

Deborah Weinswig

Managing Director,

Fung Global Retail & Technology

deborahweinswig@fung1937.com

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

2

January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

TableofContents

ExecutiveSummary.........................................................................................................................................3

Introduction....................................................................................................................................................4

TheRent-The-RunwayRevolution...................................................................................................................4

MillennialLifestyleTrendsUnderpinApparelRental.......................................................................................51.Instagram,celebritiesandtheselfiegeneration............................................................................................62.Experiencesoveracquisitions........................................................................................................................63.Limitedfinancialmeansandbudgetconsciousness......................................................................................7

FurtherFactorsSupportingTheRentalSegment..............................................................................................7Decluttering........................................................................................................................................................7FastFashion........................................................................................................................................................8Sustainability.......................................................................................................................................................8OneElementofTheBoomingSharingEconomy................................................................................................8

ImplicationsForRetailers...............................................................................................................................10

WhatDoesTheFutureHold?..........................................................................................................................11

CompanyProfiles...........................................................................................................................................12

KeyTakeaways...............................................................................................................................................16

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

ExecutiveSummaryOnlineapparelandaccessoryrentalstartupsareproliferating.Apparelrentalmodelsallowcustomerstoborrowitemsforasettimeperiod,typicallyatamuchlowercostthanbuyingtheitemsoutright.Millennials—thosebornbetween1980and2000—appeartobedrivingthegrowthoftheapparelrentalsegment.Inparticular,threemillenniallifestyletrendsareunderpinningthedevelopmentofthesegment:

1)TheInstagrameffect,celebritycultureandtheselfiephenomenonnecessitatethatmillennialshaveanever-changing,on-trendwardrobe.Apparelrentalservicesallowconsumerstowearachangingselectionofmajorbrandswithouthavingtospendasmuchastheywouldiftheyboughttheitemsoutright.

2)Millennialsvalueexperiencesoveracquiringproducts.Apparelrentalsallowmillennialstowearhigh-endbrandsatlowercost,andsofunnelmoreoftheirspendingtowardservicesandleisureexperiences.Meanwhile,thelowprioritythatmillennialsattachtoowningproductsmakesrentingapparelamoreviableoption.

3)Millennialsareconsideredbudgetconscious,sorentingitemsmakessenseforthem,especiallyhigh-worthandexpensiveitemsthatareusedonlyoccasionally.

Furtherfactorssupportingtheapparelrentalsegmentincludethedeclutteringtrend,theprevalenceoffastfashionandmillennials’concernforenvironmentalsustainability.

Apparelrentalserviceshaveexpandedinlinewiththerapidgrowthofthesharingeconomy.Intoday’sincreasinglydigitalizedworld,moreandmoreconsumersareforgoingownershipofproductsandservicesandchoosingtorent,borroworbarterfortheminstead.TheInternethasfacilitatednewmarketplacesthatprovidesuperiorcommunicationandlogisticsservicesthatlinksownerswithborrowersandrenters.

Onlineapparelrentalcompaniescansiphonoffsalesthatwouldotherwisegotoretailers.Ontheflipside,rentingcaninspireconsumerstomakefuturepurchases,assomemayfeelmoreconfidentaboutbuyingaparticularitemorbrandaftertryingiton.Rentalservicesintroducepotentialcustomerstonewbrandsanddesigners,especiallyoneswhoseproductsthecustomerscannotaffordtobuycurrently,butmaybeabletobuyinthefuture.Thisisparticularlyrelevantnow,asluxurygoodssaleshavebeenonadecliningtrend.

Anumberoffashionrentalcompaniesandpeer-to-peermarketplaceshavelaunchedoperationsinthelastfewyearsintheUS,theUK,EuropeandAustralia.Themajorityofferhigher-enddesignermerchandise,andsometargetnichemarkets.

Servicessuchasvirtualfittingroomsandaugmented-realityappswillencouragemoreonlinepurchasesandrentaltransactions,asthesenewtechnologiesresolvesomeofthechallengesrelatedtofindingtherightfitorsizewhileshoppingforapparelonline.However,apparelrentalandpeer-to-peersharingservicesstillfacesomechallengesandroadblocksthatinhibittheiradoptiononalargerscale.

