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Rent the Runway

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Rent the Runway
Type of businessPublic
Traded asNasdaq: RENT
Founded2009; 15 years ago (2009)
Headquarters
New York City
,
U.S.
Founder(s)Jennifer Hyman
Jennifer Fleiss
Key peopleJennifer Hyman (CEO)
IndustryE-commerce
RevenueIncrease $100 Million (2017)[1]
Employees1,800 (2019)[2]
URLrenttherunway.com

Rent the Runway is an e-commerce platform that allows users to rent, subscribe, or buy designer apparel and accessories. It was founded by Jennifer Hyman and Jennifer Fleiss, who launched the company in November 2009.

History

[edit]

In 2007, Hyman and Fleiss met as sectionmates at Harvard Business School.[3] They regularly met up to discuss entrepreneurial ideas, one of which was Rent the Runway.[4] After seeing her sister overspend on an expensive new dress for a wedding, Hyman had the idea of offering dress rentals for women for special events.[3] Long term, her plan was to offer women unlimited access to a designer closet they could rent from on-demand.[5] Early on, Hyman and Fleiss pitched the idea to designer Diane von Fürstenberg as a rental service for her brand's website. She was initially uninterested, and suggested that instead they create their own multi-brand retail site. Hyman and Fleiss took her advice, and Fürstenberg signed on as one of the company's first designer partners.[3][6] A November 2009 article in The New York Times helped bring publicity to the company shortly after its launch.[3][7] In 2016, the company began offering everyday clothing through a subscription model.[8]

The company has received over $400 million in venture capital from investors including Fidelity, Franklin Templeton, TCV, Bain Capital Ventures, Highland Capital Partners, American Express, and T. Rowe Capital.[9][10][11] In 2015, the company suffered negative press after the departure of several executives such as CTO Camille Fournier and Linda Honan (now of BBDO).[12][13] However, it was reported to have a positive bounce back by the end of 2016 with a Series E venture investment from Fidelity Investments and the launch of new physical retail shops.[14][15] In 2017, Fleiss left the company to co-found Jetblack, a concierge shopping service.[16] Fleiss remained on the board and Hyman remained as CEO.[17] In March 2019, Rent the Runway received a new round of financing that increased its valuation to the unicorn level of $1 billion.[18]

In September 2023, Rent The Runway began to decline, as sales were failing to meet soaring consumer demand after a disappointing quarter.[19] In October 2023, CreditRiskMonitor reported that Rent the Runway was nearing a potential Chapter 11 bankruptcy filing.[20]

Business model

[edit]
First Physical Location in NYC

The company offers clothes from over 700 designers, in sizes ranging from 00 to 22. In addition to garments for events, the company also rents everyday clothing, children's clothing, ski apparel, home décor, and accessories, including jewelry and handbags.[21][22][23] The company offers several subscription plans at varying prices, that can be customized. According to the company, as of 2019 subscriptions account for 75% of its business.[24]

Customers can also rent clothes for a 4- or 8-day period without signing up for a subscription as part of the company's Reserve program.[25] Each rental includes a back-up size at no additional cost to ensure it fits. Customers can get a second style for an additional fee. Rental prices include the dry cleaning and care of the garments. In 2021, the company began allowing anyone to buy items secondhand from its site without a membership.[26] Subscribers have had the option to buy items they rented since 2016.[25]

Rent the Runway had physical locations in New York City, Washington, D.C., Chicago, San Francisco, and Los Angeles,[27] where customers could work with a personal stylist, and either take items directly with them or book dresses and accessories for future events. In August 2020, the company announced it would be closing all five of its retail locations, in order to focus on digital subscriptions, and would be adding more drop box locations.[28]

According to the company, it has the biggest dry cleaning operation in the United States and possibly the world, processing 2,000 items per hour (as of 2018).[3][29] The company has distribution warehouses in Secaucus, New Jersey, and Arlington, Texas.[30]

In September 2019, Rent the Runway experienced an 11-day operational glitch and temporarily stopped accepting new customers.[31] The company resumed regular operations on October 15, 2019, after implementing system upgrades.[32]

