Introduction
In the late 2000s, the idea of renting designer dresses was a foreign concept. Women would spend hundreds, if not thousands, of dollars on gowns they might wear once or twice. However, two Harvard Business School classmates, Jennifer Hyman and Jennifer Fleiss, saw an opportunity to disrupt the fashion industry. Their brainchild, Rent the Runway, would go on to become a fashion powerhouse, transforming how women consume and experience luxury fashion.
The Birth of an Idea
The story of Rent the Runway begins during a Thanksgiving break in 2008. Hyman was visiting her sister Becky in New York City when Becky showed off a $2,000 designer dress she had bought for a wedding. The dress was stunning, but it had also put Becky into credit card debt.
Hyman questioned why there wasn’t a way for women to rent dresses for special occasions rather than spending exorbitant amounts on something they would likely wear only once. With the rise of social media, women were feeling increasing pressure to not be seen in the same outfit twice, exacerbating the problem.
Hyman returned to Harvard and shared her idea with classmate Jennifer Fleiss. Together, they realized they had stumbled upon a potentially transformative concept.
Testing the Waters
To validate their idea, Hyman and Fleiss set up a pop-up shop on Harvard’s campus. They offered students the chance to rent dresses on the spot for various events. The response was overwhelming. Women loved the idea of getting to wear designer dresses without the commitment of purchasing them.
Seeing the excitement and enthusiasm from their target market firsthand, Hyman and Fleiss knew they were onto something big. Women not only appreciated the cost savings but also the opportunity to always have something new and fashionable to wear.
Building Inventory and Partnerships
Armed with validation from their pop-up shop, Hyman and Fleiss set out to build their inventory. They began cold-calling designers, starting with Diane von Furstenberg. While von Furstenberg initially expressed skepticism, fearing that rentals would cannibalize sales, Hyman and Fleiss persuaded her that Rent the Runway could actually help reach a new, younger customer base.
This conversation set the tone for future partnerships. Hyman and Fleiss approached designers as collaborators rather than competitors, emphasizing how Rent the Runway could introduce their brands to a new audience who might eventually become purchasers.
Overcoming Logistical Hurdles
As Rent the Runway grew, the complexity of its operations became increasingly apparent. Managing a constantly rotating inventory, ensuring dresses were cleaned and repaired between rentals, and getting orders to customers on time was a logistical nightmare.
To tackle these challenges, Hyman and Fleiss heavily invested in technology and data science. They developed sophisticated algorithms to optimize inventory management, predict demand, and streamline shipping processes. They also established their own dry-cleaning operation, which would eventually become the largest in the United States.
These investments in infrastructure and logistics allowed Rent the Runway to scale efficiently and provide a seamless experience for customers, even as the business expanded rapidly.
Expanding the Business Model
Rent the Runway’s success with dresses opened up opportunities for expansion. The company added accessories to its offerings, allowing customers to complete their looks with rented jewelry and handbags.
In 2016, Rent the Runway introduced a subscription service called Unlimited, which allowed subscribers to rotate items as frequently as they wished for a monthly fee. This move marked a significant shift in the company’s business model, providing a more predictable revenue stream and encouraging deeper engagement with the platform.
Recognizing that women seek variety not just for special occasions but in their everyday wardrobes, Rent the Runway also launched a line of more casual clothing. This expansion allowed the company to serve customers’ needs beyond formal events.
To complement its online presence, Rent the Runway opened physical stores in major cities across the United States. These stores provided a tangible touchpoint for customers to experience the brand, try on items, and get styling advice, creating an omni-channel experience.
Navigating the Pandemic
Like many businesses, Rent the Runway faced unprecedented challenges during the COVID-19 pandemic. With social events cancelled and many people working from home, demand for rentals plummeted. The company had to make difficult decisions, including laying off staff and closing its retail stores.
However, Hyman and Fleiss saw an opportunity amidst the crisis. They doubled down on their casual clothing offering, recognizing that even if women weren’t attending formal events, they still craved variety and novelty in their everyday wardrobes. They also leaned into their subscription model, which provided a much-needed consistent revenue stream during turbulent times.
These strategic pivots, combined with a focus on customer retention and engagement, helped Rent the Runway weather the storm and emerge from the pandemic well-positioned for future growth.
Going Public and Looking Ahead
In October 2021, Rent the Runway achieved a major milestone: it went public on the NASDAQ stock exchange. The IPO was a testament to the company’s resilience and the enduring appeal of its business model.
As Rent the Runway looks to the future, it remains committed to its core mission of making women feel empowered and confident through fashion. The company continues to invest in technology, expand its offerings, and enhance its customer experience.
With sustainability becoming an increasingly pressing concern in the fashion industry, Rent the Runway is also well-positioned to play a leading role in promoting a more circular economy. By encouraging the reuse and sharing of clothes, the company offers a more environmentally friendly alternative to the buy-and-dispose model that has long dominated fashion.
Timeline of Key Events
- 2008: Jennifer Hyman has her “aha” moment during Thanksgiving break
- 2009: Rent the Runway officially launches
- 2010: Accessories are added to the rental offerings
- 2014: Rent the Runway opens its first brick-and-mortar store
- 2016: The Unlimited subscription service is introduced
- 2020: The company navigates the challenges of the COVID-19 pandemic
- 2021: Rent the Runway goes public on the NASDAQ
Key Takeaways
- Identify a genuine problem: Rent the Runway succeeded by addressing a real pain point for women—the desire for variety and luxury without the hefty price tag.
- Embrace technology: Investments in data science and logistics technology were critical to Rent the Runway’s ability to scale efficiently and deliver a seamless customer experience.
- Be agile: When faced with the unprecedented challenges of the pandemic, Rent the Runway quickly pivoted its strategy to meet changing customer needs.
- Build partnerships: By approaching designers as collaborators rather than competitors, Rent the Runway gained access to top fashions and expanded its inventory.
- Focus on customer experience: From its earliest days, Rent the Runway has prioritized making customers feel confident and beautiful, fostering deep loyalty and word-of-mouth growth.
Conclusion
Rent the Runway’s journey from a campus startup to a publicly-traded fashion powerhouse is a testament to the power of innovation, resilience, and customer-centricity. By challenging traditional notions of ownership and consumption in the fashion industry, Jennifer Hyman and Jennifer Fleiss have not only built a successful business but also reshaped how we think about our wardrobes.
As the sharing economy continues to evolve and sustainability becomes an ever more pressing concern, Rent the Runway is poised to play an increasingly influential role in the future of fashion. Its story serves as an inspiration to entrepreneurs everywhere, demonstrating that with vision, perseverance, and a willingness to adapt, even the most entrenched industries can be transformed.
