“We still feel like a start-up, but we’ll have our 10th anniversary this November.”
That’s Maureen Sullivan, chief operating officer of Rent the Runway, on the prevailing mood inside the company, which enables women to rent fashion, accessories and soft home products, and has for many shoppers altered their apparel spend and the content of their closets.
The start-up mentality stems from Rent the Runway’s continued growth in revenues, offerings and services, especially with its subscription business.
“Subscription is on fire and has been since the day we launched three years ago,” said Sullivan. “It’s more than half of our business today and on a rocket-ship trajectory.”
Subscribers pay $159 a month and can have four items in their possession “on constant rotation, giving customer ultimate control,” said Sullivan. “It’s an infinite closet. You pull what you need and you keep it for as long as possible.
“In the first 90 days of being a subscriber, we see on average a subscriber trying out 15 new brands. They’re having a love affair with fashion even if they’re not fashion-savvy,” and figuring out preferred fits, colors and patterns. The service provides value, a sense of discovery and some fun, said Sullivan.
“Our goal is to expand our assortment as quickly as possible to keep up with our growth and the incredible consumer demand,” Sullivan said. “We are buying color, print, embellishment. Very little of our inventory is like basic black. People want to rent the nonrationale thing. People make way bolder choices. And our designers appreciate we are giving them post-order data around many, many turns of different customers wearing their product. It opens up a whole level of learning they are not getting from their traditional distribution.”
Ten years ago, when Jennifer Hyman and Jennifer Fleiss started the business, it had a very simple construct — enabling women to rent special occasion clothes — those gowns or dresses that typically aren’t worn more than once and therefore don’t make sense to buy.
“We saw a big use case for us to solve,” said Sullivan. “We had built credibility with the designers we had in the original business model and they were excited when we came and said we want to buy more. Our assortment has grown tremendously. We now partner with more than 600 designers. We are expanding into new categories. We want to buy things for women that will work for everyday.” The company offers all fashion categories, from casual and ath-leisure to wear-to-work, and also says it’s become the world’s largest dry cleaner. “Women used to spend 2.5 percent of their take-home pay on wear-to-work. Now it’s 6.5 percent. We are all wearing separates.”
In addition to casual and wear-to-work broadening the assortment, Rent the Runway now has soft home products including throw pillows, blankets, coverlets and quilts. “It’s pieces you want to able to rotate at different times — not big investment pieces.”
Rent the Runway is further broadening its assortment through its relatively new revenue-sharing program, enabling Rent the Runway to approach brands not previously bought, like Levi’s or J. Crew, and provide another revenue stream.
“We are really proud of where we are. Women are amazingly honest and want to help other women. Ninety-four percent of our customers have come through word-of-mouth. Thank God for how amazing women are or our business wouldn’t have grown. Customer growth was always there, kind of organically.”
Growth at Rent the Runway, suggested Sullivan, has also been spurred by a “feeling of too much ownership. The Millennial customer is super aware of that. Removing the burden of ownership is a big unlock.”
Growing concerns in sustainability has also spurred Rent the Runway’s rental business. “Apparel is a $1.7 trillion industry, a fifth of which gets thrown in a landfill somewhere,” said Sullivan. “Thirty percent of garments (manufactured) are never even sold. Fifty percent of fast fashion is discarded after a year.” Fast fashion, she added, is not a sustainable end game. “More and more consumers are looking for sustainable alternatives. That’s been our DNA from the beginning, but we didn’t think anybody was going to care about it at the level they do now.”