Innovative Retailer – Rent The Runway


Brought to you by Retail Insider and PCMS Group

The Name: Rent The Runway

The Place: Headquartered in New York and currently only operating in the United States with a small army of campus reps drumming up business in their core graduate student market. Grab ‘em young.


The Story: Two young female business graduates and a lot of taffeta. There are all kinds of straplines that have been used to describe Rent The Runway. Here are a few of them: “Why buy a dress you’ll only wear once”, “Think of us as your best friends with a much bigger closet”, “favouring access over ownership” and “the Netflix of dresses”.

I get it. They hire out dresses: Indeed they do. “On a mission to democratise luxury” and “disrupting the luxury designer and high-end retail market”.

OK that’s enough of those now: Sorry. In 2009 Rent The Runway launched as a purely online entity but in 2013 the company opened shops – it now has stores in New York, Washington and Las Vegas. And it has grown like topsy. Guess how many dresses it has bought wholesale and then rents out?

Dunno, 20,000: Way off. Around 65,000, that’s a lot of ruffle and sequin. In fact the company has opened up a whole new market for the 150 or so designers they work with (and trust me most of the big names are in there). Rent The Runway is a five million member strong new customer acquisition channel, at an instant a vast number of young professionals who think nothing of parting with lots of interesting data about themselves.

Yes, yes, yes. And as they get older having developed an affiliation with a particular designer they start to fork out for stuff to keep: Well maybe. Or perhaps as Millennials with a penchant for the sharing economy they’ll just become renters for life. Who knows… too early to say. Each dress is displayed with its rental cost next to its retail price. The eye-watering difference alone would be enough to convince you to keep on renting. One thing is predicable however, according to Rent The Runway’s own research, the average American woman buys 64 pieces of new clothing every year and a shocking 50% of that will only be worn once.

Good God, I don’t own 64 pieces of clothing full stop: That’s because this service is specifically designed for people with a life who have places to go and functions to attend and for those who do not wish pictures of themselves to be uploaded onto social media wearing the same dress to every one of those events.

Wait, I’m just thinking though, dresses + parties = stainage: You are so right.              There is a vast logistics machine at work here considering that 60% of dresses returning in their pre-paid envelopes on any given day will be turned round immediately for re-shipping out again the same day. And for this miracle to happen – enter the highly sought after and very well paid “spotter”.

Is that the dry cleaner? Oh you have so much to learn, but yes, kind of. If these people do their job correctly, dresses which investors initially said could only be turned around eight or so times will be worn over and over again, making the initial investment repay itself many times over. At the latest count the average number of rent-outs per dress was 30. Some would say that is the real triumph of this company, convincing young women conditioned to buying new that it is cool and in fact to be desired to rent instead. Come on America, you can do it.


Yes, but the spotters? Sorry, the sharing economy is just so exciting. Okay, Rent The Runway is probably the biggest dry cleaning firm in the United States just by virtue of its back-end operations. At a huge warehouse in New Jersey every dress is assessed on its return to see if it needs just a normal clean or something more heavyweight. Rent The Runway now trains its own spotters but started out by poaching all the best ones from around the US. A good spotter can drastically elongate the life of a dress and has a thousand removal techniques up their sleeve for anything from foie gras to nail varnish, and from blood to frankly, so much worse.

Ooh. Have they ever had…Almost certainly. But what goes on tour stays on tour.

Right. My problem with all of this though is – what if it’s the wrong size when it arrives: Aha. With every rental dress the customer gets a second copy of the dress in a different (read larger) size. Plus a totally different dress can be added to the order for the nominal sum of $32.50. And if you still cannot fit in to any of them, well, that’s your fault for lying about your dress size for your profile in the first place. No good will come of it.

Fair enough. Does your profile edit your choices for you by any chance? Indeed. A thousand algorithms chug through all the data constantly forecasting demand, analysing seasonal changes, setting prices against all those factors, tracking garment locations so as to select the most efficient method of return, either overnight or three-day return. Like so many of these companies Rent The Runway is at heart a technology firm which just happens to specialise in consumer goods.

Can we talk about sequins again? No, we’ve done that. But we can discuss the future. And the future is… subscription.

They really are bang on all the trends aren’t they? Yup. The ‘Unlimited’ service means that for a $75 a month retainer the customer has three items at any one time always on loan – for as long as they want. This is not for dresses by the way, but for the next big category they want to conquer, i.e. seasonal wear, outdoor wear, handbags, jewellery, accessories. You have a queue of items that you want and as soon as you return any or all of the three items you have been using then the next one in the queue is sent out to you. And so it goes on. The same massive spotting operation goes on – jewellery repairers, leather handbag dyers in house.  So it’s a rolling changeover programme with guaranteed revenue taking them into safer territory than the seasonal/weekend dress rental market. Kerching.

And talking of money, any profits on the horizon? Well, I don’t really want to dwell too long on that side of things, they’re investing everything they make into the infrastructure. The effortless ease with which they raise very large sums of venture capital money tells you what you need to know about their prospects.

Hmmm, I see: Don’t hold me back with petty details. The company is valued at beyond $500 million – that’s all the likes of you needs to know. “The Amazon of rental”– that’s what they want to be. They’ve started with pretty much the hardest category they could – infinitely destructible, fragile and hugely expensive garments. How hard can the rest be? They’ll probably turn to men next.

They want to rent out men – well, hello: I officially give up.

PCMS Group is a leading independent supplier of software and services to the retail industry; PCMS Store and Multi-channel solutions have been chosen by over 98 retailers including Arcadia, John Lewis and M&S.

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