Renting your clothes and furniture is easier than ever — when does it make sense?

Borrowing is the new buying.

Retailers including Ikea, American Eagle and Rebag are making it easier for consumers to rent investment pieces for a fraction of what they cost to buy.

Earlier this month, American Eagle AEO, -2.48%  launched “American Eagle Style Drop,” its new clothing rental service for women.

It partnered with subscription-based technology platform CaaStle to allow consumers to choose from jeans, tops, bottoms and dresses, and rent out three items at a time for $49.95 per month. Items can be swapped out at via free shipping in exchange for new ones. There’s also an option to buy an item you want. For context, a pair of women’s blue jeans range between $39 to $59 each; dresses cost upwards of $44; and tops are priced between $19.95 and $35.

This sartorial subscription service is in its pilot stage to gauge the interest of a younger Generation Z and millennial demographic ages 15 to 25, AE execs confirmed, adding that there’s potential for the rental service to become a permanent fixture.

‘If you’re a person that likes having the latest fashion maybe it’s better to rent, but for most people it might make sense to buy a few staples and keep them longer.’

— Martin Ihrig, associate Dean of Business Programs at the NYU School of Professional Studies

“Gen Z is increasingly interested in options that allow them to look great, but have less of an impact on the environment,” Kyle Andrew, executive vice president and CMO at American Eagle told MarketWatch. “As the test continues, and we learn more about what our customer is looking to rent from us, we’ll adjust the assortment accordingly.”

Renting can be easier on the environment than buying

Roughly 60% of Generation Z spend money on brands that are ethically conscious, according to a report from the National Retail Federation. So having an eco-friendly service that aims to reduce waste could be one way for brands to earn trust from a younger demographic, while helping them to turn a larger profit on a piece of clothing by renting it out multiple times instead of selling it and having it languish in the back of a customer’s closet.

Take DIY furniture giant Ikea. The company is testing out a leasing program that would allow customers to rent out office furniture like desks, chairs and, potentially, kitchen products. The initiative, announced this month, is being tested in Switzerland for now.

It’s part of the Swedish brand’s effort to make items that can be recycled, reused or resold to promote a longer shelf like for its furniture. Ikea has said it plans to source all of its wood and paper from more sustainable sources by 2020, and hopes to eliminate its use of fossil fuels by 2023.

Ikea’s new leasing program could also put a dent in combating the 9.8 million tons of furniture that gets thrown away per year, according to a 2009 report by the U.S. Environmental Protection Agency. It may also help Ikea earn more money from renting the same desk and chairs multiple times than it would if one shopper bought the item outright.

Similarly, a Brooklyn-based furniture renting company called Feather that launched in 2017 allows shoppers to rent packages of furniture or individual pieces like baby cribs, sofas and mattresses for a monthly fee of $149 with the option to buy products outright.

Taking luxury goods for a spin

Others like Rebag, a New York-based designer handbag buyer and seller, are attempting to make luxury accessible. (The only catch is you have to give the items back after renting them, obviously.) The company announced last week it received $25 million in a Series C funding round, bringing its total funding raised to $52 million.

The site recently introduced its Rebag Infinity program, which allows shoppers to tote around purses by Gucci, Louis Vuitton [ LVMH, +0.68% Dior CHDRF, +1.34% or Prada PRDSY, -0.85%   for up to six months, then exchange them for any item worth up to 70% of they originally paid. Bags range in price from $300 to up to $60,000.

Rebag sees it as a way to give customers a taste of luxury and, hopefully, encourage them to spend big bucks later on. “Consumers see high-end bags as investments, and Rebag both provides an entry point to the luxury ecosystem and sustains it,” a spokesperson for the brand said in a statement.

Also read: WeWork is making it easier to Rent the Runway

When is renting worth it?

Rent the Runway is probably the most famous company renting out designer cocktail dresses and ball gowns. Since the e-commerce site launched in 2009 with dresses and accessories, the brand has expanded to ready-to-wear clothing items from blazers, slacks, pantsuits and blouses for every day office looks to designer jeans from brands like Rag & Bone for more casual looks.

It rolled out an unlimited subscription last year for $159 per month with a limit of four items of clothing that can be rented at a time, and $99 for a trial month for new members.

Last October, the brand partnered with shared office space company WeWork to put clothing drop-off boxes in more than a dozen locations around the country to help working customers conveniently return and reorder new threads.

Consumer experts say paying for a rental subscription service is only worth it if you know you’ll only use the item for a short time period, like renting furniture for a college dorm or leasing an expensive dress for a wedding.

“It depends on your necessities, and your personal lifestyle,” said Martin Ihrig, associate Dean of Business Programs at the NYU School of Professional Studies. “If you’re a person that likes having the latest fashion maybe it’s better to rent, but for most people it might make sense to buy a few staples and keep them longer. You have to consider if you want to stick with the same dress or same handbag as opposed to having the latest and greatest for a shorter amount of time.”

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