Consumers are increasingly becoming aware that there’s no reason to buy an item you will only wear once when you can rent it.
This makes a costume rental business an ideal niche to invest in.
Not only is this the kind of business that’s fun to run, but it also requires a relatively small investment. And the profits can be quite big.
A single costume pays off its cost price within five to six rental cycles, after which it will only generate profit for you.
If you’re thinking about breaking into this field, right now is the right time.
According to Infinity Business Insights, the costume rentals market is set to grow at a CAGR of up to 6% from 2024-2031.
Who the customers are for costume rentals
Understanding your target market will be critical for your business, even more so in its early stages.
There are a few different kinds of consumers you can target.
For best results, keep your targets set on one of these segments initially, and then target a wider audience as your business grows by acquiring more garments and spending more on marketing.
The niches you can target include:
Halloween costume rentals
Halloween costume renters are only active during October.
But on the plus side, you can rely on them to turn up year after year.
Halloween renters are an ideal market segment to target in the early days of your business because you can cater to them by acquiring Halloween-related costumes and memorabilia and get a big payoff from it on All Hallows Eve.
Theaters
Theater companies are always on the lookout for reliable costume and prop vendors. That’s where you come in.
The advantage of this market segment is that you can rely on one theater company to provide you with a steady stream of business throughout the year.
Schools and educational institutions
Schools and universities hold several events yearly that require costumes and props.
These include plays, fancy dress parties, and period festivals.
Educational institutions make reliable clients who bring plenty of business year after year.
Cosplay fans
Dressing up as a fictional character from a film, TV show, book, or video game – a.k.a cosplay – has become increasingly popular.
To target this segment you should conduct some research on the topic and stay aware of any cosplay festivals or conventions that may be happening in your area. Comic-cons are a good place to start.
Formal wear rentals
Your costume rental business could benefit from having a few tuxedos and ballroom dresses on hand.
While not strictly costumes, plenty of customers would rent these items out as formal wear is expensive and often only worn once.
If advertised properly, these items could bring you a substantial profit every month.
How to start a costume rental business
As with any kind of entrepreneurial endeavor, conduct a few essential steps to kick off your costume rental business.
This blog will guide you through the entire process and chalk out essential steps you must take:
1. Conduct market research
Your business plan has to be based on relevant market research.
The costume rental sector is highly dependent on dynamic consumer behaviors and trends, which you will have to stay updated on.
You will also have to familiarize yourself with any competition you may face, including the kind of stock they rent out and any special deals they may offer their customers.
2. Come up with a cost and pricing strategy
Your pricing strategy depends on your target market. High-end clientele are willing to pay a premium for higher-quality rentals and special services.
Conversely, budget-conscious customers are happy to rent lower-quality items for cheaper prices.
Regardless of which segment you are targeting, your rental prices have to be high enough to cover overhead costs. These include utilities, insurance, LLC fees, and other operational expenses.
You will also have to set a target profit margin.
A popular pricing strategy that works is to charge a flat rate per day or costume. This is a simple pricing structure that is easily understood by customers.
You could also go with charging an hourly rate. This is a good approach if you have a large stock of high-end costumes and you want to discourage customers from wearing them for extended periods.
You can also offer discounts for long-term rentals or customers renting out multiple costumes.
3. Pick a store location
Your store location should place you near your target market.
For example, if you want to rent your stock to educational institutions, you should pick a store in or near a school zone.
However, the location you choose will also be impacted by what falls within your budget.
Other factors you should look out for include an easy-to-navigate floor plan, ample storage capacity, and the availability of display cases.
Your store should also have changing rooms.
4. Acquire your costume rental inventory
What costumes you prioritize acquiring in your rental business’s early stages will be determined by your target market.
You will also have to monitor trends, which can shift year to year, often impacted by the latest fads in movies, comic books, video games, and literary fiction.
In the early stages of your business, you can buy out or make your consumers a minimal profit-sharing vendor by putting up their costumes to rent in your rental inventory. You can also use a rental inventory software to better manage your inventory and track it so you can meet your business needs on time.
5. Create an online store
An online webstore will greatly enhance your access to customers.
Not to mention most businesses have an online presence, including your customers.
While designing your website, you should clearly show important details such as business hours, contact information, pricing, special deals, product details, and shipping terms.
The website should also be eye-catching and user-friendly for maximum engagement.
6. Use costume rental software
As a costume rental business, you will be dealing with several costumes and other trackable assets.
Managing these items manually will be a time and resource-intensive process that will hinder your capacity to deliver satisfactory service to your clients.
You can unburden yourself and your staff from tedious asset management tasks by using rental inventory management software specialized for garments and costumes. Using the software, you can also use and implement different pricing strategies for your rental business.
Once employed, the software will be able to monitor the maintenance cycle for each item in your rental inventory. It will also gather information on how often a particular item is rented out, helping you understand which items have the highest demand.
This feature will also let you know which items are not receiving enough rental requests, helping you downsize your inventory accordingly.
Rental inventory software also automates daily business processes. For example, automating invoice management allows you to create and send out invoices without delay, helping you save vital time.
Automated notifications and alerts also remind of return dates, increasing timely returns and decreasing incidents of item unavailability.
The right software for your costume rental business should cater to the unique needs of this sector.
This includes adding new items to a system without physically scanning them, a built-in pick-up and drop-off service, security deposit management, automatic application of charges to late returns, and ROI monitoring.
A fun way to make a profit
If you’re a fan of Halloween, cosplay, or period dramas the costume rental business is perfect for you. Not to mention, acquiring an inventory for this niche requires a much smaller investment than other rental businesses. You can also collaborate with a party rental business to increase your customer base and do a project together for an increased reach.
What you’ll need to focus on most to ensure success is the costumes themselves. They will need to be trendy, and clean and go through proper maintenance after each rental cycle.
Sticking to the guide above should ensure you get off to a good start and can expand the business as time goes by.
If properly managed and marketed, your costume rental business should break even in a few years.