Threemillenniallifestyletrendsareunderpinningthedevelopmentoftherentalsegment.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

IntroductionInthisreport,weexaminethetrendofrentingfashion,whichconsistsofrentingmerchandisesuchasapparel,footwearandaccessoriesforaspecific,predeterminedtimeperiodandfee.Weidentifythreekeymillennialtrendsthatareunderpinningthemarketforapparelrentals.Wealsoconsiderthepotentialimplicationsoftherentaltrendforretailers,showcasevariousonlinestartupcompaniesthatofferrentalservicesforapparelandotheritems,andshedlightonhowtheapparelsharingeconomyandrentalmovementarelikelytoevolveinthefuture.

Source:Renttherunway

TheRent-the-RunwayRevolutionAlongsidetherapidexpansionofthesharingeconomyforallkindsofgoodsandservices,onlineapparelandfurniturerentalstartupsandpeer-to-peersharingplatformshaveproliferated.Rentalmodelsallowcustomerstoborrowitemsforasettimeperiod,typicallyatameaningfuldiscounttotheproducts’retailprices.Perhapsthebest-knownapparelrentalcompanyisUS-basedRenttheRunway,whichlaunchedin2009andcurrentlyhasmorethan6millionmembers.

Rentalcompaniesprovideproductaccessibilitybyofferingaspirational,discounteddesignerproductstoabroaderaudience;theseconsumersoftenwouldnotbeabletoaffordtobuytheproducts,butareabletorentthemforaperiodoftimeatalowercost.Thefashionrentalmodelexpandsthefashionmarketbyenlargingthecustomerbaseandmakingawiderarrayoffashionsavailabletoyoungerandless-wealthyconsumers.Therentalmarketisgearedtowardspecialoccasionwearandformalwear,assuchitemsareoftenrarelywornbutofhighvalue.

ThelargestapparelrentalserviceisUS-basedRenttheRunway,whichlaunchedin2009andcurrentlyhasmorethan6millionmembers.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

MillennialLifestyleTrendsUnderpinApparelRentalMillennials—thosebornbetween1980and2000—appeartobedrivingthegrowthoftheapparelrentalsegment:

• Accordingtoasurveybyshopping-centeroperatorWestfield,about46%ofmillennialsintheUKand35%intheUSwouldbewillingtospend£200(US$253)ormoremonthlytorentclothes.

• Thesurveyfoundthatalmosthalfof25–34-year-oldsintheUKandtheUSwouldbeinterestedinamonthlyrentalsubscriptionplanforclothes.Consumersinurbanareasareparticularlyinterestedinrentingclothesfromtheirfavoritestores,theWestfieldsurveyfound.

• Inaddition,about60%ofmillennialspreferrentinggoodstoowningthem,accordingtoasurveyconductedbytheOrganisationforEconomicCo-OperationandDevelopmentin2013.

Weseethreekeymillenniallifestyletrendsunderpinningthedevelopmentoftherentalsegment:adesiretobeseenwearinganever-changing,on-trendwardrobethatisdrivenbysocialmediaandcelebrityculture;apreferenceforspendingonexperiencesratherthanongoods;andfrugalconsumptionhabits.

Figure1.Millennial-DrivenCatalystsfortheFashionRentalRevolution

Source:FungGlobalRetail&Technology

SocialMediaandCelebrityPressures

ExperiencesoverOwnership

FrugalityandBudget

Consciousness

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

1.Instagram,CelebritiesandtheSelfieGenerationTheInstagrameffect,celebritycultureandtheselfiephenomenonleadmanymillennialstodesireanever-changing,on-trendwardrobe.Millennialsareverymuchinfluencedbycelebritiesandsocialmedia,andweseeplatformssuchasFacebook,Instagram,TwitterandSnapchatstimulatingdemandforfashionandapparelrentals.Millennialswanttobeseenindesignergoodsandthelatestapparelstyles,andrentalservicesprovideamoreaffordablemeansofprocuringdesignerclothing.Theyalsoofferconsumerscontinuousproductnewnessandvariety,allowingrenterstowearachangingselectionofmajorbrands,butatalowercostthanbuyingthem.

2.ExperiencesoverAcquisitionsMillennialsoverwhelminglyvalueleisureexperiencesovermaterialpossessions,andtheyandmanyconsumersinotherdemographicsnowprefertorentorsharecertainitemsratherthanownthemoutright.AccordingtoasurveybyEventbriteandHarrisPoll,fully78%ofUSmillennialsprefertospendonadesirableexperiencethantobuyadesirableproduct.

