American Eagle

American Eagle launched a new clothing rental service, and it's just the latest sign that fast fashion as we know it is dying

The new service costs $49.95 a month. Facebook/American Eagle

Last year, Business of Fashion called out the rental market as being one of the next big trends in fashion.

"In more and more categories, consumers are choosing to rent rather than own goods outright. Think of Spotify supplanting CD sales and downloads, Netflix replacing video stores and ZipCar standing in for car ownership among many young urbanites," a group of writers wrote in the publication's State of Fashion report for 2019.

They continued: "This is a fundamental evolution in consumer behavior and we expect it will have an impact in the fashion business in the years ahead."

Companies such as Rent the Runway, which allows customers to rent designer pieces one-off or sign up for a monthly subscription service, are paving the way in the rental market, and mainstream brands are increasingly joining in.

Read more: I've used Rent the Runway's unlimited subscription for a year — and it's completely changed the way I shop

As Business of Fashion noted, Express recently launched its "Express Style Trial" service, which allows consumers to rent up to three items at any given time for a monthly fee. Last month, American Eagle launched (an almost identical) clothing rental subscription model known as "American Eagle Style Drop."

For $49.95 a month, members can rent up to three items at a time and have an unlimited number of exchanges. The shipping costs are covered each way, and dry cleaning is free. If customers decide they like a piece, they are able to purchase it at a 25% or more discount.

And customers seem to like it: "Just got my first box today! In luv with this game changer!!!!" one subscriber wrote on American Eagle's Facebook page.

American Eagle's new subscription service. American Eagle

Experts say that the rental market has the opportunity to thrive because it remedies a major conflict in the younger generation's shopping habits: These customers not only crave newness, but they are also more conscious about sustainable living and preserving the environment. Renting clothes allows them to stay fashionable without buying cheap clothes from fast-fashion retailers.

This could spell trouble for retailers such as H&M, Forever 21, and Zara, whose business is built around newness but doesn't offer the same level of sustainability.

Mike Barry, director of sustainable business at UK retailer Marks & Spencer, recently told The Guardian that while the backlash is brewing against fast fashion, it isn't widespread yet.

Still, "it would be a very brave business leader who didn't look into the next 12 to 18 months and say we are not heading there," he said.

"The signals are [fashion is] on the same trajectory as plastics and forests and alternatives to meat," he added.

American Eagle Outfitters is going to Europe

Dive Brief:

American Eagle Outfitters on Tuesday said it will expand its flagship and Aerie lingerie brand throughout Europe.

The effort is part of a multi-year license agreement with AEO EU, a partnership of European brand builders with "more than 30 years of experience launching and growing brands across European markets through a multi-channel distribution network," led by Sunil Shah, according to a company press release.

The first American Eagle stores are set to open in Ireland this summer. After that the retailer will launch European Union-based e-commerce and a three-year store expansion across Germany, Switzerland, Austria, the Czech Republic, the U.K. and the Netherlands, the company said.

Dive Insight:

This move underscores how successful American Eagle's recent U.S. rebound has been, and demonstrates new-found levels of confidence and ambition.

But it doesn't come without risk, according to GlobalData Retail Managing Director Neil Saunders. "The European market is extremely crowded and competitive, and a lot of the dynamics are currently unfavorable," he told Retail Dive in an email. "The economies of mainland Europe are fairly weak, and the UK is in a period of turmoil over Brexit — something that has weakened consumer sentiment and spending."

Even if American Eagle has the patience for the long view, it faces a tough market that isn't necessarily primed for what the brand is selling, he also said. "I think it has its work cut out to differentiate and bring something new to the European market where fast fashion is more developed than it is in the US," he said. "There is also the issue of taste; while I don't think there are major differences in consumer attitudes, there are subtle differences in the type of products consumers like and I think AEO is a very American brand that will put off some European consumers."

Its Aerie brand isn't poised to make the splash there that it has here, mostly because global market behemoth Victoria's Secret isn't quite as big a player there, diluting Aerie's opportunity to grab attention and share, he said. Still, the authenticity that Aerie has prioritized in its marketing is valued by Europeans. "I think Aerie has quite a lot of potential — mainly because its authentic marketing and positioning will resonate with a lot of social trends in Europe, just like it has done in the US," he said.

In Abercrombie & Fitch, American Eagle will be facing a familiar rival when it goes abroad, but not enough to worry a lot about because they won't overlap much —  except when it comes to Hollister, according to Saunders. "Although they are both American brands, their positioning is different," he also said. "Abercrombie has limited its expansion in Europe, opting to open a small number of large flagship stores. That said, competition with Hollister will be more significant as it has a much larger footprint in Europe and serves a similar demographic."

American Eagle Outfitters, Inc. Expands American Eagle and Aerie Brands to Europe With New License Agreement

PITTSBURGH--(BUSINESS WIRE)--

First Stores Open This Summer

American Eagle Outfitters, Inc. (AEO) today announced plans to expand its American Eagle and Aerie brands throughout Europe with a multi-year license agreement with AEO EU, a partnership of successful European brand builders, led by Sunil Shah. The AEO EU team has more than 30 years of experience launching and growing brands across European markets through a multi-channel distribution network. The first American Eagle stores are expected to open in Ireland this summer. Following the opening of these locations, an e-commerce site serving the European Union will lay the foundation for a 3-year brick and mortar expansion strategy across Germany, Switzerland, Austria, the Czech Republic, the UK and the Netherlands.

“Global expansion is a major growth opportunity for AEO Inc. and we are excited to take our leading American Eagle and Aerie brands to vibrant consumer markets across Europe,” said Jay Schottenstein, Chief Executive Officer of American Eagle Outfitters, Inc. “The AEO EU team brings deep market expertise and strong connections enabling us to create the best possible brand experience for local consumers.”

About AEO EU

Promoted by Sunil Shah, the team brings 30+ years of extensive market experience launching and building brands in Europe, including Pepe Jeans, Tommy Hilfiger, Guess Jeans, Esprit and Skechers.

About American Eagle Outfitters, Inc.

American Eagle Outfitters, Inc. (AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle® and Aerie® brands. The company operates more than 1,000 stores in the United States, Canada, Mexico, China and Hong Kong, and ships to 81 countries worldwide through its websites. American Eagle and Aerie merchandise also is available at more than 200 international locations operated by licensees in 25 countries. For more information, please visit www.aeo-inc.com.