Rent the Runway started out with a simple business model: rent a dress for a special occasion at half the retail price. However, Jennifer Hyman's long-term vision for the company was to allow customers to have a closet on rotation. This "closet in the cloud" idea was to enable women to try out different styles, avoid over-packed closets, and reduce fashion waste by renting more and buying less. RTR soon became a subscription-based company where women can now subscribe monthly to one of RTR's packages to be able to rent up to 4 items at a time from any designer at any price. RTR's mission is to democratize fashion where trying out new season's styles will no longer lead to buyer's remorse after wearing something only twice.
Fashion has changed enormously. With the rise of Instagram and social media, more and more consumers are sharing more than ever. As a result, the discovery of new fashion trends and personal style is almost entirely done on Instagram and Pinterest. With the sharing of photos and the rise of media influencers, women find it necessary to purchase new clothing when getting photographed. A survey done in Britain found that 1 in 3 young women consider clothes "old" after wearing them once or twice. 1 in 7 consider it a fashion faux-pas to be photographed in an outfit twice. Young people are attracted to new styles and are more likely to change up their wardrobe the most. Rent the Runway serves as an alternative to the average shopper who spends too much on new clothes they wear only a couple of times until the next season rolls around and she does it all over again. On the RTR platform, consumers are exposed to a multitude of designers and style options with the advantage of renting being more than half the cost of the original retail price.
You can think of RTR as either replacing your closet or enhancing it. While I know a few people who rely on RTR for their entire wardrobe, this is certainly an extreme case. The end of ownership means increasing the lifespan of a fashion product to suit your needs as you see fit. If you spend your paycheck on quality staple pieces such as a Burberry trench coat or A.P.C. Chelsea Boots, you won't have to worry about wearing these items only once or twice. However, when you're thinking about buying a new $800 embellished suede jacket, you might get tired of it after a couple of wears. Therefore, RTR comes in to provide you with the flexibility in maintaining your existing wardrobe while giving you the freedom to experiment with new styles you always wanted to try out. There are many other use cases for RTR, as explained below.
As more and more people want new styles in their wardrobe, they are looking to brands that are not only unique, but also conscious of ethical production techniques and the environment. In their State of Fashion 2019, Business of Fashion reported “Nine in ten Generation Z consumers believe companies have a responsibility to address environmental and social issues. The change is reflected in the higher profile of social issues, and campaigns such as #metoo, #blacklivesmatter and #timesup." With more companies embracing ethical practices such as Everlane, Patagonia, and Reformation, younger generations are more cognizant of the standards at which they expect brands to follow. Addressing concerns about sustainable practices is enough to garner a strong brand reputation.
In addition, people are becoming more interested in purchasing pre-owned products. Rental, resale, and refurbishment lengthen a product's lifespan and offers consumers the newness they desire. As a result, more money is being invested in marketplaces or resellers such as Grailed, GOAT, or TheRealReal. 44% of respondents of a BOF survey believe the pre-owned business model will be more relevant in 2019 than in 2018. With fashion being both one of the most lucrative and wasteful industries, RTR’s mission is to provide a more sustainable way to purchase everyday and luxury clothing. With a subscription swap-based model, RTR is a sharing economy where instead of throwing away a shirt you wore only once or twice, you put it right back into the RTR renting cycle.
To understand how RTR functions, I found it helpful to analyze the market in which RTR resides in. More and more consumer brands are becoming subscription-based to offer necessities as well as luxury goods within a timeframe set by the consumer. Typically, subscriptions add value when consumers repeat a behavior so often. A seamless transition would be to unlock a monthly-based system for a routine such as Netflix for streaming movies or Amazon Prime for buying necessities. The following are a couple subscription-based businesses whose success largely relies on user retention:
One of the biggest challenges facing a retail/fashion brand is knowing and connecting with your customer. RTR aims to democratize fashion, which means connecting with a wide range of women with different lifestyles and preferences.
Jennifer Hyman, CEO: "Our customer base today represents 76 percent of all zip codes in the United States. Given the segregation that exists in the United States, it means we’re catering to almost everyone. We have subscribers who have household incomes of $60,000 a year, we also have subscribers with household incomes of over $5 million a year using the same product, with the same inventory. Now, the value that she might be deriving from it is different. One woman is subscribing because she never in a million years would have been able to afford what is being offered via the subscription; [another] woman might be using it because it just saves her time or it’s more efficient for her, or she needs a new outfit for every day at work." Business of Fashion
When figuring out the RTR customer base, I thought about the use cases for women of different stages in their life, occupations, and routines. RTR appeals to a diverse group of women for unique edge cases as well, but the following are important cases that RTR targets:
→ Women in the Workplace: One of the biggest use cases for subscribing to RTR is unlimited workwear. Having the flexibility to try new styles at high quality without over-spending on premium brands gives many women the ability to look their best everyday. In addition, with RTR's recommendation algorithm, busy working women spend less time shopping for new brands and styles.
→ Maternity: RTR launched their Maternity campaign to prevent women from over-spending on clothes during their pregnancy given their body changes every month.
→ Seasonal: When the season changes, so does your style. RTR aims to give women the chance to constantly refresh their wardrobe as it gets colder or warmer. This is especially beneficial for frequent travelers who temporarily live in a place and don't want to over-spend on clothing for a different climate.
