One of the most controversial issues pressing people’s fashion choices is outfit repeating. This ongoing fear is most prevalent in today’s society following the documentation of outfits on social media – nobody wants an outfit posted two times on their Instagram feed. In a recent study by Hubbub, 72% of women consider a dress outdated after one wear; this thought process is keeping fast fashion alive, as well as the emerging new idea of rental fashion. Rent the Runway is fashion’s largest clothing rental service with a valuation of $800 million dollars. Founded by two Harvard MBA students, Jenn Hyman and Jenny Fleiss, here is an exploration of this lucrative business model:
“I Don’t Know What to Wear”
Every entrepreneur or student that has taken an entrepreneurship class knows that a good or service being presented to the marketplace must fulfill an unfulfilled need; usually this service or product will provide a problem with a solution. Fleiss recognized one of the most prevalent issues women in the 21st century have: a closet full of clothes and nothing to wear. The want to find a solution to this problem generated Rent the Runway: a service in which women can rent articles of designer clothing at distinctly cheaper prices than retail. After putting this plan to paper Hyman and Fleiss cold emailed Diane von Furstenberg who offered support for the idea. This propelled their confidence in creating a ‘closet in the cloud.’
How Can Consumers Rent the Runway?
As a consumer looking to rent a Gucci cocktail dress or Marc Jacobs shoes, the price is something to be concerned about. This is where Rent the Runway’s business model thrives among millennials. Rent the Runway creates revenue through a subscription service, in which users pay monthly in exchange for the services each corresponding plan provides; this business model is extremely important to millennials who report that 33% are members of at least one subscription service. The two plans Rent the Runway offers is the Unlimited plan for $159 a month which grants unlimited swapping of items with the maximum of four designer goods in possession of the user. The Update plan is $89 a month, this plan allows consumers to rent four items at a time while only swapping their items once a month. They also offer a Reserve option in which a specific item can be reserved for four to eight days (this option is highly recommended for those wanting to dress up for a wedding or special occasion).
How do Designers Rent their Runway?
Rent the Runway has an amalgam of designers, categories, colors, and sizes of women’s apparel on their site. The big question consumers have is: how do they get their designer clothes? To create long-term loyalty with designers their business model ensures they create partnerships with these designers. Rent the Runway gives designers a valuable piece of consumer information in return for these products: consumer purchasing data. This piece of information in obtaining Rent the Runway’s inventory is very interesting, but brilliant in terms of today’s marketing climate. The designers get consumer information about what colors, styles, and fabrics are selling the most on Rent the Runway’s platform; while giving them access to consumers who might never have had the chance to buy a Tory Burch dress through regular retail. In consideration of giving this valuable data back to the designers forecasting team, Rent the Runways gets wholesale pricing, quantity discounts and full size runs of collections.
Rent the Runway took an ordinary problem that every woman faces and turned it into a multi million dollar company. This lucrative business model in junction with fast fashion shows that consumers do not want to be seen (or pictured) wearing the same thing more than once. Therefore, a subscription service with exact dates in place when the service will be provided is crucial for a business model in this “era of subscription services.” Rent the Runway fulfilled a need for consumers as well as succeeded in the business to business realm: they “rent the runway” in clothing and “rent the runway” with consumer data. The women’s apparel industry is ever changing day by day and now women can rent dresses with just as much ease as a man who has been renting his tuxedos since 1865.