Asos recently launched its first ever rental edit with UK-based rental marketplace, Hirestreet, as the struggling online fashion retailer attempts to stem its losses amid a decrease in consumer spending. Featuring over 180 styles from Asos’ homegrown brands, namely Asos Design, Asos Edition and Asos Luxe, the collection will focus on women’s occasion wear, including wedding-guest outfits, bridal looks and bridesmaid dresses. Individual items can be hired for four, 10 and 30-day periods.&nb
ds. According to HirestreetCEO, Isabella West, the average cost of attending a wedding is over £500 (A$947), while renting items on Hirestreet is about half of that. The story so far The move into fashion rentals comes at a critical time for Asos. The company’s interim results for the six months to 28 February, showed a loss of £87.4 million (A$165.7 million) , compared to a profit of £14.8 million (A$28 million) in the same period last year. UK sales were down 10 per cent year on year, while sales in Europe were flat. US sales were down seven per cent and sales in the rest of the world showed a decline of 12 per cent. Jose Antonio Ramos Calamonte, Asos’ CEO, has said he is confident the company will be able to return to sustainable profit and cash generation in the second half of this year and beyond. He added that the company will be undertaking strategic and operational changes with a disciplined approach to capital allocation and ROI. This includes repositioning inventory profiles and reducing its cost base. An important move As a way to attract more cost-conscious consumers, Asos’ deal with Hirestreet makes a lot of sense. But from an environmental standpoint, experts say there’s a lot to be desired. Rosanna Iacono, advisor and managing partner at The Growth Activists, noted that Asos offers up to 60,000 different products for sale at any given time, so the 180 outfits that are available to rent are a very modest start. “However, it’s an important move in signalling that Asos understands that the way younger generations will interact with fashion is evolving. You could say that they’re dipping their toe in the water to understand what the potential of rental can be as a new revenue stream,” Iacono told Inside Retail. The biggest benefit for Asos will be to learn how consumer behaviour is changing and feed these insights into its medium to long-term circular economy strategy. “At this stage, rental is a test-and-learn exercise, to understand what sort of revenue and profit they can extract from this service, as the decline of purchase of new fast-fashion products becomes a more salient macro-trend,” she added. In her opinion, the main reason most businesses are reluctant to adopt rental is because they fear that it will cannibalise their sales. But the reality is that businesses need to explore alternative revenue streams like rental, resale and repair. “Businesses who move quickly to understand how to successfully incorporate recommerce into their operating models will be on the front foot,” Iacono noted. Given that many major UK retailers, such as Marks & Spencer, Warehouse and Oasis, are already partnering with Hirestreet, Asos is less ‘early adopter’ and more ‘late to the party’. “Hurr is another rental services provider like Hirestreet offering similar services in the UK and has partnered with John Lewis and Selfridges,” she said. “Here in Australia, a similar white-label rental service is offered to retail brands by Rntr.” Highly profitable Still, Asos’ rental edit could be a highly profitable venture. Iacono noted that as long as the company is utilising high quality garments that have good durability, it can drive significant multiples through repeated rental. “It will enable Asos to explore alternatives to outright product sales, and understand how they might drive sound revenue and profitability with fewer units. This is probably the most significant way in contributing to the circular economy and reducing consumption,” she said. The fact that Asos doesn’t have to invest in setting up the infrastructure to enable rental, including the capacity to clean, repair and re-rent garments, represents a significant cost savings. “This is where a partnership with Hirestreet is so valuable, as it means that infrastructure is provided by Hirestreet and it gives Asos time to think about if and how they might eventually set up their own infrastructure as circular consumption patterns evolve,” she explained. Ultimately, she believes that the entry of Asos into this niche space sends a powerful signal to other fast fashion players, and could result in more organisations trying out rentals. “The key opportunity here is for Asos to expand its rental offering, not just within occasion wear, but also to other categories to make rental a more significant offering and to gain broader learnings for its future operating model,” she concluded.