Figure2.USMillennialsandExperiences,SurveyResults(2014)

Source:Eventbrite/HarrisPoll

69%

69%

72%

77%

78%

BelievethatAlendingEventsMakesThemFeelMoreConnectedtoOther

People,theCommunityandtheWorld

ExperienceFearofMissingOut

WouldLiketoIncreaseTheirSpendingonExperiencesRatherThanPhysical

ThingsintheNextYear

ClaimthatSomeofTheirBestMemoriesArefromanEventorLiveExperience

TheyAlendedorParncipatedIn

ChoosetoSpendonDesirableExperienceorEventoverBuying

SomethingDesirable

Fully78%ofUSmillennialssurveyedbyEventbriteandHarrisPollsaidtheyprefertospendonadesirableexperienceratherthanbuyadesirableproduct.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Apparelrentalsdovetailwiththistrendintwoways:

• First,therentalmodelallowsmillennialstowearhigh-endbrandsatlowercost,leavingthemmoretospendontheservicesandexperiencesthattheyvaluemorehighly.

• Second,thelowprioritythatmillennialsattachtoowningproductsmakesrentalsamoreviableoption:iftheseconsumershadastrongpreferenceforacquiringproducts,themodelwouldnotwork.

3.LimitedFinancialMeansandBudgetConsciousnessIntheaftermathofthefinancialcrisis,manymillennialsintheUS,CanadaandtheUKaregrapplingwithhighstudentdebtlevelsandsoftemploymentprospects.InContinentalEuropeancountriessuchasFrance,ItalyandSpain,millennialsarefacingmuchhigherlevelsofunemploymentthanothergenerationsdo.Unsurprisingly,thisagegroupisconsideredbudgetconscious.Millennialsseekvalue,sorentingitemsmakessenseforthem,especiallyforhigh-worthandexpensiveitemsthatareusedonlyoccasionally.AccordingtoUK-basedapparelrentalstartupChicbyChoice,onlyone-thirdofmillennialsarewillingtopurchaseapparelatfullprice.

Source:Chic-by-choice

FurtherFactorsSupportingtheRentalSegmentDeclutteringPeer-to-peerrentalserviceshelpconsumersdecluttertheirhomesandsustainablymakeuseofunwornandunuseditems.AccordingtoonlineresalestoreThredUp,morethanUS$8billionworthofapparelisjustsitting,unworn,inconsumers’closetsintheUS.Therentalmodelallowsconsumerstocleanouttheirclosetsandmonetizetheclothestheyneverwearthemselves.

AccordingtoapparelrentalcompanyChicbyChoice,onlyone-thirdofmillennialsarewillingtopurchaseapparelatfullprice.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

FastFashionRentingandborrowingapparelbuildsonthefast-fashionbusinessmodel,asapparelrentalservicesprovidecustomerswithmorechoiceandvariety,alongwithcontinuouslyon-trendmerchandise.Fastfashion,duetoitslow-value,expendablenature,isalsoanextensionofconsumers’desiretoexperienceproductsratherthanownthemforever.Fast-fashiononlinepureplayssuchasBoohoo.comandASOShavereportedverystrongsalesresultsintheiraffordablebridalandspecialoccasiondresscategories.

SustainabilityFinally,insomeways,itismoresustainableandenvironmentallyfriendlytorentclothesthanitistobuythem,asthetextileindustry—especiallyfastfashion—isoneofthebiggestpollutersglobally.Onecounterargumentcouldbethatthetransportationofrentalgarmentscreatesadditionalpollution.AccordingtoNielsen,millennialsaremorelikelythanGenerationZers(thegenerationthatfollowsthemillennials)tobewillingtopaymoreforsustainableproducts.

Figure3.PercentofGlobalSurveyRespondentsWillingtoPayMoreforSustainableProducts,2015

Source:Nielsen

OneElementoftheBoomingSharingEconomyIntoday’sincreasinglydigitalizedworld,moreandmoreconsumersareforgoingownershipofproductsandservicesandchoosingtorent,barterfororborrowtheminstead.TheInternethasfacilitatednewmarketplacesthatprovidesuperiorcommunicationandlogisticsthatlinkownerswithborrowersandrenters.