Awards and honors

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Rent the Runway was named on CNBC's Disruptor 50 list in 2013,[33] 2014,[34] 2015,[35] 2018 and 2019.[36] The company was named one of Fast Company's Most Innovative Companies in 2011, 2015, 2018 and 2019.[37][38][39] In 2018, Fast Company recognized RTR Unlimited as a World Changing Idea; in 2014 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;[40][41] and in 2010, Time magazine named it one of the 50 best websites of the year.[42]

In 2019, Time recognized Hyman as one of their 100 Most Influential People.[43] The firm and Hyman were named one of the 12 Most Disruptive Names in Business in 2013 by Forbes,[44] and Hyman was included on Fortune’s Trailblazers list of individuals changing the face of business in 2013.[45] Both Hyman and co-founder Fleiss have been named to Inc. Magazine’s “30 Under 30,” Fortune’s “40 Under 40,”[46] Fast Company’s “Most Influential Women in Technology,”[47] Fashion Group International’s 14th annual Rising Stars in Retail,[48] Forbes' "Women Entrepreneurs to Watch",[49] and The Business Journal 2016 Upstart 100 Class of Creatives.[50]

References

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  1. ^ Henry, Zoë (July 20, 2017). "Rent the Runway Had 6 Million Customers, $100 Million in Revenue. Then the Co-Founder Quit". Inc.com.
  2. ^ Robert, Yola (25 March 2019). "Rent The Runway Joins The Unicorn Club At A $1 Billion Valuation". Forbes. Retrieved 14 June 2021.
  3. ^ a b c d e Schwartz, Alexandra (22 October 2018). "Rent the Runway Wants to Lend You Your Look". The New Yorker. Retrieved 8 June 2021.
  4. ^ Black, Tiffany, “Jennifer Hyman and Jenny Fleiss, Founders of Rent the Runway”, Inc Magazine, July 19, 2010
  5. ^ Marikar, Sheila (12 October 2018). "The Transformational Bliss of Borrowing Your Office Clothes". New York Times. Retrieved 17 June 2021.
  6. ^ "Rent The Runway: Jenn Hyman". NPR. 7 August 2017. Retrieved 8 June 2021.
  7. ^ Wortham, Jenna (8 November 2009). "A Netflix Model for Haute Couture". New York Times. Retrieved 8 June 2021.
  8. ^ Harris, Ainsley (23 March 2016). "Rent The Runway Launches Unlimited Service". Fast Company. Retrieved 8 June 2021.
  9. ^ Rao, Lena, "AmEx Backs The Netflix For Designer Clothes, Rent The Runway", "TechCrunch", March 11, 2013
  10. ^ Roof, Katie (27 December 2016). "Rent the Runway Raises $60 Million". TechCrunch. Retrieved 17 June 2021.
  11. ^ Segran, Elizabeth (21 March 2019). "Rent the Runway is now a unicorn". Fast Company. Retrieved 17 June 2021.
  12. ^ Roberts, Daniel, "Exclusive: What’s behind the exodus from Rent the Runway?", "Fortune", Nov 17, 2015
  13. ^ Kosoff, Maya, "Why executives are fleeing $500 million startup Rent the Runway", "Business Insider", November 17, 2015
  14. ^ O'Connor, Clare, "Rent The Runway Raises $60M In Funding As It Rolls Out Retail Stores""Forbes", December 28, 2016
  15. ^ "Rent the Runway pivots away from rough year | PitchBook". pitchbook.com.
  16. ^ Belanger, Lydia (31 March 2018). "Why the Entrepreneur Behind Rent the Runway Decided to Launch Her New Company Through Walmart's Incubator". Entrepreneur. Retrieved 14 June 2021.
  17. ^ O'Connor, Clare (20 March 2017). "Rent The Runway Cofounder Fleiss Bows Out As Company Preps For IPO". Forbes. Retrieved 14 June 2021.
  18. ^ Maheshwari, Sapna (2019-03-21). "Rent the Runway Now Valued at $1 Billion With New Funding". The New York Times. ISSN 0362-4331. Retrieved 2019-09-24.
