When Rent the Runway launched more than six years ago, it became an early player in the “sharing economy” boomlet and amassed millions of customers who wanted a taste of catwalk style without the hefty price tag. Now, the company is announcing a new iteration of its designer clothing rental model that will serve as a key test of just how far shoppers want to ride the sharing wave — especially when it comes to their closets.
On Wednesday, Rent the Runway launched its Unlimited app, a program that allows customers to pay a monthly fee of $139 to receive three items at a time that they can keep for as long as they want. (Remember how Netflix worked in the pre-streaming era? This will function much the same way.) And, crucially, Unlimited is focused on offering everyday clothes such as tops, blazers and skirts, a departure from Rent the Runway’s traditional business, which has largely been the province of women seeking fancy dresses for galas, proms and weddings.
Rent the Runway has plenty of incentive for testing the waters with Unlimited: For starters, customers were telling the retailer that they spend most of their time in office attire, and so sometimes they were taking the special-occasion frocks they rented for a party and trying to wring more use out of them by tossing a blazer over them and wearing them to work on Monday.
“Women are taking inventory that’s not even appropriate for work and wearing it to work,” Jennifer Hyman, Rent the Runway’s chief executive, said in an interview.
So, executives believe that they are filling an existing customer need by giving them clothes that are truly cubicle- or corner-office-ready.
And Hyman said Unlimited is attractive from a logistics perspective. With Rent the Runway’s special-occasion business, there’s enormous time pressure for shipments to be on time — not even an hour late — so scores of prom queens and banquet goers don’t end up disappointed on a big night. Plus, big soirees tend to be on Friday or Saturday nights and are heavily concentrated in late spring and early summer, creating uneven pressure on the company’s supply chain.
The theory is Unlimited won’t have those pronounced spikes and lulls, as there will probably be more flexibility and variation around clothing that women just want to wear to client meetings or happy hour.
And yet Rent the Runway faces a fundamental challenge in trying to cultivate Unlimited: It is asking women to think differently about the way they build their wardrobes and about how value should be defined when it comes to clothing.
Rent the Runway has been able to sell women on the logic and cost-effectiveness of renting a gown that they will wear only once or twice. But it may prove harder to sell that same message about everyday gear. Is it really a good investment to spend more than $1,600 a year on casual and office attire if you don’t get to keep it?
Plus, the subscription apparel market is already quite crowded, with businesses such as Trunk Club and StitchFix already dropping regular wardrobe additions on customers’ doorsteps. Although it works differently than other subscription apparel services, there’s a risk of too much noise in the category for Unlimited to get traction.
But Hyman says she is confident that the model will work because her customer is already so accustomed to using services such as Spotify, Uber, Airbnb and Netflix.
“We think that given that she’s already renting everything else in her life, from her music to her transportation to her entertainment,” she’ll be increasingly open to renting clothes, Hyman said.
In fact, Hyman theorizes that this could, for some women, become a replacement for the dollars they spend on fast fashion pieces from the likes of H&M or Forever 21. After all, women often buy those low-priced items knowing they’ll wear them only a few times.
And ultimately, it might still manage to be a solid business even if it only attracts a niche group of shoppers. Hyman said the company deliberately priced Unlimited to deliver an “extremely healthy [profit] margin” from the get-go instead of trying to lure people with a lower introductory price.