Fortransportation,manyconsumersuserental/ride-sharingservicessuchasUber,ZipcarandGetaround,aswellasscooterrentalservices.Othersaresharingvacationrentalsthatarebookedthroughhome-sharingplatformssuchasAirbnb.Thesharingeconomyhasalsoexpandedtoincludepeer-to-

75.0%

72.0%

70%

71%

72%

73%

74%

75%

76%

Millennials GeneranonZ

AccordingtoonlineconsignmentcompanyThredUp,morethanUS$8billionworthofapparelissittinginAmericanconsumers’closets,unworn.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

peerrentalsoffurniture,appliances,tools,artand,ofcourse,apparelandfootwear.

PwCforecaststhattheglobalsharingeconomycouldgenerateUS$335billioninannualrevenueby2025,upfromaboutUS$12billionin2015.However,itisunclearhowmuchofthatwillbeaccountedforbyretailorfashionapparelrentals.

Figure4.GlobalSharingEconomy:AnnualSales(USDBil.)

Source:PwC

Asof2014,only2%oftheUSpopulationhadparticipatedinasharingtransactioninretail,comparedwith6%forleisureand8%fortransportation,accordingtoPwC.

Figure5.PercentofUSPopulationthatParticipatedinSharingEconomyTransaction,2014

Source:PwC

$12

$335

2015 2025E

2%

6%

8%

Retail Leisure Transportanon

Asof2014,only2%oftheUSpopulationhadparticipatedinasharingtransactioninretail,comparedwith6%forleisureand8%fortransportation.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

ImplicationsforRetailersOnlineapparelrentalcompaniescansiphonoffsalesthatwouldotherwisegotoretailers.Iftheapparelrentaleconomytakesoffonalargerscale,fast-fashionretailerswilllikelybemostaffected,sincetheysellon-trendandseasonal,butinexpensive,products.TraditionaltuxedoandformalwearrentalcompaniessuchasMossBrosandMen’sWearhousemayalsoseepressure,asthecustomaryexperienceofrentingformalattireforspecialoccasionshasoftenbeencharacterizedasunpleasantandoutdated.

Ontheflipside,rentingcaninspireconsumerstomakefuturepurchasesoncetheyhavetriedonacertainitemorbrand.Rentalservicesareameansofintroducingpotentialcustomerstonewbrandsanddesigners,especiallyonesthattherentersmaynothavebeenabletoaffordtobuyoutright.Thisisparticularlyrelevantnow,asluxurygoodssaleshavebeenonadecliningtrend.

AccordingtoRenttheRunway,95%ofapparelrentersaretryinganewbrandforthefirsttime,sorentalcompaniesarefacilitatingcustomeraccessandintroducingcustomerstobrands.Insomeinstances,customerswouldlikelyneverhavetriedthebrandiftheapparelrentalservicehadnotbeenavailable.

RenttheRunwayhasopenedashowroominUSluxurydepartmentstoreNeimanMarcusinSanFrancisco,andthetwocompaniesconsidertheirpartnershipawaytointroducecustomerstonewbrandsandtoexpandsalesorrentalstonewcustomers.RenttheRunway’scorecustomersare20–30-year-oldsandNeimanMarcus’scorecustomersare40–50-year-olds.Thedepartmentstoreisespeciallytryingtoattractmillennialfashioncustomersandintroducethemtonewfashioncategories.

Likewise,NewYork–basedluxuryrentalstartupArmariumhasestablishedanewpartnershipwithEuropeanonlineluxurymarketplaceYooxNet-A-Porter.WhenArmariummembersselectarentalpiece,theyarealsoofferedaselectionoffootwearand/oraccessoriesavailableonNet-A-PorterthathavebeenselectedbyArmarium’sstylists.Net-A-PortersellsmanyoftheitemsthatareavailableonArmariumalready.

Source:Armarium

RenttheRunwaysaysthatapproximately95%ofapparelrentersaretryinganewbrandforthefirsttime.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

WhatDoestheFutureHold?TheCEOsofrentalstartupsbelievethatrentingapparelwillbecomemorecommonthanpurchasingit,andthatrentalcompanieswilldisrupttheapparelmarket.Servicessuchasvirtualfittingroomsandaugmented-realityappswillencouragemoreonlinepurchasesandrentaltransactions,asthesenewtechnologiesresolvesomeofthechallengesrelatedtofindingtherightfitorsizewhileshoppingforapparelonline.

