Most companies have been able to easily identify that the retail environment is a value-centric one, but Jennifer Hyman took it a step further.
The chief executive officer and cofounder of Rent the Runway, a Web site that allows customers to rent designer apparel and accessories, realized that cost-conscious consumers would open their wallets more for an experience than a material possession.
“I believe we live in the experience economy,” Hyman said, noting that a greater number of younger consumers today have probably been on a safari, but are still “sleeping on the same couch from college.”
The executive explained that even companies that sell an experience or offer a unique value, such as Airbnb, Zappos, Zipcar, eBay and Fresh Direct, are part of this new economy.
Spearheading this change are working women, who spend more money online than they had in the past.
Hyman cited research from 2010 that said 60 percent of women are the sole or major income earners at home. As a result, “efficiency” is key when shopping.
She also explained that companies that allow shoppers to experience a product without purchasing it are profiting in this environment.
For Hyman, it was a no-brainer to extend this model to luxury goods.
Having access to designer clothes, for instance, is a way to gain access to a lifestyle without breaking the bank.
In 2010, Hyman launched Rent the Runway, and immediately saw demand. To get a sense of the business’ growth, her company has spent $15 million on designer wholesale merchandise since it started, and she estimates it will spend $100 million in the next few years.
Part of Hyman’s mission is to show its core customer, who is in her late 20s to early 30s, the value of designer clothes over fast fashion. What’s more is that customers who rent from the Web site tend not only to rent again, but also tend to purchase apparel or accessories from the brands they tried. Customers “created a memory from that brand,” she said, explaining that the first rental is usually for an event such as a party.
“Rent the Runway helps them create those ‘Cinderella’ moments,” Hyman said.