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Subscriptions bringing clothing rentals out of the closet

When Rent The Runway’s subscription proposition was launched three years ago, the company went overnight from ‘dressing’ its customers an average of only 2.7 days per year to a massive 120 days.

This move took it away from being solely focused on the obvious rental items such as event wear including prom dresses and formal suits and also into offering more regular clothing such as work wear. What this also meant was the need for a different approach to customer engagement and the way Rent The Runway used the mass of data it was accumulating on its customers.

“With event rental we’d high-five in the office when people spent 45 minutes on the site but then when we had [people with] 120 days of rentals per year that metric was no good. We’ve now split the business into the subscribers, who want ‘set it and forget’ it personalisation from algorithms that help them choose [items], and those other customers who don’t want any algorithms choosing for them,” says CTO & head of product at Rent The Runway, Josh Builder, speaking at Tech.Festival 2019.

The subscription customers are benefiting from Rent The Runway’s utilisation of data that constantly builds a profile on them through a feedback loop that asks customer questions based on what they liked, what they returned, and their various preferences. From this the company is able to not only define a customer’s taste - regardless of what they say their taste is - but also understand what fits them.

“Many companies come to us with software solutions for fit but frankly this is not about sizing it’s more about personal preferences. A dress might actually fit by measurement but the customer might like it tight around the chest or they might not want it to show much of their arms. This is why the feedback loop is so important,” he explains.

As well as having the data to support its drive to boost subscriber numbers Rent The Runway also has the benefit of more consumers warming to the idea of renting clothing. A key attraction for a growing number of consumers is environmental concerns and Builder says Rent The Runway fits neatly into this scenario.

This is not only because it drives re-use of clothing but the company’s much greater efficiency with dry cleaning ensures less chemicals and water are used in this vitally important part of its business (it is the biggest dry cleaning company in the world).

Also helping the company’s environmental footprint is its use of stores for collection and return of rentals. Rent The Runway currently operates five such stores in the US. “The stores fit with our ‘closet in the cloud’ model and help tie everything together,” he says.

Builder believes this sets the company up well for achieving its objective of making the closet obsolete. “We absolutely believe rental is the future, where ownership is optional. You might own a couple of things but not need to own anymore. The average woman [in the US] spends $4,000 on fashion per year and this could be fully replaced. With subscription at $159 per month you can afford a lot more this way,” he suggests.

Builder did not reveal whether the company has any plans to bring its service to the UK nor did he discuss Rent The Runway’s current widely reported issues with its new inventory management software.

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