AT ABOUT 4.30am the first of thousands of black garment bags arrive by truck at a vast warehouse less than ten miles (16km) from Lower Manhattan. The bags brim with designer dresses and other trendy clothing and accessories. Workers begin inspecting the garments. A billowy, patterned blouse smells a bit ripe. A floor-length red gown has a tear. A stain sullies the floral pattern of a silk sundress.
Turnaround is quick. The blouse is sent to washing machines, the gown goes to one of the 75 seamstresses lined up next to a wall of thread, zippers, buttons and other adornments in every imaginable colour and the silk dress makes its way to the “spotters”: experts who know how to get tough stains out of delicate fabrics. Most items are in and out in less than a day.
Such efficiency is essential for Rent the Runway (RTR), a New York-based, privately-owned startup with a value of almost $800m that rents out clothes, handbags and jewellery. Its dry-cleaning warehouse is the world’s biggest, processing 2,000 items per hour. RTR started with formal dresses that women rented for weddings and other events. Now nearly three-quarters of its 9m clients across America use it for work clothes. For $159 a month, its “unlimited” and most expensive plan, subscribers can rent four items at any one time.
Constant novelty seems to outweigh the “yuck” factor of wearing something that rubbed against someone else’s skin not long ago. Some two-fifths of American women who have heard of the service (or any of its younger competitors) say they would be willing to rent outfits. Renting a ball gown when an occasion arises runs at about a sixth of what it would cost to buy it. Cleaning and insurance for minor damages are always included.
To lure more customers, RTR has opened bricks-and-mortar shops in New York, Chicago, San Francisco, Los Angeles and Washington, DC. Foot traffic is up by 80% from the same time last year, says Anushka Salinas, who oversees sales. The firm had revenues of over $100m in 2016, the latest year for which it gives numbers, and says it is profitable at the level of operating earnings. At the Manhattan shop at 9am on a Wednesday, two women in their twenties explain that they often drop in on their way to work to pick up clothes to wear that day and change at the office. Another young woman who chooses casual outfits for the weekend says her subscription is a money-saver because she has stopped buying clothes.
Customers do have niggles. Sometimes monthly subscribers receive frocks that have not been pressed or cleaned. A bridesmaid’s dress rented by Reagan Sims, a customer in Washington, DC a couple of years ago worked well. But more recently a dress she ordered for an annual ball that she organises came in a size she could barely squeeze into (RTR gave her a full refund).
Another snag can be shipping. RTR has a strict policy for non-returns, charging customers a late fee of $50 per day after a 24-hour grace period. These charges accrue and can match the retail price. Late arrivals are another headache for customers, as well as patchy inventory. Ms Salinas admits that when RTR introduced its subscription services it did not have enough inventory to meet demand. RTR has since scaled up its supply, and there are now hundreds of units of each style and size.
Other brands are expanding upon RTR’s model. Christine Hunsicker, co-founder of Gwynnie Bee, a RTR rival with a niche in plus-sizes, is launching a service for conventional retailers looking to rent some inventory. The deal includes the digital technology, cleaning and warehousing services needed to run a clothes-rental business. Several American clothing brands, including Ann Taylor (popular for business attire) and NY&Co (a fixture in shopping malls) are testing the package. Rakesh Tondon, the boss of Le Tote, another rental startup, predicts that more retailers will launch rentals in the next five years as they see the potential.
Jennifer Hyman, RTR’s chief executive, once said that she wants to put Zara and H&M, the giants of high-street retail, out of business. She is nowhere near that. But her clothes-renting model looks more than just the latest fad.