Rent the Runway is revolutionizing the fashion industry, making runway clothing a reality for mass consumers. The concept is simple; it allows women to rent luxury dresses, accessories and handbags at a fraction of the cost for a few days at a time.
In less than four years, Rent the Runway has partnered with over 170 designers while registering more than 3.5 million members, growing at a rapid rate in a short amount of time.
“Rent the Runway’s growth has come from word of mouth,” Jennifer Hyman, Rent the Runway Co-Founder and CEO said. “Over 65 percent of our members tell us they heard about Rent the Runway through a friend.”
The successful startup is backed by some of the top venture capitalists in the world. Funding from big names like Bain Capital Ventures, Kleiner Perkins Caufield & Byers and Highland Capital Partners have been used by Rent the Runway to increase inventory and develop other areas of its business. Earlier this year, Rent the Runway announced a new $24.4 million round of financing led by Advance Publications, bringing the company’s total capital raised to more than $50 million.
Hyman says Rent the Runway’s track record of growth and success is the reason venture capitalists are showing interest. “I think venture capitalists will invest in businesses if they see there will be a huge return.”
Rent the Runway’s unique business model is fueling its demand.
“We’ve tapped into a market that is enormous and we’re democratizing an industry,” Hyman said. “We’re giving the mass market access to luxury brands we’re all taught to aspire to. The average American woman gets dressed up for about 18 occasions per year, so if a few of those occasions can be rental occasions, this is a multibillion dollar opportunity.”
Less than one year ago, Rent the Runway moved beyond its original e-commerce platform. The company’s first and only showroom opened in New York City, allowing customers to browse dresses and accessories from top designers like Diane von Furstenberg, Vera Wang and Shoshanna with the help of a personal stylist at no extra cost.
“We’ve done something interesting with our showroom concept,” Hyman said. “It isn’t a traditional retail concept. What we do is we invite prior customers of Rent the Runway and utilize the showroom as a way to reward them and catalyze their loyalty.”
So far, the showroom has proven to be a success, and the interest may prompt the company to expand its physical presence beyond New York City.
“We always run quick tests first in New York at our home base, and then we’re always thinking about how to grow and expand them,” Hyman said. “I wouldn’t be surprised if this concept takes off all over the country.”
The fast growing company is showing no signs of slowing down. It’s determined keep attracting new fashion forward members at a record rate.
“We are just at the beginning of what rent the runway is going to be,” Hyman said. “We’re only three-and-a-half years old. I tend to focus on the here and now and we have so much growth to do with the concept we have today. I don’t know what will happen in the future but I want to make sure we grow as quickly over the next few years that we have in the last few.”