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Has the UK obsession with owning things gone away? Have the millennials shown us that being frugal is not only clever, but also cool?

Today, thanks to the likes of Airbnb, Zipcar, and Uber, I can stay in a luxurious villa in St Tropez, hire a car by the hour, or have personal driver on hand any time of the day – what’s not to love about that?  

The rise of the economic model ‘sharing economy’ opens up these opportunities to everybody and is increasingly becoming a bigger part of our lives. Rather than owning an asset, behaviour has shifted towards more convenient rental agreements, available on-demand and with less commitment. The sharing or ‘peer-to-peer’ economy enables people to rent assets owned by another individual.

It’s become common place in the transportation and hospitality sectors and the outlook of sharing economy is expected to reach $20bn globally by 2020 (Juniper Research), but what industry is next and where will it end?

The endless wardrobe – how it works

Imagine the horror of being spotted on Instagram twice in the same outfit!

Now, thanks to the sharing economy you don’t have to worry about it. Companies like Rent the Runway, Chic by Choice and Girl Meets Dress are the answer to your worries. They offer rental options that enable anybody to wear the latest fashion items without spending a significant amount of money. Predominantly aimed at women, the idea is to make a wide range of high-end clothing accessible to everybody. No longer do your wardrobes need to be the graveyards of ‘never-to-be-worn-again’ items.

The ‘rent-a-dress’ model makes it possible to rent expensive designer dresses and accessories for a limited period at a fraction of the retail price (generally between 10%-20%). The rental price includes shipping costs, a return package with a pre-labelled barcode, care, and optional insurance. You can order your outfit online or in stores. On top of that, a personalised customer service is provided through stylists who can help you find the perfect dress and accessory combination. If you want a regular service, another option is to pay a monthly fee or subscription for a specified number of designer pieces on rotation. They even insure against minor spillage and damage.

The rent-a-dress model is proving to be so popular that peer-to-peer market places have opened up to cut-out the middle man and connect you directly to people who will rent that killer outfit you have been looking for.

But none of this would be possible without a slick supply chain…

Well-oiled logistics operations are critical to delivering this proposition and support the end-to-end supply chain. On-time delivery must be consistent in order to meet with the special occasion date for which the outfit is rented. Offering reservations on products up to 4 months in advance provides demand insight that supports planning and forecasting but adds additional complexity to inventory management and tracking.

Good relationships with reliable couriers and parcel delivery companies are essential to not only deliver on-time but offer timed delivery slots to provide the convenience and certainty that consumers increasingly demand and expect.

Returns processing has to be managed effectively, with packaging and barcode labels provided and collection day clearly specified. This convenience for the customer comes at a higher cost for the company. However, it is essential for the providers in managing the process to ensure the outfit is returned, cleaned and ready to be made available to the next customer looking for that perfect outfit!

Think before you act

The millennial generation is the first to come of age with digital TV, the internet, and mobile phones. They have already overtaken baby-boomers as America’s largest generation and the UK is not far behind. Retailers need to consider how on-demand sharing solutions could impact their business and whether it could become a part of their customer proposition. It’s not for everyone but the disruptive sharing economy cannot be overlooked.

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