Rent the Runway’s IPO plans signal a resurgence in fashion rental – Sourcing Journal
Midway into 2021, Rent the Runway is looking to take its status as a Fashion Rental OG to the next level.
On Monday, the New York-based “closet in the cloud” company said it had confidentially filed S-1 documents with the Securities and Exchange Commission, outlining its intention to go public. The former fashion unicorn, who has not revealed any information on how many shares she plans to offer or the price range, appears to be fighting for a bigger share of a global fashion market. clothing rental estimated at $ 2.08 billion by 2025, Researchandmarkets.com predicted last year.
The development comes just months after America tentatively began moving toward resuming normal life – and comes amid renewed fears that the Delta variant of the Covid-19 virus could stifle the country’s reopening, and with it the need for an influx of Instagram ready outfits. The most contagious strain now totals 83% of the number of Covid cases in the United States, the Centers for Disease Control and Prevention reported on Tuesday in news that could chill what is raising the temperature in fashion retail.
Yet Rent the Runway’s plans to go public confirm not only the continued strength of the IPO market – with Dr. Martens, ThredUp and Torrid among those flirting with the markets – but also the company’s ability to exit. the other side of the coronavirus controversy and chaos. A lot has happened since RTR’s valuation hit $ 1 billion in 2019. Not quite two years ago, Rent the Runway found itself with an egg in its face (and angry customers a-Twitter) when an infamous supply chain collapse left members suspended and MIA orders. Then the pandemic made a Marriott partnership virtually useless, as last year’s travel bans and widespread cancellations left consumers with little need for fashion-packed RTR garment bags ready and waiting in their hotel rooms. .
Like others in retail, RTR closed its stores during the height of the worst Covid – in a move that has proven to be permanent. The brick and mortar associates had the ax, and the warehouse workers took up arms against what they denounced as a dangerous environment. âWho needs to rent luxury clothes during a global health emergency? ” they asked.
Perhaps the most upsetting move, however, came at the end of last summer when the curtain fell on RTR’s beloved unlimited subscription plan. Gone are the days when busy women could fully embrace the one-time-wear lifestyle and access a virtually limitless wardrobe to suit any mood, whim and occasion. The overhaul of RTR’s subscriptions has irritated an eruption of members. An army of “disgruntled” Twitter users described the move as a “slap in the face” and a “huge problem” for those who use Unlimited to “take fashion risks.” “Please make us grandpa,” pleaded another, while a “devastated” user claimed that RTR’s 16-item-per-month replacement plan “won’t cut it” for his business and event needs. specials.
Though it upset a basket of longtime devotees, RTR steadfastly persevered, replacing what it had taken from its customer base with a range of new offerings. As temperatures warmed in May, the company announced plans to let Hamptons revelers return their rentals to a station drop box before boarding the destination’s famous Jitney for the return trip to New York. A limited-time program allows members of select zip codes in New York, Dallas and Washington, DC to choose to have returns picked up at their doorstep, perhaps in an effort to appease customers cut off from closed stores.
And at the start of last month, RTR launched a full-fledged resale program after long trying to sell second-hand fashion. Anyone can now buy the second-hand items on his website, he said – no membership required.
âWe’ve all looked at closets full of clothes that haven’t been worn in the past year, which has created a paradigm shift in the way consumers think about shopping and dressing,â Co-founder CEO Jennifer Hyman wrote in a blog post. âResale is a natural complement to leasing and a logical next step as we continue to expand the value proposition of Rent the Runway. “
Although the General Manager described â[c]full flexibility ‘as’ the future of fashion’, the truth could be more nuanced. Breaking into the $ 77 billion clothing resale market could bolster RTR’s bottom line with a new revenue stream (and against future disruption) as it seeks to transition from private to public.
Gwyneth Paltrow’s installation on RTR’s board could also appease investors looking for an established vote of confidence. The actor, Goop founder and funder has used his influence to support maverick brands like Universal Standard, the size-inclusive unconventional label that’s also part of the RTR assortment.
