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Rent the Runway: Closet in the cloud

Rent the Runway: Closet in the cloud

Rent the Runway: Closet in the cloud

In an age where we stream music, rent other people’s homes and hire cars by the hour, why not borrow our clothes too? That’s the rationale behind US start-up Rent the Runway, which has been dubbed the ‘Netflix for clothes’.

Co-founders Jennifer Hyman and Jennifer Fleiss came up with the idea of a women’s fashion rental service while doing an MBA at Harvard Business School in 2008. (Fleiss stepped down from an executive role in the company in March 2017 to pursue other projects.) There’s nothing new about hiring clothes – men have been renting tuxedos from Moss Bros for decades – but women had not been catered to. Hyman, Rent the Runway’s CEO, said the initial challenge was “getting women to understand renting was a viable – let alone a smarter – alternative to spending hundreds of dollars on dresses they would wear just once”.

Hyman and Fleiss foresaw the rise of the sharing economy 10 years ago. Since then Airbnb, Uber and Spotify have become global brands. And with Millennials leading the shift in consumer preference to experiences and access instead of ownership, it is perhaps no surprise that the average Rent the Runway customer is 29 years old. “Our lives today demand for access over ownership, as our society becomes increasingly more fast-paced, mobile, and on-demand,” said Hyman. “Rental is no longer unusual but a norm.”

The New York-based business originally focused on renting designer dresses for special occasions. Now, its online model gives women across the US the option to rent their clothes. A back-up size is included and free shipping, insurance and dry cleaning are all part of the service. In an Instagrammable world, where image is Rent the Runway gives customers the opportunity to be seen in designer outfits, such as a Missoni gown (US$1,755 retail, only US$265 to rent).

Now Rent the Runway is looking beyond black-tie events to “build the closetless future” where consumers can rent clothes for their everyday life. In 2016, it launched a subscription service. With the RTR Unlimited plan, which currently costs US$159 a month, members can rent as many clothes as they want, four at a time, from more than 550 brands including Diane von Furstenberg, Tory Burch, Vera Wang, Marni and Helmut Lang.

In October 2017, the business targeted more price-sensitive consumers with a second subscription service, RTR Update. For a monthly fee of US$89, members can rent four items a month from more than 200 brands. The company also makes the point that renting the latest fashion trends is more environmentally responsible than the throwaway model of fast-fashion.

At the start, the founders had to persuade designers to work with them and convince skeptics that they would not lose sales. “We want to be a sales and marketing channel that supports designer brands by introducing them to new customers and arming them with data,” said Hyman.

Describing itself as being a “fashion company with a technology soul”, the start-up has built a reverse logistics network, using its own proprietary technology. All orders are processed through a 250,000-sq ft fulfillment center in Secaucus, New Jersey, where they are able to turn around returned clothes, repair and dry clean them and send them out to new customers in a day.

Your physical closet will become a relic of the past just like CDs, landlines, DVDs.

When stores make sense

Though Rent the Runway started out as a pure play e-tailer, it has opened five bricks-and-mortar stores in the US, which carry a rotating selection of inventory. The stores also act as local distribution centers, allowing outfits to be couriered to nearby customers. Every customer who visits a store reduces Rent the Runway’s shipping costs.

These high-tech hubs have self-service tablets, iOS-based scanners and kiosks that allow customers to drop off worn items and pick up new pieces. This is balanced with traditional customer service: clients can book an appointment with a personal stylist and try out handpicked looks.

Last autumn, the company launched its first national TV advertising campaign, which posed the question of what people can do with their closet when they’re not storing clothes in them. Alternative uses showcased included workouts and karaoke.

“We’re making the point that in a world where your closet is in the cloud, and you have this constant access to a subscription to fashion, that your physical closet will become a relic of the past just like CDs, landlines, DVDs,” said Hyman.

A growing sector

The global online clothing rental market is estimated to reach US$1,856m by 2023, according to a study by Allied Market Research1. North America accounted for a 40 percent share of the global market in 2017, followed by Europe. New-style fashion rental start-ups have sprung up around the world. In the US, Le Tote and Armarium are among Rent the Runway’s competitors, while Black Tux caters to men. There are sites such as Girl Meets Dress in the UK, Chic by Choice in Europe and Glam Corner in Australia. If this manifestation of the shared economy keeps growing, it could force fast-fashion retailers to rethink their business model.

The lowdown on RTR

  • The idea for Rent the Runway came when Jennifer Hyman’s sister Becky was trying to find something to wear for a wedding, but despite having a closet full of clothes felt she couldn’t wear a dress more than once.
  • Hyman and Fleiss emailed their rental concept to Diane von Furstenberg to get her input. When the learned about the idea, she loved it and became their mentor.
  • The company’s strategy is to beta test every new concept. At first, the founders bought dresses from shops and tested the idea of renting among Harvard students. Before opening physical stores they trialed a pop-up store in their New York office.
  • The company stopped featuring real fur on the site in February after a campaign by PETA supporters.
  • Rent the Runway’s growing subscription service accounts for 50 percent of its total revenue.



1. Online Clothing Rental Market, Allied Market Research, March 2017

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