Rent the Runway expands its fashion subscription service, aiming to put your closet out of business
- Rent the Runway is adding a membership option that costs less than $100 per month.
- Co-founder and Chief Executive Jenn Hyman says she sees a world where women no longer use closets to store their day-to-day clothes.
- Rent the Runway is also launching its first national brand campaign.
Rent the Runway is making its fashion subscription service accessible to more shoppers by adding a membership option that costs less than $100 per month.
The New York-based clothing service partners with more than 500 brands — such as Kate Spade, Oscar de la Renta and Rebecca Minkoff — and lets women rent pieces from its website and five physical locations, either on a monthly basis or strictly for special occasions.
The new, less-expensive membership tier, called "RTR Update," allows shoppers to choose four pieces from Rent the Runway's selection of more than 200 brands every month, with free shipping, returns, dry cleaning and insurance included in the package. The monthly fee is $89.
The company's current "RTR Unlimited" tier is also being revamped, with a price increase to $159 from $139 per month. Current members, though, will be locked in at the lower price "for life," Rent the Runway said. This package allows shoppers unlimited rentals throughout the month, choosing from more than 500 designer brands.
"We noticed some pretty unusual customer behavior when we launched the 'RTR Unlimited' subscription in 2016," co-founder and CEO Jenn Hyman told CNBC. "It confirmed to us the future is 'closetless.'"
"With the decline in physical retail sales ... the rise of Amazon happening so quickly, it's difficult for brands to stay afloat," she added. "We are a growing and important player for brands, and it's one of our missions to help incredible designers have big businesses."
According to Hyman, Amazon and big-box players Target and Wal-Mart present some of the biggest threats to the fashion industry. The three companies have at one point or another mentioned growing their apparel businesses.
In partnering with more brands, Rent the Runway has plans to triple its subscription business by 2018, having seen 125 percent growth on its platform from a year ago. The company has set up physical stores in New York, Chicago, San Francisco, Washington, D.C., and Woodland Hills, California, with the goal of also growing its brick-and-mortar footprint.
Some women are visiting Rent the Runway's stores twice a day, Hyman said, changing their looks before heading into work and then before heading home, or for a night out on the town.
"Our stores have turned into extensions of our customers' own closets," she said.
Unlike online fashion platforms like Gilt, Spring and subscription box service Stitch Fix, which sell clothes, Rent the Runway is building what it calls a "closet in the cloud."
The company's original rental offering allowed shoppers to pick a dress or other special-occasion outfit for only four or eight days at a time. Women turned to Rent the Runway for weddings, proms and birthday parties. But a monthly membership model opened the doors to those picking everyday wardrobe staples, even jewelry and accessories.
In tandem with announcing its less-expensive membership model, Rent the Runway also rolled out its first national brand advertising campaign on Monday, hoping to introduce the name to a much wider audience.
The ads predict "what women will do with their closets once they start renting the runway."
"The concept behind the commercial is the idea that the closet is changing, and we're rethinking this place in our home," Hyman said. "We at Rent the Runway don't think it's going to exist in the future."