Market research for digital platforms in apparel rental market

Abstract

The global fashion and apparel industries have witnessed unprecedented growth in recent years, with fast fashion emerging as a dominant force. However, this rapid expansion has also underscored a critical limitation: the growing Indian middle class often finds fast fashion unaffordable. To bridge this gap, the introduction of a strategic rental retail model presents a compelling solution—making fashion more accessible while simultaneously addressing the environmental concerns associated with fast fashion.

This comprehensive study investigates the intricate relationship between price and perceived value, especially in the context of high-value fashion items that are inexpensive to manufacture but command significant emotional and aspirational value among consumers. By analyzing income-based customer clusters, the study explores how the convergence of digital technology and the rental model can unlock substantial value for both businesses and consumers. The analysis leverages strategic frameworks such as the 4C model (Customer, Cost, Convenience, Communication), SWOT analysis, and the Strategy Diamond model to provide a holistic view.

The fashion and apparel sector is marked by intense competition and rapid evolution. For instance, the fast fashion segment was valued at $106 billion in 2022 and is projected to reach $187 billion by 2027. Despite challenges like inflation and rising operational costs, global brands such as Nike and H&M have effectively transferred these costs to consumers without compromising brand loyalty. However, sustainability remains a pressing issue, with water usage, textile waste, and energy consumption prompting the need for industry-wide reforms.

In this landscape, pricing strategy is crucial and revolves around perceived value, which is shaped by consumer understanding and expectations. Businesses must strike a delicate balance—overpricing may alienate customers, while underpricing can erode profitability. Fair and transparent pricing, therefore, becomes a vital strategy for long-term success. Moreover, segmentation based on income levels plays a key role in identifying where different customer groups derive their perception of value, enabling more targeted and inclusive business models.

Ultimately, the rental retail model, supported by digital innovation and strategic segmentation, offers a win-win proposition—enhancing affordability and sustainability, while empowering brands to build deeper, long-lasting connections with a broader consumer base.