Rent The Runway Adds $89 Subscription As Fashion Tech Startup Chases Younger Shopper – Forbes
In 2016, fashion tech startup Rent the Runway hit $100 million in revenues for the first time, thanks in large part to its Unlimited subscription, a $139/month “closet in the cloud,” as CEO Jenn Hyman described it.
The plan has proven popular with older millennials, mostly from urban and coastal areas: the average age of Unlimited subscribers is 33, and their household income has tended to be $100,000 or more.
On Monday, Rent the Runway will roll out a less expensive subscription tier aimed at democratizing the rotating wardrobe. For $89/month, women will receive four rental pieces from brands including Tory Burch, DVF, Milly and Opening Ceremony.
This ‘RTR Update,’ as the service is called, will look to win over twentysomething women, Midwesterners, and those from households with an annual income of $75,000 and up, Hyman told Forbes.
It’ll also target fast-fashion shoppers, many of whom may be spending some $89 monthly already on disposable, badly-made clothes from chains like Zara and H&M.
“I want to take the ‘closet in the cloud’ and turn it into the ‘closet on every corner,'” said Hyman, who’s been running the show solo at the eight-year-old company since cofounder Jennifer Fleiss bowed out in March.
She described Rent the Runway as primarily a logistics company; indeed, its main warehouse is also America’s largest dry-cleaner. To service the “millions” of women Hyman hopes to reach with this $89/month plan, the company may well open a second distribution center in 2018.
The company’s five existing retail stores function as mini-distribution centers of sorts; subscribers can walk in before work or a function, try on outfits, and walk out without swiping a credit card thanks to self-scanners. Hyman said to expect further retail locations outside major urban areas in the near future.
As for Rent the Runway’s big-picture plans, Hyman denied industry rumors that the company is looking to be acquired by a tech giant like Amazon or by Neiman Marcus, where it opened its first store-within-a-store in 2016. “They can’t afford us,” she laughed.
To date, Rent the Runway has raised $190 million in venture capital funding; its $60 million Series E in 2016 was one of the largest ever for a women-run company. Cofounders Hyman and Fleiss, each with stakes of 13% in the business, landed on Forbes’ 2016 Self-Made Women to Watch list as a result.