Exploring the growth of sustainability, environmental practices, and capitalizing on business opportunities in the retail industry to save our planet.
REI increased their product presence in the circular economy: a part of an industry-wide trend responding to environmentally conscious consumers, who have said they will spend with brands that align with their values.
REI (Recreational Equipment, Inc.)
Over the years REI has hosted in-store “used products” sales a few times a year and two years ago they decided to raise the bar by offering full-time space dedicated to used products.
REI conducted extensive consumer research and determined that 36% of millennials would rather rent than own a product. They are offering their customers a more affordable option because of shrinking personal space and families.
REI, CEO Eric Artz said, “it’s a good sustainable business and it is what our customers are looking for”. Artz commented that “It really comes back to the circular economy. We can see a big purpose and we are learning this in a big way”. This plays well into their co-op business model.
Growth and Opportunity
Last year they had 85 locations participating in the new offerings and this year they are expanding their business in rentals, used gear programs, and trade-ins and now offer these products at 115 of 154 REI stores across the USA.
REI is also exploring alternative ways for its co-op members to resell and recycle their used gear at all locations. Some of the used products that they are selling are snowshoes, skis, snowboards, fully equipped camping, and backpacking kits.
The company is also testing online reservation rentals this year and in April, they are testing bike trade-ins in their Denver location.
REI stated that they had twice as many rentals this year compared with last year and is on track to resell nearly a million used items and it has doubled its online used business.
REI saw its membership base increase by one million new members, to bring their total members to over 18 million. They also commented that a majority of their new members are under the age of 40.
They posted record financial results for 2018 shortly after entering the rental and used gear markets. 2018 sales rose 6% to a record $2.78 billion with comparable store sales rising 4.8%. Online sales have climbed by a “high teens” percentage to about 30% of total sales.
Rent The Runway (RTR)
This online portal started the rental revolution back in 2009 before many had considered this as an opportunity. Sustainability is now a key part of the business model.
Today they have over 8 million customers with revenue topping $100 million and a recent valuation has it pegged at over $1 billion.
RTR was looking to attract environmentally friendly consumers who are looking for companies who support their values, beliefs, and principles.
Ellen Fischer (EF)
Is selling “upcycled” fashion by redesigning and reselling products that customers no longer wear and bring back.
Since 2009 they have taken back over 1 million articles. For each item you return, Ellen Fischer gives you a $5 redeemable renew rewards card.
EF is taking responsibility for what it makes and where it ends up with a goal to design a future without waste.
Items that are in perfect condition are cleaned and sold through their renew program. Items damaged beyond repair are transformed into one-of-a-kind works of art, pillows, and wall hangings.
Urban Outfitters (UO)
Is launching a clothing rental business called Nuuly. It will be a subscription service that will cost $88/month and allow customers to pick up to six items with a combined value of $800 to rent, wear, and return.
UO describes Nuuly as a solution to “the paradox of millennials quest for constant fashion newness alongside the desire for a more sustainable lifestyle”.
UO will stock a 1,000 different items for rent, adding a 100 new items each week til the end of the year. Renters will also have the option to purchase the items they like.
Urban Outfitters is hoping to revitalize their struggling brick and mortar business.
Retail is Changing
With the awareness of sustainability, many brands are looking at unique and different ways to highlight their responsibility and commitment to the environment and issues that matter.
While capitalizing on the opportunity to grow their revenues and profits.