However,apparelrentalandpeer-to-peersharingmarketplacesstillfacesomechallengesandroadblocksthatinhibittheiradoptiononalargerscale.First,notallconsumerswanttoshareapparel,footwearandaccessoriesorwearapparelthathasbeenwornbyothers,althoughtheconsumermindsetmayevolvefavorablyonthisovertime.Second,notallbrandswanttooffertheirproductsonloan.

Themostlikelyscenarioisthatconsumerswilluseapparelrentalservicesmostoftenforspecialoccasionapparelandformalwear,aswellascertainuniquelifestylepieces.Currently,fewerthan1milliontuxedosarepurchasedintheUSannually,whilemorethan10millionarerentedout.Giventhegrowthoftheathleisuretrendandtheless-formaldressinghabitsthataredefiningtheworkplace,therecouldbeasizableopportunityinrentingsuitsandtuxedosforspecificoccasions.

Rentalstartupsthattargetnichemarketssuchasmaternitywearandplussizesarealsolikelytosucceed.Furthermore,itdefinitelymakessensetorentspecializedbutstylish,sporadic-usageapparelforcertainoutdooractivitiesorsportssuchasskiing,snowboarding,sailingandyachting,andclothingforwintervacationsandjungleordeserttrekking.Finally,webelievethereisalsodemandforonlinerentaloffurniture,artandhomedécor,especiallyinlargeurbancenterswithrelativelymobilepopulations.

Source:Shutterstock

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

CompanyProfilesAnumberoffashionrentalandpeer-to-peersharingcompanieshavelaunchedoperationsinthelastfewyearsintheUS,theUK,EuropeandAustralia.Themajorityofferhigher-enddesignermerchandise,andsometargetnichemarkets.Almostallofthesecompaniesofferfreeshippingandreturns,aswellasassumethecostsofrepairsanddrycleaning.Mostalsoofferfreepersonalizedstylistadviceforfitandstylingsupport.Somecompaniesalsoofferiteminsuranceandtheoptiontopurchaseitemsafterrentalatadiscounttotheretailprice.Startupsinthesectorlikelyhavehighoperationalcostsandwewouldnotbesurprisedifmostofthemarenotcurrentlyprofitable.

Revenuedataarethinontheground,givenapreponderanceofprivateownership.RentTheRunwayhasbeenreportedtobetargetingUS$100millioninrevenuein2016.GlamCornerreportedapproximatesalesofAU$1millionin2015andGentuxrevenueswereprojectedtoreachUS$1.2millionin2015andoverUS$20millionin2016.

Figure6.OnlinePurePlayRentingandBorrowingStartups

Company BusinessModel Country

RenttheRunway AspirationalApparelRenting US

ChicbyChoice AspirationalApparelRenting UK

Armarium LuxuryApparelRenting US

LeTote SubscriptionApparelRenting US

GirlMeetsDress DressRenting UK

GlamCorner DressRental Australia

LSwop LuxurySneakerRental US

TheBlackTux TuxedoRental US

Gentux TuxedoRental US

StyleLend LuxuryApparelBorrowing/Swapping US

GwynnieBee PlusSizeApparelSubscriptionRental US

BorrowForYourBump MaternityApparelRental US

RentoMojo Furniture/DécorRental India

Furlenco Furniture/DécorRental India

Source:Companyreports;pressarticles

RenttheRunwayUS-basedRenttheRunwayoffersdesigner-brandedfashionrentals,includingspecialoccasiondressesandoutfits.Thecompanywaslaunchedin2009,andcurrentlyhas800employeesserving6millioncustomers.Apartfromitsonlineplatform,thecompanyhasopenedsixbrick-and-mortarshowrooms,inNewYorkCity,Chicago,LasVegasandWashington,DC.RenttheRunwayhasalsolauncheda2,500-square-footshowroomatNeimanMarcusinSanFrancisco,andisplanningtoopenmorestand-aloneshowroomlocations.

RenttheRunwayhas800employeesandisprojectingannualcompanyrevenuesofUS$100million.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

Thecompanyexpandeditsrentalofferingsfromeveninggownsandformalweartoall-occasionwearandlaunchedaservicecalledUnlimitedthatallowsmemberstorentuptothreeitemsforamonthlyfeeofUS$139,orUS$1,700annually.RenttheRunwayisprojectingannualcompanyrevenuesofUS$100millionin2016andisvaluedatanestimatedUS$500million.Thecompanyalsohasadedicatedteamof250employeestohelpcustomersfindoutfitsthroughSnapchat.Accordingtothecompany,RenttheRunwayoperatesthelargestdry-cleaningoperationintheUS,cleaning2,000dresseseveryhour.

