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The holiday season isn't just a boon to retailers that sell merchandise. It's critical to the players that rent clothing too.
Rent The Runway launched the market for rental party-wear when it started in 2009. The company's CEO and co-founder Jenn Hyman told CNBC that every holiday quarter for the past eight years of Rent The Runway's existence has set a new record.
Hyman said events of various types are a big reason for the rise, as her consumers are going to business parties, galas, and celebrating New Year's Eve.
"This is the time of year that women of all ages have events," she said. "Couple that with our growing subscription business, and shipments are up over 50 percent year over year, and actually from the third to the fourth quarter, it's up over 30 percent," she said.
In addition to rentals on an on-demand basis, the company has introduced a subscription model, including work-appropriate clothing, RTR Unlimited. Unlimited rentals cost $159 a month. For $89 a month, subscribers can receive four looks at a time in a program called RTR Update. The prices cover shipping, returns, insurance and dry cleaning.
"Our unlimited subscription has really taken the company by storm," Hyman said. "The subscriber growth has been unprecedented, we actually had to put people on a wait list because the demand is so high and people are using it about one third to half of the days of the month. So they're wearing an outfit that is rented hundreds of times a year."
Rent The Runway isn't the only company trying to tap into the demand for rental wardrobes. Le Tote describes itself as the "Netflix of clothing." Although it is marketed less for formal events, and more for everyday wear, Le Tote also sees an upswing during the fourth quarter.
Le Tote president and co-founder Brett Northart told CNBC that during the holiday season, it sees consumers rent more "due to parties, meetings but also travel. Subscribers will send their items directly to their destinations and not have to worry about packing extra items."
Le Tote usage rises 30 percent during the holidays, Northart said. Plus, there is an increase in the number of totes sent to each subscriber during the season. Additionally, Northart said about 10 percent of lapsed subscribers take their membership off hold during the season.
Le Tote subscribers rent clothing and accessories to wear as long as they would like, and then return the tote when they are done. Another tote with new options will be shipped out. The subscription cost is $59 to $79 a month, based on the number of items in each shipment. Totes range from three garments and two accessories to five garments and three accessories.
Gifting rental clothing is also growing segment. For the first time this year, shoppers can gift a month subscription to Rent The Runway. Hyman said the option is "super popular." What's more, the retention rate is just as strong as with those who join Rent The Runway on their own.
Northart said Le Tote sees a bump in gift subscriptions around 10 days prior to Christmas.
When it comes to box subscriptions for outright purchasing, or merchandise you keep, it seems like every brand or category has an offer. So it makes sense that gifting one is on the rise too, especially during the final days of the holiday season.
"Gift cards spike last minute. It's an easy, last-minute treat everyone loves," said Sucharita Kodali, a principal analyst at Forrester.
When it comes to competitors, Hyman actually thinks it's less about competing with those selling the same designer items, and more about competing with the fast-fashion players.
"We're really competing against all of the retailers where you go in, and you know that you're buying something that you're only going to wear once," she said. "So businesses like H&M , Zara, even some of Amazon's private label clothing where you're buying it cheap. "
But the field is also getting more crowded and now includes rivals who are more focused on offering personal styling services and selling clothing and accessories.
Among them is Stitch Fix, which ships clothing and shoes selected by a combination of data science and personal stylists directly to consumers, who pay for the items they choose to keep.
RBC Capital Markets analyst Mark Mahaney estimates Stitch Fix could double their current 2 million active client count over the next four years, but the company declined to disclose trends in gifting during its quiet period between quarterly reports.
It's difficult to determine how much subscription services are hurting traditional apparel retailers. Mahaney thinks most shoppers use them as a fill-in trip, rather than an entire wardrobe option.
Also as the space grows more crowded, there are a lot of questions about whether or not the market has reached a subscription peak.
Hitwise said in November, 7.2 million Americans visited one of the top subscription box sites. That's up from 5.2 million in November 2016. Visitors of these websites last month leaned heavily towards adult members of Generation Z, which is 18 to 24 years old, while visitors in November 2016 consisted mainly of older millennials and Generation X.
While that is a good sign that there is potential for growth, some subscription box services have struggled to retain customers, which means they need to aggressively recruit new customers, an expensive proposition.
The holidays have proved to be a good boost for BirchBox, which has had a difficult last couple years after pioneering the subscription box craze seven years ago.
BirchBox, which focuses on beauty products rather than clothing, said the holidays remain a key time of year for subscriber growth, both for consumers signing up for themselves and those buying the beauty boxes as gifts for others.
Cyber Monday was BirchBox's biggest day of the year and it launched a Best Sellers Bundle, which sold out that day.
One way to ward off the consumer fatigue is to innovate and provide shoppers with new options as Rent The Runway has done.
"No, I think we have a long way to grow and I have a very long-term vision for what Rent The Runway is going to be and this is all about us growing against our vision," Hyman said.