Rent the Runway

Rent the Runway is an online service that provides designer dress and accessory rentals. Initially a purely e-commerce company, it began to expand into brick-and-mortar in 2013, opening three retail locations in the United States. Rent the Runway was started by Jennifer Hyman and Jennifer Fleiss, who met at Harvard Business School and launched the company in November 2009. Rent the Runway now offers over 50,000 dresses and 10,000 accessories from over 200 designer partners, including Badgley Mischka, Vera Wang, Alexis Bittar, Carolina Herrera and Calvin Klein.

History

In 2008, Hyman and Fleiss met as sectionmates at Harvard Business School. They regularly met up to discuss entrepreneurial ideas, one of which was Rent the Runway. Hyman thought of the idea after witnessing her sister spend thousands of dollars on a new designer dress to wear to a wedding, despite already owning several designer dresses, because she did not want to be seen in a dress she had already worn, especially after photos of her wearing those dresses had been posted to social media.^[1] Hyman and Fleiss knew the concept had the potential to contribute to the “sharing economy” along with companies like Netflix and Spotify, which favor access over ownership, and decided to test it out with consumers. They pitched the idea to designers and potential investors without writing a business plan, instead deciding that testing and iterating on their concept was more important than a formal plan.^[1] They launched www.renttherunway.com in November 2009.

The company has received approximately $54 million in venture capital from Bain Capital Ventures, Highland Capital, Kleiner Perkins Caufield & Byers, Condé Nast’s parent company Advance Publications, American Express, and Novel TMT Ventures.^[2] As of February 2014, Rent the Runway has over 4 million members, 250 employees, and over 200 designer partners.^[3]

Rent the Runway provides women access to luxury items which they may not otherwise be able to afford or that they believe do not make sense to purchase. While Rent the Runway sources its inventory directly from designers just like traditional retailers, it has transformed the fashion industry by then offering access to the same designer apparel and accessories for 90% off retail with its rental model.

Business model

Customers can lease Rent the Runway’s designer dresses and accessories for a 4- or 8-day period for 10% of the retail price. Rent the Runway carries apparel in sizes 0 to 22, depending on the designer. Each dress rental includes a back-up size at no additional cost to ensure fit. Customers can get a second dress style with their order for an additional $32.50. Rent the Runway provides customers with a pre-paid, pre-addressed package to return the dress, and offers a $5 insurance fee to protect against accidents. Rental prices include the dry cleaning and care of the garments.

Rent the Runway also rents accessories, including jewelry and handbags, and sells “essentials,” including lingerie, tights, shapewear, and cosmetics.

Rent the Runway has showrooms in New York City’s Soho neighborhood and Henri Bendel’s flagship on Fifth Avenue in New York City, plus a store in The Cosmopolitan Hotel of Las Vegas.^[3] Customers can visit any of Rent the Runway’s three physical locations, work with a personal stylist, and either take items directly with them or book dresses and accessories for future events.

Rent the Runway’s stylists are also available to provide answers to customers’ styling, fit and logistics questions via phone, email and live chat.

Reception

The New York State Society for Human Resource Management honored Rent the Runway as one of the best companies to work for in New York State in 2014.^[4] In 2013, Rent the Runway was named one of the 50 companies disrupting the status-quo by CNBC,^[5] one of the 10 most innovative fashion companies by Fast Company in 2011,^[6] and one of the 50 best websites of 2010 by TIME magazine.^[7]

Rent the Runway CEO and Co-Founder Jennifer Hyman was named one of the “12 Most Disruptive Names in Business” in 2013 by Forbes^[8] and was included on Fortune’s “Trailblazers” list of individuals changing the face of business in 2013.^[9] Both Hyman and co-founder Jennifer Fleiss have been named Inc. Magazine’s “Top 30 Under 30,” Fortune’s “40 Under 40,”^[10] Fast Company’s “Most Influential Women in Technology,”^[11] and Fashion Group International’s 14th annual Rising Stars in Retail.^[12]

References