ChicbyChoiceChicbyChoiceisaUK-basedcounterparttoRenttheRunway.ChicbyChoicepurchasespremiumbrandsfromthewholesalechannel,rentsthemmultipletimesandresellsthemonconsignmentwebsitessuchasVestiaireCollectiveandTheRealReal.ChicbyChoiceshipsthroughouttheUKandtomorethan15Europeanmarkets,includingFrance,ItalyandGermany.Thecompanyoffersitemsfrommorethan40high-enddesigners.

ArmariumNewYork–basedArmariumwasestablishedinApril2016.Thecompanyoffersanapp-basedrentalplatformforwomen’sluxuryapparel,footwearandaccessories.Itemscanberentedatclosetoone-tenththeircostatretail.Armariumrentsstatementpiecesandspecialoccasionitemsathighpricepoints,withmostdressrentalscostingaroundUS$500forfourdays,sotheconceptappealstothosewhocanafforddesignerbrandsbutwouldliketoincreasethevarietyoftheirwardrobes.ArmariumhasestablishedanewpartnershipwithonlineluxurymarketplaceYooxNet-A-Porterandalsohasabrick-and-mortarshowroominNewYork.

LeToteSanFrancisco–basedLeToteoffersamemberserviceoptionthatallowscustomerstorentabroadselectionofapparelandaccessoriesforUS$59amonth.AvailablebrandsincludeNike,LuckyBrand,VinceCamuto,FrenchConnectionandLevi’s.LeTotealsooffersmaternityclothingandaspecializedmaternitysubscription.

GirlMeetsDressUK-baseddressrentalcompanyGirlMeetsDressoffersstylesfrommorethan150designers.Customerscanrentdressesfortwoorsevennightsandcanchooseuptothreedressestotryon.Thecompanyhasopeneditsfirstshowroom,inBattersea,London.Thecompany’swebsitestatesthatGirlMeetsDressisseekingfurtherinvestmentfunding.

GlamCornerGlamCornerisanAustralianonlinerentalserviceforspecialoccasiondresses.Thecompanyoffersacollectionofmorethan1,500dressesfromover100acclaimedinternationalandlocaldesigners,aswellasaccessoriesandfootwear.Renterscanborrowdressesforfouroreightdaysand

ChicbyChoiceisaUK-basedcounterparttoRenttheRunway.Thecompanyshipstomorethan15Europeanmarkets,includingFrance,ItalyandGermany.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

accidentaldamageinsuranceisavailable.ThestartupcurrentlyhassalesofoverA$1millionannuallyandexpectstoincreaseitssalestoA$3million.GlamCornerhasraisedA$1.3millionininvestmentfundingtodate.

LSwopLSwop(LuxurySwop)isanonlinepureplayluxurysneakerrentalserviceformen.Thecompanyoperatesonamonthlysubscriptionbusinessmodelandsneakerscanberentedforonetofourdays.CustomerscanrentonepairamonthforUS$150,twopairsforUS$250andthreepairsforUS$350.LSwopoffersluxurysneakersfromTomFord,ChristianLouboutin,Balmain,GivenchyandRickOwens,amongothers,whicharetypicallypricedat$800–$1,000.Accordingtothecompany’sfounder,nosneakersarerentedoutmorethantwotimesandmembershipsubscriberscanpurchasesneakersatadiscountedprice.Thisfall,thecompanysetupatemporarypop-upstoreinNewYork’sSohoneighborhood.

TheBlackTuxTheBlackTuxisanonlinerentalserviceforformalandspecialoccasionmenswear.Thecompany’sbusinessmodelissimilartoRenttheRunway’s.TheBlackTuxrentsaffordablesuits,tuxedosandaccessories,offeringasimpleselectionoffiveclassicstyles—threetuxedosandtwosuits.Thecompanyrentseachitemanaverageof15timesbeforeremovingitfromservice.TheBlackTuxclaimsthatcompetitortuxedorentalservicessuchasMen’sWearhouserentthesameitem40to80timesbeforeretiringit.ThecompanyhasraisedUS$10millionininvestmentfundingtodate.

