Rent the Runway CEO Jennifer Hyman describes the latest iteration of the fashion tech startup’s Unlimited service in terms that’ll appeal to your inner ‘90s teen.
"It’s like the 'Clueless’ closet," she said. "We brought it to life."
Rent the Runway might not stock Cher Horowitz’s favorite neon yellow mini-kilt, but its inventory of 100,000-plus pieces of clothing, jewelry and accessories by some 100 designers is just as fashion-forward.
Hyman was, of course, mostly referring to the ‘virtual’ element of her 7-year-old company’s newest offering. "It puts your closet in the cloud,” she said.
The $139/month Unlimited plan, which launched this spring, allows women to rent and wear up to three pieces at a time from sought-after contemporary design houses including Proenza Schouler, Jason Wu, and Derek Lam. They can keep an item for a month or send it back after a day, choosing new looks with a swipe of the company's mobile app. Shipping and dry-cleaning are included.
It is perhaps a logical extension of Rent the Runway's original business model, which offers a la carte rental of high-end dresses for special occasions, like weddings or black-tie functions, for between $30 for a simple shift to $600 for a column gown.
"The product-market fit was about a subscription to their everyday lives," said Hyman, adding that for "the educated woman in her 20s, 30s and 40s," she's more likely than not to be wearing corporate attire: "The main activity she does in her life is work, whether that's interviews, meetings, presentations or casual Friday."
Rent the Runway's valuation was estimated at up to $600 million after its Series D round. Hyman and cofounder Jennifer Fleiss, each with stakes of 13% in the company, land on Forbes' 2016 Women to Watch list as a result. They join six other up-and-comers we believe will one day make our ranking of America's Richest Self-Made Women, including tennis icon Serena Williams, singer-turned-mogul Jessica Simpson and ClassPass founder Payal Kadakia.
In 2016, Rent the Runway's revenues are expected to surpass $100 million for the first time, thanks in part to the guaranteed $1700 apiece annually from its subscription members. If Unlimited grows as predicted -- there was a waitlist in the tens of thousands prior to launch, the company said -- the duo may make the list sooner rather than later.
Lorna Hall, head of fashion intelligence at trend forecasting and analytics firm WGSN, has high hopes for Rent the Runway's foray into the subscription business, as well as that of a growing crop of competitors, like mid-price Le Tote and plus-size specialists Gwynnie Bee.
"Any model that has subscription in front of it is really appealing from an investor point of view," she said. "It's cash flow you can count on if you really make it work. 'Occasion' is a high churn model; if you're having to recruit customers more often, the cost cuts into your profit. With subscription, you just have to retain them."
Hyman hopes Unlimited will also prove popular with design houses looking to get their wares in front of that holy grail of consumer demographics: the millennial woman with disposable income.
"If you think about the rules related to retail: why does
For her part, WGSN's Hall sees apparel rental as appealing to young people growing ever more accustomed to the sharing economy.
"It's that new generational thing: a much more fluid attitude towards owning stuff," she said. "You can have the experience of owning something. They're a trader generation, swapping in and swapping out."
There's also the Instagram effect. With so many teens, 20- and 30-somethings chronicling their every outfit via social media, who wants to repeat a look? Or to purchase a $500 Loeffler Randall bag when you can pose with it, snap a picture then send it back?
Said Hall: "They're keeping up without the cost, in investment terms, of keeping up."
