Cinderella Syndrome Getting Hip to Dress Rental

A growing number of companies are offering women the opportunity to rent rather than buy high-end designer dresses. While the concept is slowly catching on, setting up as a supplier requires a lot of capital.
German celebrities in ballgowns from Dresscoded.com, including actress Nadja Uhl (second from right), the star of "Summer in Berlin."

 

A black evening dress by Versace for €190, or $216? A dress by Just Cavalli for €140? These are not bargain prices in the summer sales, but rental prices for luxury-brand evening wear.

While German women are slowly getting used to the idea of renting a dress for a reception, it is already a big business in the U.S. The market leader, New York-based Rent the Runway, served more than five million customers last year and generated sales from dress and accessories rentals of $809 million.

Alexandra Grün, the founder and manager of the Munich-based online dress platform dresscoded.com, is pioneering the concept in Germany. “We started in 2013, initially only to outfit film actresses and other celebrities for big events,” said Ms. Grün. Since then the small start-up has become a solid business with growing numbers of customers. “We feel that customers in Germany are becoming more and more open, not only to owning evening dresses, but to renting them,” Ms. Grün added.

For a business function, the rental price can be a tax write-off. Alexandra Grün, Founder, Dresscoded.com

For the moment, German dress rental companies can only dream of returns like those of Rent the Runway in the U.S. They hope for a time when renting luxury clothing will be similar to the concept of car sharing today.

Yet a piece of clothing is something much more personal than a car.

“Many customers are scared that the dress will not fit them,” said Margarita Kozakiewicz, managing director of Prêt-à-Louer in Berlin. “So we deliver the dress in two sizes.” And if those don’t fit, customers can quickly send them back and get another.

For some women, dresses are a sensitive topic. “Many are very uncertain about what they should wear, and place great value on a personal consultation,” said Ms. Grün of Dresscoded. The company offers consultations by appointment in the Munich showroom, where almost 3,000 dresses hang, and a seamstress stands by to make alterations.

 

The Dresscoded showroom in Munich.

 

Ms. Grün said her current customers include “many clients from politics and business,” who need outfits for receptions, official engagements, even weddings. Additionally, dresses fast become unwearable these days as people have instant access to photos of women wearing elegant dresses thanks to social media.

“For a business function, the rental price can be a tax write-off,” Ms. Grün said, adding that rental fees average about 15 percent of the retail purchase price. Cleaning and small repairs are included in the rental price.

“It’s a good business idea and it fits with the spirit of the times,” said Sabine Meister, who owns a consulting company in Munich. “These days, people don't have to fill their closets with garments they rarely need.”

While the market for online sales of luxury clothing is expected to double in Germany to almost a half-billion euros by 2018, according to McKinsey, it is impossible to say how much the luxury clothes rental segment will grow.

There’s a lot of experimentation going on in this the new niche. Some providers have concentrated only on shoes and handbags. Stilverleih.de in Hanover, for example, offered luxury high heels from the star designer Jimmy Choo for about €50 to €100 per week. But despite efforts to woo those concerned about hygiene by explaining how thoroughly the shoes were cleaned after each use, the business never took off and Stilverleih has ended the service. “The German market hasn't yet developed very far,” said Kevin Richter, the managing director.

Some providers such as Laremia of Berlin, which is now owned by British Chic, quit because they lacked the necessary resources. The capital expenditure for hundreds of luxury dresses is significant. Meanwhile, the logistics, in terms of consultations, cleaning and clothing repairs, are often underestimated.

Ms. Grün of Dresscoded.com is undeterred and now seeks to expand. “We will also offer shoes in the future,” she said. “But for sale.”

Video: Rent the Runway generated income of €710.9 million last year. Here's how it started.

Georg Weishaupt mainly reports on the construction sector, the renewable energy industry, and the clothing industry. To contact him: [email protected]