GenerationTuxFoundedin2014bythefounderandformerCEOofMen’sWearhouse,GenerationTuxisanonlinesuitandtuxedorentalbusiness.Thecompanyhas25,000weeklyvisitorsandhasgeneratedmorethanUS$1millioninsalestodate.Thecompanybelievesthatsuitrentalisthenextbiggrowthopportunity.

MossBrosMossBrosisaUK-basedmen’sformalwearretailerthatsellssuits,tuxedosandassociatedformalandprofessionalwearaccessories.Althoughthecompanyhasabrick-and-mortarpresence,with125storesintheUK,itrecentlyannouncedthatitwillputgreaterfocusandinvestmenttowarditssuitrentalservice,withtheaimofboostinggrowthinthecategory.Therebrandingtargetsyoungconsumerswhowillrentsuitsforjobinterviewsandothereverydayevents,insteadofjustforweddingsandblacktieevents.

StyleLendNewYork–basedStyleLendisanonlinepeer-to-peerrentalmarketplacethatprovidesapparelswapping/rentalservices.Thecompanywasfoundedin2014.Consumersbrowsethroughrenters’digitalclosetstochooseitemsfromChanel,SaintLaurent,Valentino,Givenchy,Balmain,BCBGandmany

GenerationTuxwasfoundedin2014bythefounderofMen’sWearhouse.Thecompanyhas25,000weeklyvisitorsandhasgeneratedmorethanUS$1millioninsalestodate.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

otherpopularandemergingdesigners.Pricesvarybasedondressanddesigner.ItemsaredeliveredwithinhoursinNewYorkandintwotothreehoursoutsidethecity.Renterscankeepthepiecesforsevento14days.IntheUS,StyleLendrequiresownerstosendinitemstheywanttorentout,andthecompanystoresandhandlesdeliveryanddrycleaning,muchlikeatraditionalrentalcompany.

GwynnieBeeUS-basedGwynnieBeeoffersonlinewomen’splus-sizefashionrentalsbysubscription,targetingprofessionalwomenages28–45.GwynnieBeeofferswomen’sclothingrentalsinsizes10–32frommorethan190brands,includingASOS.Since2012,thecompanyhasincreasedsalesby10%–15%annually,becomingoneofthelargestpurchasersinplus-sizefashion.By2015,thecompanyhadshippedmorethan3millionsubscriptionboxes.

BorrowForYourBumpUS-basedBorrowForYourBumpisanonlinematernitywearrentalservice.Thecompanyprovidesaonetimedressrentaland/orasubscriptionboxserviceforvariousmaternityitems.ForUS$99,renterscanborrowfouritemsfor30days.

RentoMojoBangalore-basedonlinefurniturerentalcompanyRentoMojowasfoundedin2014.RentoMojooffersonlinerentalservicesforfurniture,appliances,trekkingequipmentandbikes.Thecompanyhasbeengrowingat30%monthovermonthandhasapresenceinDelhi,Mumbai,PuneandBangalore.ThestartuphasraisedUS$7millionininvestmentfundingtodate.

FurlencoFurlencoisanotherIndianstartupthatrentsfurnitureandhomedécorpackages,whicharedeliveredandsetupwithin72hours.ThecompanyoperatesinPune,MumbaiandBangalore.FurlencohasraisedUS$6millionininvestmentfunding.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

KeyTakeawaysAsthesharingeconomyforallkindsofgoodsandserviceshasrapidlyexpanded,wehavewitnessedaproliferationofonlineapparelandfurniturerentalstartupsandpeer-sharingplatformsforapparel.

Rentalmodelsallowcustomerstoborrowitemsforasettimeperiod,typicallyatameaningfuldiscounttoretail.Rentalcompaniesprovideproductaccessibilitybyofferingaspirational,discounteddesignerproductstoabroadaudiencethatmightotherwisenotbeabletoaffordthem.

Apparelrentalismoregearedtowardspecialoccasionapparelandformalwearduetotheinfrequentusagebuthighvalueofsuchclothing.Millennialsinparticularappeartoliketheoptionofrentingatrendybutinexpensivedressoranexpensivedesignergownratherthanbuyingone.

Apparelrentalismoregearedtowardspecialoccasionapparelandformalwearduetotheinfrequentusagebuthighvalueofsuchclothing.

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January16,2017

DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technologydeborahweinswig@fung1937.comUS:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.

DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comJohnMercerSeniorAnalyst

EvaK.SeniorResearchAssociate

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