Hauteline Finds Success With Hybrid Rental-Retail Model

Hauteline's shop connected Orchard Street offers emerging designers pinch an edge.

Courtesy of Hauteline

The apparel rental marketplace is notoriously difficult to crack. Rent the Runway closed each 5 of its storefronts and continues to struggle, and brands specified arsenic Ralph Lauren, American Eagle and Banana Republic person scaled backmost aliases ended rental and subscription services.

Hybrid rental-retail level Hauteline has managed to standard the rental exemplary contempt obstacles. “Rental profitability is ace difficult because of distribution and shipping costs, inventory costs, inventory degradation, and each of the overhead costs that spell into inspecting the garment,” said co-CEO and cofounder Kristie Chow.

Hauteline was calved retired of need. The founders had small money near each period aft paying for rent, nutrient and entertainment. “Naturally, we turned to 2nd manus and clothing rentals, but thing successful the abstraction was resonating pinch us,” said cofounder and co-CEO Michelle Li . “Being young, what was retired location felt dated aliases excessively normal aliases excessively overmuch the same.”

Chow and Li didn’t person manner backgrounds erstwhile they launched the institution successful 2023. Chow was a package technologist astatine Microsoft and Farfetch, and Li was a banker. Starting Hauteline allowed them to indulge their emotion of fashion.

The 2 women, who lived downtown, wanted to create thing that said specifically to a “cool downtown girl.” They started pinch 1 mini rack of apparel cobbled together pinch items from resale sites connected the internet, waste and clearance areas successful stores and their ain closets.

“About a twelvemonth aft launching our business, we opened our beingness store,” Li said. “That benignant of changed everything for us. It made america recognize that what we were doing was little of a rental play and much of a rental-retail hybrid."

Hauteline’s shop astatine 95 Orchard Street, grew gross by 645 percent from May 2025 to May 2026, astir 7 times the anterior year. The returning customer complaint much than doubled and is complete 25% per month. The institution has been profitable since early this twelvemonth and is connected way to astir triple profits adjacent year.

The maturation is simply a testament to Chow and Li’s societal media trading savvy. They said Hauteline has tens of thousands of followers and the connection of rima of the channels and organization substance the traffic.

“Our integrated socials person allowed america to scope a wide assortment of customers who will travel to the shop aft uncovering america online,” Chow said. “Orchard Street is the superior of emerging fashion. Customers stumble onto our store. We person aggregate channels of acquisition.”

All the merchandise for unit and rental is caller erstwhile it arrives from brands, designer partnerships and different sources. The founders besides activity pinch vintage curators. They database each their inventory for some rental and waste astatine retail. “Some group want to get a rental astatine $99 for the play and others will bargain thing outright,” Chow said.

“Having the unit constituent equilibrium retired the portion economics of the rental constituent has been instrumental to our success” Li said. “We cognize we tin waste 200 of our cleanable mini skirt. The gross from those products allows america to return bigger swings and make bigger bets for the wholesale broadside of our business.”

With their analytical backgrounds, Chow and Li attack buying for the shop and rental tract successful a deliberate way. “That’s helped america move a profit,” Li said. “We’ll commencement beautiful humble and the infinitesimal we spot the sell-throughs travel in, aliases the rentals react, we’ll double down and acquisition those skews. We’re capable to rent 1 point 50 times to execute utmost profitability.”

The apparel rental marketplace was weighted astatine astir $2.14 cardinal successful 2025 and is projected to scope astir $10.47 cardinal by 2035, increasing astatine a compound yearly complaint of 15.2% betwixt 2026 and 2035, according to Accio. The marketplace is expected to scope $2.58 cardinal this year. This reinforces the broader displacement toward non-ownership models specified arsenic rental and resale that Hauteline is leading.

“You’re starting to spot the proliferation of adjacent to adjacent models and the revitalization of the 2nd manus market,” said Juan Pellerano Rendòn, main trading serviceman of Swap. “There person been a fewer iterations of the rental marketplace that person travel and gone. People aren’t doing subscription models. They want much power complete their wardrobes. They don’t want to bargain from a bunch of different sites.”

Pellerano Rendòn added that knowing that the Gen Z user is simply a much conscious user and that they’re early successful their careers truthful their disposable income is lower, has helped Hauteline cater to the demographic.

Because of their proximity successful property to the cohort they serve, Li and Chow cognize what their customer wants. “Young women, particularly now, don’t attraction if it’s been worn before, they conscionable attraction if it’s cute,” Chow said. “Offering rental and resale and caller retail, you tin can get this woman who needs

an emergency day look for the weekend, aliases a tiny easy dress to deterioration done the summertime that she’s consenting to walk each small much connected because she knows she’ll deterioration it a lot,” Li said.

“It’s almost for illustration we’re maximizing the touchpoints we person pinch these young Gen Z interested-in-fashion women, who are still experimenting, but want to research extracurricular the realm of accepted luxury and accelerated fashion,” Li said.

“We’re proud of our selection,” she added. “They’ll bargain from our mundane essentials curation astir of the twelvemonth and erstwhile they request those typical dresses for definite occasions, they’ll move to our much curated arena deterioration collection.”

The founders did a mini friends and family angel information successful 2023. Since then, they haven’t taken connected different capital. “We person a tug and propulsion astir funding,” Chow said. “I’m not judge we would spell the organization route. Maybe immoderate smart angel investor who has scaled user businesses successful the past and tin connection immoderate insight.”

Sustainability is built into the business. With 4,000 items rented since launch, giving garments a second, 3rd aliases 4th life, Hauteline is making an effect pinch consumers who are willing successful the environment. “Having the hybrid is 1 of the astir viable ways to tally a sustainable, profitable rental business,” Li said. “It’s the early of unit – gathering your customers wherever they are.”