MKTG1281: How Rent the Runway became a fashion hit Looks at the evolution of Rent the Runway : Applied Brand Management Case Study, RMIT, Singapore

How Rent the Runway became a fashion hit

Looks at the evolution of Rent the Runway from a digital business renting clothes for special occasions into one that dresses people on a daily basis.

• Its subscription model gives access to top-end brands and offers environmental benefits.
• Data powers everything from clothing recommendations to the logistics of delivery and dry cleaning.

At a glance
Rent the Runway aims to offer its subscribers a range of clothing choices based on what it knows about them; it’s developing new ideas around what constitutes ‘fit’ in this context, considering emotions as well as physical measurements.

Why it matters
As an example of a successful business in the sharing economy, Rent the Runway effectively combines the DTC and subscription business models and has built word-of-mouth into its systems. It believes it can take ownership of clothing optional and that this is not only more environmentally friendly, it also gives consumers access to brands they would not have otherwise considered.

Your algorithmic dresser
That has required a re-evaluation of the metrics it relies on – the ones that are good for the event rental side aren’t necessarily good for the subscription side – and a greater focus on personalization. If a user spends 45 minutes on the site picking a dress for a special occasion, that signifies deep engagement.
And that’s fine for event rental but not for the subscription side where the business is looking to dress someone on an almost daily basis.

For the latter use case, the approach has been to “set it and forget it”, which entails a great deal of learning about the user and their likes, which also informs inventory purchase. Few people want to be dressed by algorithms every day, however. This process may remove a pain point for a certain type of customer, but chances are even they will want to go shopping at some time. “We have to figure out what mental state you’re in and give you those different paths – so we’re trying to do both at the same time,” Builder explained.

On the personalization side, he claimed that Rent the Runway can know its customers reasonably well after just one visit to the site. “Everyone has a cold start problem,” he acknowledged, “but I think we employ some rather
clever tactics to try to shorten that time”. As well as looking at who the customer is and what she’s doing, “there are things you need to learn about who referred you to the site. One of the more interesting ways we solve that
cold-start problem is that Rent the Runway grows like a virus – in a really good way.”

A different approach to fit

The role of dry cleaning
“We own and clean all of our own garments. We run the largest dry-cleaning business in the world!” said the builder. And not just any old dry-cleaning business, a data-driven dry-cleaning business. Rent the Runway has to figure out for any particular garment, how it can best clean it so that it looks newer for longer. “So we know that this chemical mix with this type of fabric will work better. And if we can run a machine more efficiently with that, then we will build that into our logistics process.” It’s clearly important to get the most value
of a garment before “deactivating” it – that happens when it just doesn’t look new anymore.

“It’s not that it’s unusable, but when you rent from Rent the Runway you’re expecting a high level of quality. After a certain amount of time per garment, we will determine that that garment doesn’t look like new anymore.” At that
point, it’s taken out of circulation, with users given an option to buy it at a discount. “Then we have sample sales and warehouse sales and liquidation channels around selling those items. And then there’s a donation, the last
piece.” The issue of fit and sizing is a particular bugbear for many women, with no consistency between brands – and sometimes not even within brands themselves. “We are an excellent place to map a size two to a size four in a
brand,” he said, but – as the survey questions indicate – it’s thinking about fit differently.

He offered a personal example. “When my wife started using the program, she put a dress on, stood in front of the mirror, and said ‘I don’t like it, it doesn’t fit me. And I was like, it totally fits you, what are you talking about? She said, ‘I don’t like the way it shows my arms.”