Two years ago, the rented fashion business was one of the fastest-growing segments in the trillion-dollar fashion industry. Post-pandemic, companies still standing, like Rent the Runway, are trying to find their footing.
Cut off from office-going clientele, Rent the Runway quickly lost nearly two-thirds of its business when COVID-19 hit. Surviving meant changing its strategy as quickly as people changed their wardrobe.
“People just want to be comfortable,” professional stylist Samantha Brown said. “That’s why everybody’s still in sneakers. Nobody’s walking around in stilettos and bandage dresses anymore. That’s done.”
Will rented fashion come back en vogue?
Pioneering platform Rent the Runway is perhaps best positioned to survive. In June 2021, CEO Jennifer Hyman touted business being up 100% from its COVID-low and continued acceleration out of the pandemic.
“Rent the Runway, it’s like trying to compete with Amazon,” Brown said. “They came in first, fastest, hardest.”
To date, more than two million people have worn clothes out of this rental closet, and while COVID pushed the company into cost-cutting mode, the changes made it more resilient and ready to welcome returning customers.
But 13 years in, Rent the Runway is still chasing a profit, and after going public in October, investor sentiment quickly soured. The stock, trading under the ticker RENT, is down about 70% in its first four months.
“We think it’s a tough business model,” said Kristen Classi-Zummo, a fashion industry analyst for The NPD Group. “The shipping, the cleaning, the managing of inventory: I think there’s a lot at play here. It’s just definitely a tough model for a lot of startups and brands and retailers to really grasp.”
Dressing for a new model
“There are so many components to why we get dressed every day, but I would say the largest one is audience based: Who are you dressing for?” Brown said. “Because as much as I’d love to think we’re all dressing for ourselves, we’re really not. We’re dressing for who we’re interacting with on a day-to-day basis.”
Rent the Runway started as a way to rent formalwear for special occasions. As it grew into a subscription service, customers turned to the closet in the cloud for office attire. Now, remote work is changing the game, and rented fashion is striving to be what customers reach for in everyday settings and for social media snaps. In this new normal, its survival depends on it.
While Rent the Runway paved the way, up-and-comers like Nuuly are competing for a share. Created by Urban Outfitters, the rental service is targeting younger audiences with Urban-owned brands, including Anthropologie and Free People. But as Rent the Runway has shown over more than a decade, building a customer base is only part of the battle. The path to profitability is the biggest hurdle of all.
