When it comes to special occasion wear, rental is the next big thing.

A number of clothing rental businesses have popped up globally and locally, doing what suit rental businesses have done for decades: offering designer frocks for a fifth of the retail price.

The pioneer of it all is US-based Rent the Runway. The site launched in 2009 and rents out party, wedding, prom and special occasion designer clothing and accessories.

Founder Jessica Hyman told CNBC the model was a “direct attack” on fast fashion retailers, such as H&M and Zara.

While these chains sell high fashion looks for less, Rent the Runway flips this model on its head and commoditises designer labels.

Rent the Runway has since grown to 5.5 million members, renting out US$809 million worth (retail value) of dresses and accessories in 2014. 

In New Zealand, the designer rental trend has been slower to take off, with most launching in the last couple of years.

Locally managed sites like The Borrowed Closet, Designer Wardrobe and Rent Her Dress have been founded and cater to a predominantly young, social media savvy clientele.  

Designer Hire founder and University of Auckland student Lucy Clarke, 20, says her business began when she realised the majority of girls her age would rather pay a portion of the price to wear a dress for one occasion, rather than pay the retail value and only get one wear out of it.

“The types of designers that we stock are targeted at a fairly young age range of girls (14 to 25) which means that the girls who like to dress in these designers are generally not at an age where they can afford to be buying designer outfits for every occasion,” she says.

“It seems to make more sense to them to pay a small amount of the price to rent it and rent an outfit every weekend, so that they can always be seen in something new without breaking the bank.”

Oh Rent Me founder Saejung Oh, 22, says she started off by renting out several of her own designer pieces on a Facebook group called Designer Wardrobe.

From there demand grew to the point where she decided to turn it into a business venture in June 2015. She has since grown Oh Rent Me from six garments to around 100.

She says designer rentals have taken off in New Zealand because it simplifies previous pain points felt in shopping. “I think girls are liking the idea of having a ‘middle man’, where they don’t have to spend hundreds on a garment that they would only end up wearing once and when they do try re-sell it on, they lose a lot of money.”

Social media is key

Both Oh and Clarke agree one of factors influencing the success of designer rental sites is how effectively they use social media.

Clarke says it’s been key to the success of her business, as once one person is seen in a Facebook or Instagram post wearing something from the site, others will follow.

Because of this, both Designer Hire and Oh Rent Me use social media promoters (public figures with large followings) to wear their clothes in a post in exchange for free rentals.

Oh says it’s great for creating awareness of her site, but it’s hard to measure whether it amounts to more sales.

“They [promoters] have been successful with getting our word out there but it is hard to tell if they have been effective for generating sales. But at the moment, the reason behind the fact that we use promoters is that they look great in our clothes and it helps spread the word.”

Oh Rent Me and Designer Hire have over 3000 followers on Instagram and close to or over 4000 likes on Facebook.

Clarke says she also uses social media to track what the latest fashion trends are and what girls want to wear. 

Ironing out the creases

Unlike other sharing economy services like Uber which connect customers with third-party controlled goods, fashion rental services have a few more logistics involved.

For one, there’s transportation and delivery of the clothes, as well as maintenance like cleaning and repairs.

Rent the Runway has almost 65,000 items on its site and holds the title of biggest dry cleaning operation in the US, with a 150,000 square foot centre dry cleaning 2000 dresses every hour.

Oh Rent Me and Designer Hire operate on a smaller scale, with both run out of the founder’s houses.

Clothes are delivered with a prepaid postage bag for the item to be shipped back by the customer once it’s been worn.

Before renting a piece, customers have to agree to terms and conditions which state items should be returned in the same condition they were received in, aside from general wear and tear.

Any dry cleaning, repairs or replacements that are needed will be charged to the customer’s card they purchased the rental with.

“We send off each garment with a ‘garment care’ tag, which just outlines how best to look after the garment so that it can help the customer to be aware of the fabric and delicacy of that garment,” Oh says.

Rental vs. retail

Despite the rise in rental sites, the sharing economy has been slower to take off in retail than it has in other industries. 

According to a PwC report, just two percent of US adults had tried hiring retail products through a sharing economy service, versus nine percent in entertainment and media and eight percent in transport.

But some believe it’s only early days. Hyman, the co-founder of Rent the Runway, reckons that in the future, fast fashion retailers’ sales may be impacted by the growth of designer rental.

She told The Business of Fashion that consumers will grow savvier with their purchasing habits.

They’ll continue to buy staple, everyday sort of clothing to get the basics down, she says, but rely on rentals for occasion wear and statement items. “Consumers will become smarter about what they want to own forever and what they don’t want to own forever.”