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Business spotlight: less rag trade, more sustainable apparel delivery

Author: ICAEW Insights

Published: 09 Sep 2020

Shifting mindsets and the growing waste crisis are pushing sustainability and clothing up the agenda. Glasgow-based Advanced Clothing Solutions is at the heart of this revolution.

Fashion rental is now firmly part of the zeitgeist. No longer is it associated only with weddings and proms; today the options for renting our day-to-day clothing are real.

As ICAEW member Andrew Rough, Group CFO of ACS Clothing Ltd explains, his company is now the largest rental clothing business in the UK.

“We started off providing Highland wear to retailers who rented it to consumers,” Rough says, “and we now provide 80% of UK’s rented menswear”.

After the kilts and associated apparel came the rental of traditional tailcoats, and now the options for clothing rental are almost limitless. What is really capturing the imagination is the shift from associating garment rental with formal occasions to everyday clothing for leisure and workwear.

“Over the last 18 months we have started delivering a service whereby we hold third-party stock for women’s wear rental and also babywear rental,” Rough explains. “This demand is growing quickly in the UK. The situation is mirroring what is happening in the US where people are renting their day-to-day outfits.”

He continues: “We’ve taken our knowledge and expertise that we’ve built since 1997 around traditional menswear rental and moved it into the womenswear and babywear rental space. We see that the existing fashion industry has to change. It is not sustainable. It’s the second biggest polluting industry in the world and it’s been estimated that one truckload of clothing waste ends up in landfill every second. By 2050, it’s projected that it will create 25% of the world’s carbon budget.”

While the need to move away from irresponsibly consuming clothing seems obvious on paper, until new options emerge it is hard to see the way forward. ACS is offering up a solution at the forefront of a new business sector and is leading retailers to higher ground. It is all about the shift from ownership to usership, as Rough points out.

“Where we see the UK rental sector moving is – mirroring the US – that people will have a virtual wardrobe and they will be able to rent pieces, not formal clothing but shirts and jeans, for example,” he says. He points out that online retailers are struggling with the rate of returns – in the realm of 30-50% of what is ordered – and this is contributing to waste.

“We have also been working with online retailers like ASOS on their returns. We are garment longevity specialists. After all, we still rent out kilts that we have been renting out since 1997. Some of our suits have been rented out 50 times but they look brand new,” he says.

Rented clothing is not second-hand – it is simply the product of a use-based mindset and can actually be much safer in the COVID environment, Rough points out. In some ways, sanitised rented garments could have the edge over brand new retail garments – this could present a conundrum.

“We were one of the pioneers of sanitising garments. Our advanced technology uses ozone gas to remove bacteria, odours and also 99.8% of viruses in a way that is environmentally friendly and free from chemicals. This gives assurance to our retail partners as well as the ultimate users of these rented garments,” he says.

ACS wants to work with more retailers to take returned garments that may have been damaged or soiled, which ACS improves, cleans and sanitises, and then consumers are offered the opportunity to buy something that has been returned, probably at a lower price. The alternative could be landfill.

Whether the pre-loved concept takes off with retailers remains to be seen.

In terms of making the clothing rental business work, sales must be maximised and stock minimised. “Our stock is all bar-coded. We’ve also invested in RFID which allows us to track garments. We have a fully automated and unique pick and pack facility just outside Glasgow. We have invested heavily,” says Rough. Technology has clearly been at the heart of the company’s business model.

For the profession, ACS’s activities raise all sorts of questions around the economic life of these garments. We are used to separating ownership from the use of assets in sectors that revolve around larger long-term assets, and now much of that thinking is being applied to dresses, jeans and shirts. These garments are rental assets.

What is important, as with all assets where use and ownership are separated, is the maintenance and tracking of those assets, supported by ongoing research around the best way of delivering that maintenance, at the best cost and, ultimately, being able to track everything.

It is going to be interesting to watch this new sub-sector – of not only the garment industry but also the asset management industry – as it evolves.

For more on how accounting can drive sustainability, visit ICAEW’s dedicated Climate Hub.