by Abigail Zhu

Created on: December 19, 2009

Pros:
• Target markets
As anything from designer bags, clothes, accessories and jewelry can be rented, "the luxury rental concept can be applied to virtually every business segment" (Evers 2006, p8). Thus, making it possible to consider the designer fashion rental market as a niche market, since target markets can be segmented according to designer fashion categories, consumer lifestyle expectations and statistics (demographic, psychographic and behavioral patterns); providing more customized service (value) and reaching out to a target audience.

• Growing market
The designer fashion rental is a growing market, offering more options to consumers. With the increasing amount of consumers who are looking for more economical ways of 'expanding' their wardrobe, especially if they want to experience the status and exclusiveness that is often associated with designer fashion items despite their limited spending power (Han 2008), or if they are affected by any economic downturn (Barlyn 2008). Investors are also finding companies such as BAG BORROW OR STEAL attractive (Evers 2006); all of which contribute to the industry's growth.

• Competition
As there can be many niches catering to specific target markets, there are fewer competitors: few companies provide similar services, as compared to mainstream fashion.

• Profit
Profit margin is relatively high as niche markets tend to have smaller overheads and generally do not need to achieve high sales volume to generate more profit.

Cons:
• Latent/irregular demand
Depending on the fashion season and popularity of certain designer fashion items (latent/irregular demand), sales could decline if items stocked are unpopular with consumers. Another example would be that during a recession or slow economy growth, consumers might be more concerned about their physiological needs rather than their self-esteem needs (Maslow 1943); consuming less designer fashion goods, resulting in declining sales.

• Capital
Fast-moving fashion cycles might make it harder to predict which items to stock; especially if a company is restricted by capital/cash flow; they would be unable to afford stocking too much inventory. Capital is crucial when it comes to stocking inventory, the more capital available, the more items can be offered. Thus, appealing to consumers by providing them with more choices.

• Small market (Limited)
Being a niche market, it is relatively smaller than the mainstream fashion market, as not all locations (countries or states etc...) are fashion centric/conscious. For example, consumers who live in a fashion capital such as Milan would be more fashion conscious, as opposed to those who live in rural areas of China, where fashion is not a priority in their lifestyle.

• Changing Values
Reflected in the growth of products and service that consumers believe are consistent with their values. For example, consumers may switch to another company providing the same service for a lower price.

• Loss of income and credibility
As the designer fashion rental market is relatively new, credibility is important to gain and maintain customer loyalty and trust. The possibility of goods getting lost during shipment, received (by consumers) or returned (to the company) in damaged condition will result in loss of income and credibility.

References:
Barlyn, S 2008, 'The skinny on handbag-rental services', Wall Street Journal - Eastern Edition, Vol. 252, Issue 20, pp. 2.
Evers, R 2006, 'It's nice to share', Brand Strategy, May, pp. 8.
Maslow, A H 1943, 'A theory of human motivation', Psychological Review

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