→ Special Occasions: RTR's initial target audience was women in need of dresses for special events. Now with subscriptions, women have even more flexibility to try on several styles at home to choose the one that works best or have back-up options in case one of their options doesn't work out.
RTR has both an a-la-carte and subscription business model since women can choose to rent one time or purchase a monthly subscription:
→ RTR Reserve: Rent as you go
→ RTR Update: Rent 4 items, swap monthly
→ RTR Unlimited: Rent 4 items, swap anytime
→ RTR Platform (for designers): Try out an RTR brand partnership
RTR Update was launched shortly after Unlimited as an alternative and lesser expensive option in order to cater to women who wear new clothes less frequently, still want a diverse range of brands, but rather have less clothes on rotation. RTR has a tiered subscription-based model since before Update, women would either rent as they find the need or purchase the $159/month membership for unlimited items. Similar to LinkedIn, Angie's List, and others with "silver" or "gold" membership types, more options offer a way for customers to self-select which type works within their budget the best.
If there is one key takeaway I got from my experience at Rent the Runway, it's persistence in working towards a coherent and powerful value proposition for the brand that aligns with core principles. When you walk into the RTR HQ, one of the first things you'll see is RTR's "Core Values" on the wall. The first is "Everyone deserves a Cinderella experience."
At the company's inception, this meant offering the opportunity for luxury dresses to be sold at decent prices. With subscriptions, this value still holds true in giving women the freedom to shop for everyday wear without peering at the price tag.
However, the hard part is two-fold 1) converting women who are used to renting for special events to renting for everyday use with subscriptions 2) showing new customers the value in renting at all. An incredible amount of time is therefore poured into A/B testing the right copy, landing pages, subscription comparison grids, and onboarding. When altering consumer behavior, the most important part is the message you are conveying to people. We saw how this message can be different to all types of women, since it could be more visual in showing carousels of outfits you can receive with a subscription, or informational in presenting how much money you'd save or how beneficial renting is to the environment. RTR also dealt with persuading designers to come on-board, especially with everyday rentals. The partnership is deeply rooted in mutual trust between both parties, where the designer aims to maintain their brand reputation while RTR distributes their merchandise in an untraditional way compared to department stores.
Maureen Sullivan, COO: "Rent the Runway has changed consumer behavior, with our subscribers now wearing rented clothing 120 days of the year. We had brands coming to us asking how we could partner and help them enter the rental market. Currently, we have 39 brands signed on as part of Platform, with more being added every month." Business Insider
RTR's job is to show consumers that they don't need to change their behavior in order to rent clothing. Hyman stated that women already rent since most of their fast fashion pieces will dwindle after multiple wears and will then end up in a landfill. One of the ways RTR tries to change consumer behavior is in showing how you can combine renting with buying. The Rent/Buy Edit is a Polyvore-like feature that launched to do just that.
With this feature, RTR aims to explain how buying should be an investment. The pieces in your closet can create an ideal outfit with a combination of renting other one-time styles. RTR curates outfit inspiration by showing rental options like faux fur jackets combined with buying options like Everlane jeans.
As an intern on the Growth and Activation Team, much of my work was in looking at the top-level to acquire or "activate" new customers, whether they be Reserve customers or completely new to the platform. Although I can’t share the specifics, a lot of the work that the RTR product team produces is centered around advocating for the customer and ensuring that the subscription experience leads to referrals and high user retention. We did this by conducting focus groups, shadowing customer service agents in the RTR warehouse, and visiting the physical RTR stores to understand how the physical setting connects with the online platform.
One of the features that RTR launched was the on-boarding style quiz (below). Similar to Stitch Fix, customers will figure out which plan is right for them given their preferences. This is now called the RTR Outfit Finder and produces recommendations based on the outfits you choose that resonate with your style taste. If you see something you like, you're more inclined to try out a subscription. Showing what will be expected given a consumer's preferences is essential to activation. Because consumers are more inclined to purchase a service that aligns with their interests, RTR made an investment in first inquiring what their interests actually are to then ask to "try out" a subscription.
As with many emerging consumer-facing brands, community is incredibly powerful to a company's reputation and customer retention. Community builds trust and most companies rely on social media and even their own internal platforms to create a space for their customers to share reviews, talk to other customers, and improve the platform for the betterment of the user base. During RTR Hack Week, two engineers and a senior PM and I worked on a community feature after discovering one of the strengths of the RTR community: recommendations. We realized that although women liked to see the algorithm churning out new style recommendations for their next shipment, they also liked going to RTR events or stopping by the store to talk to other renters and get their take on what they're renting next.
To grow the platform, RTR invests in a hefty recommendation system to provide style and outfit inspiration. In addition to RTR-curated style options, the system will show items other members are renting. This type of user-generated content makes customers part of a community that is constantly sharing style recommendations.
Learn More –––
Podcast episode with Guy Raz | 57 Mins, Oct 14, 2018
RTR opens a network of clothing drop-off boxes in 15 WeWork locations across the US.
RTR has become a significant driver of sales for some of the world’s most popular fashion labels. Now, a new revenue-sharing model has large-scale players, including Levi’s and J.Crew, jumping on board.
With the introduction of RTR Platform, designers will be able to work directly with Rent the Runway in order to create a curated collection of pieces meant specifically for Runway customers.
Company tech blog for engineers, designers, analysts, and product managers.