  19. ^ "Rent the Runway Struggles to Meet Soaring Consumer Demand". PYMNTS. September 11, 2023. Retrieved October 3, 2023.
  20. ^ "11 retailers at risk of bankruptcy in 2023". Retail Dive. October 2, 2023. Retrieved October 3, 2023.
  21. ^ Nassauer, Sarah (23 July 2019). "Rent the Runway Is Growing Fast, and Struggling to Keep Up". Wall Street Journal. Retrieved 14 June 2021.
  22. ^ Macon, Alexandra (8 April 2019). "Rent the Runway Launches Kids—and My Two Daughters Took It for a Test Drive". Vogue. Retrieved 14 June 2021.
  23. ^ Lockwood, Lisa (3 December 2019). "Rent the Runway Adds Ski Apparel, Ath-leisure". Women's Wear Daily. Retrieved 14 June 2021.
  24. ^ Leighton, Mara (3 March 2020). "Rent the Runway just launched a new subscription option that lets members rent 8 items per month for $135". Insider. Retrieved 14 June 2021.
  25. ^ a b Stoll, John (10 July 2020). "How Is Rent the Runway Still In Business? The CEO Moved Quickly, Cut Deep". Wall Street Journal. Retrieved 14 June 2021.
  26. ^ Stoll, John (27 October 2020). "Coronavirus Prompts Rent the Runway to Think Beyond Rentals". Wall Street Journal. Retrieved 14 June 2021.
  27. ^ "Store Location Listing". Rent the Runway.
  28. ^ Thomas, Lauren (14 August 2020). "The clothing rental start-up Rent the Runway is closing all of its stores for good". CNBC. Retrieved 14 June 2021.
  29. ^ "Rent the Runway is taking clothes-sharing mainstream". The Economist. 7 June 2018.
  30. ^ Jimenez, Carla (12 July 2019). "Rent the Runway's new Arlington fulfillment center is like a 300,000 square-foot closet". Fort Worth Star-Telegram. Retrieved 14 June 2021.
  31. ^ "Rent the Runway back online after 11-day tech glitch". October 8, 2019.
  32. ^ Thomas, Lauren (8 October 2019). "Rent the Runway 'back to business as usual' after supply chain chaos". CNBC. Retrieved 14 June 2021.
  33. ^ "2013 Disruptor 50 List". CNBC. Retrieved 24 June 2021.
  34. ^ "2014 Disruptor 50 List". CNBC. Retrieved 24 June 2021.
  35. ^ "2015 Disruptor 50 List". CNBC. Retrieved 24 June 2021.
  36. ^ staff, CNBC com (2019-05-15). "Rent the Runway 2019 Disruptor 50". www.cnbc.com. Retrieved 2019-09-28.
  37. ^ "Most Innovative Companies: Rent the Runway". Fast Company. Retrieved 24 June 2021.
  38. ^ "The World's Most Innovative Companies 2018: Retail Honorees". Fast Company. Retrieved 2019-09-28.
  39. ^ "The World's Most Innovative Companies 2019: Social Good Honorees". Fast Company. Retrieved 2019-09-28.
  40. ^ Staff, Fast Company (2018-04-09). "The 2018 World Changing Ideas Awards Finalists". Fast Company. Retrieved 2019-09-28.
  41. ^ "Winners of 2014 Best Companies to Work for in New York State Announced", January 6, 2014
  42. ^ TIME Staff, "50 Best Websites 2010", "TIME", August 25, 2010
  43. ^ "Jennifer Hyman: The 100 Most Influential People of 2019". TIME. Retrieved 2019-09-28.
  44. ^ Carlyle, Erin, "Disruptors", "Forbes"
  45. ^ Fry, Erica, "Trailblazers: 11 People Changing Business", "Fortune", February 8, 2013
  46. ^ Keating, Caitlin, "40 Under 40", "Fortune", October 17, 2012
  47. ^ Evans, Suzy "The Most Influential Women in Technology 2011 - Jennifer Hyman and Jennifer Fleiss", "Fast Company", January 10, 2011
  48. ^ "14th Annual Rising Star Awards", "FGI Bulletin", 2011
  49. ^ Savchuk, Katia. "From Serena Williams to Katy Perry: Eight Women Entrepreneurs To Watch". Forbes. Retrieved 21 December 2016.
  50. ^ "The Creatives Upstart". bizjournals. August 18, 2018. Retrieved 2020-12-03.
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