If furniture subscriptions might help consumers delay a purchase decision that feels too permanent to handle, Rent the Runway might help shoppers stop making purchases that have gotten too easy. The dizzying variety offered by online shopping and the pressure to look great on social media create an intense incentive for women to continually expand their wardrobe, which can strain both budgets and the physical limits of one’s closet. Rent the Runway opened in 2009 to rent special-occasion dresses, but in 2016, it launched a $159-a-month service that gives subscribers access to a rotating array of everyday clothing. Users can swap out for new pieces when they’re done, or keep things they like for an extra fee.
Read: America’s post-ownership future
The same year Rent the Runway’s subscription service launched, the average American consumer purchased 65 pieces of clothing, even though most people use relatively little of their wardrobe. Surveys estimate that only 20 percent of people’s clothing sees the light of day with any regularity. Most individual pieces are worn only a handful of times before being discarded, usually into landfills. At the same time, supercheap clothing is more omnipresent than ever, which can make it seem like a smart, budget-conscious choice for refreshing a seasonal wardrobe or flexing on Instagram.
In theory, a wardrobe subscription gives people access to the variety that modern life demands, in addition to the kind of high-end clothing that it would be impossible for most people to wear every day. “We used to be a business that was more about the cherry on top of the sundae because it was something superspecial,” says Anushka Salinas, Rent the Runway’s chief revenue officer. “Now people are using us as a utility.”
But along with the advantages of variety or quality comes a downside. Whether or not a subscription to breakfast smoothies or Reformation dresses or mattresses makes sense depends on individual consumer circumstances, which Dholakia says people are bad at evaluating on their own. “You tend to overestimate how much you will consume,” he explains. When signing up for meal-kit delivery, you might tell yourself you’ll cook three times a week, when actually once or twice is more realistic. In the case of durable goods, Dholakia says, the trade-off is in the long game: “The consumer pays less, but they don’t get to own the asset and benefit from it.”
Spending $150 a month to lease three different sets of bedroom furniture in three different apartments might give you flexibility, but at the end of those three years, you’ve spent $5,400 and still don’t own any bedroom furniture.
Consumers also seem to be bad at estimating how much they spend on subscriptions. One survey found that when asked to guess their monthly spend on subscription services, Americans’ first guess was about one-third of their actual output. Because people aren’t continuously asked to opt in, it can be easy for those who don’t have to pay stringent attention to their monthly budgets to lose track of what’s being siphoned off. Dholakia says businesses profit from this disregard. “You have to go and revisit all your subscriptions as a consumer every month, or at least every quarter at a minimum,” he explains. He also urges consumers to look carefully at what companies require to cancel service. If a particular program’s terms make it onerous to opt out, that’s a red flag that subscribing may be a bad deal in general.