The Fashion Rental Market Continues to Grow And Attract Competitors
Rent the Runway Walked Unbeaten Path Amid Pandemic’s Challenges
As the pandemic hit in the early part of 2020, Rent the Runway (RENT) executives had to confront the cancellation of thousands of events from major galas to weddings and even high school proms. The business’ bread and butter disappeared overnight. Now, Rent the Runway says the bulk of its revenue comes from rentals aimed at people going to the office or spending a night out.
Shares have plunged 70% since the company went public in October. Some blame underestimated monthly overhead costs tied to returning, cleaning, and delivering rented clothes. There are analysts who wonder if Rent the Runway can overcome some people’s objection to renting clothes, while others say its model can fit into a more sustainable lifestyle. The entire market could nearly double in value by 2028, according to predictions from Verified Market Research.
Innovative Changes Helped Rent the Runway’s Altered Business Model
Executives say some of Rent the Runway’s innovations made the pandemic transition easier, such as removing a monthly subscription option allowing unlimited rentals, boosting profitability. New machines automatically sort clothes based on wash cycle, radio frequency ID tags are sewn into garments, and customers can leave feedback regarding things such as fading colors, missing buttons, and a poor fit. Rent the Runway notes garments are retired after around 20 washings.
Analysts say while the fashion rental market has potential, Rent the Runway needs to grow its subscriber base in order to achieve profitability. Company executives say its focus on casual clothes underscores growth potential, as fewer employees head into the office amid the rise in remote working. Forecasters predict Rent the Runway may need to boost its subscriber base by upwards of four times in order to turn a profit.
Competition Grows From Fashion Rental Market Challengers
Perceived potential in the fashion rental space has Rent the Runway facing challengers. Many of its rivals are even more specialized in their focus and the types of clothing they offer. Some services stick to things like athletic wear, maternity clothing, or men’s wear.
New entrants to the fashion rental market include established names as well as newcomers. Urban Outfitters (URBN) launched Nuuly in 2019 which rents clothing from hundreds of labels including its own. Ralph Lauren’s (RL) Lauren Look is a subscription service with monthly plans starting at $125, and plus-size garment service Gwynnie Bee has since expanded to smaller sizes. Rent the Runway stands as a pioneer in this evolving market space that’s come a long way from school dances and weddings.
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