Generally speaking, the concept of fashion rental seems to be on the rise. Although RTR has approached the New York Times to announce that “fashion is [expletive] back â, others in the industry have also seen demand soar with vaccination rates and freedoms restored. Nuuly, the Urban Outfitters Inc. service started in 2019, first documented a spike in consumer behavior and customers began reactivating their accounts, or first subscribing, in March. The momentum continued in April, with traffic to Nuuly’s site increasing 25% from the previous month, the company told the Sourcing Journal.
Data shows that Nuuly’s large customer base was eager to put aside the comfortable clothing that served as a safety blanket for shelter in place. Followers have jumped their feet in the avant-garde trends, seizing everything from matching ensembles and one-shoulder tops and dresses, to artful styles channeling quilting and paint-splattered aesthetics. Cropped tops have also increased, and consumers have turned to tactile textures, like crochet and smocking, as well as eye-catching gingham, checkerboard and marble prints.
Denim has also played a prominent role in the fashion revival, according to Nuuly, which offers third-party brands in addition to URBN’s own labels. Mom and dad jeans, flared silhouettes and bootcut jeans are all on trend, confirming what industry executives have described as the ânew cycleâ of denim that grew out of a decade-long skinny jean obsession.
Sky Pollard, product manager for Nuuly, said the rental newbie “certainly sees changes in our denim business.”
In Nuuly’s first six months, “the skinny was our tallest figure in denim, but over the past year it has gone down and the right leg has moved up to number one,” she told the Sourcing Journal. “We’re also seeing a much greater interest in balloon, bootcut and flare legs, proving that the client is moving away from skinny to more relaxed and fuller shapes.”
However, Pollard noted that the devil is in the details. âWhat’s very interesting and potentially a leading indicator of this change is the way denim silhouettes are praised by age group,â she added. âWe see Gen Z (18-24) have the lowest skinny penetration compared to other age groups, straight is by far their # 1 build and they get too much into flares, crop flares, bootleg and wide legs compared to millennials (25-39).
The rate for nightly dates also outperformed in April compared to the period a year earlier, Nuuly said, rising from 5% to 10% and signaling the return of outing fashion. In tandem, casual wear took the plunge; athleisure was down to just 1% of April rentals from 3% 12 months earlier, while casual wear fell 16 percentage points to 52% in the same year-over-year comparison.
Armoire founder Ambika Singh has also seen a decline in interest in “high sports recreation”. Because the rental start-up focused on the “boss lady” customer, it was never very present in items like sweatpants, she said, but even those kinds of styles. of stay falls out of favor. Demand for Cabinet’s services has fluctuated with the lockdowns, she said, and the Seattle-based company is leveraging its “responsive buying model” to drive out subscriber interests.
âWe don’t expect to be the pioneers or diviners of what fashion is going to look like,â Singh said of Armoire’s products, which span brands like Boden, Adrianna Papell, Of Mercer, Paige and Vince. Camuto. “We expect our customers to tell us what they like and that we will find it.”
And John Donoghue sees miles of trail ahead for the growth of single-brand rentals, which have seen momentum among brands scorched by the pandemic. Although the notion of single-brand rentals has long been plagued by the question of “cannibalization”, the head of CaaStle says the data is “extremely positive”.
Brand buyers who become tenants of that brand increase their overall multi-channel spend by 150%, says Donoghue, who leads corporate and business development for CaaStle, which has helped Express, Scotch & Soda and others to manage their own rental programs.
The conclusion may seem “counterintuitive,” he said, “until you realize how immersive subscription rental is as a consumer experience.”
In fact, Donoghue claims that the rental helps younger customers and “new customers” at advanced contemporary brands such as Vince and Rebecca Taylor “on its weight. The borrowing business model is a great “entry” for new consumers that these brands can “grow over time,” he added.
Some CaaStle customers have seen their subscriber base double or even triple since July of last year, despite the disruption of the pandemic in early 2020. âSubscription rental has proven to be a more resilient model during the last year. pandemic … that brick and mortar, âDonoghue said. So much so that CaaStle plans to create a rental market for “a few department stores” before the end of the year, he said.
And clothing rental, he added, could become even more relevant as many white-collar workers acclimatize to hybrid schedules. Consumers who dress for the office only two or three days a week might find “better economic value” by signing up for a rental program that keeps their wardrobes from going out of date, Donoghue said.