The Largest Dry Cleaning Facility in the World

In my previous blog post, I explored a few benefits RFID provides in terms of sustainability in the fashion industry. I also mentioned a few businesses and technologies that are supporting sustainability in the fashion industry and have the potential to curb the waste produced by the industry each year. One business that I mentioned is Rent the Runway. Rent the Runway is a digitally fueled clothing and accessory rental platform. The company has been providing women access to troths of designer clothing on a rotating basis for 10 years. Last month the company was the first company to go public with a Female Founder/CEO, COO, and CFO. 

Two years ago I got a free month of Unlimited Rent the Runway and was hooked for a few months. It was a perfect augmentation to my closet during the busy holiday season and for some trips I was going to take. The process was very easy. I used either their app or website, plugged in my sizes, delivery location, and was ready to scroll around and find four clothing items I wanted to try out. The clothes came in a branded garment bag and could be returned at any point and I could return one, some, or all of the clothes to a UPS location at any point during the month and could place a new order an unlimited amount of times. 

Recently, I placed my first order on Rent the Runway in almost two years. I looked through the membership options and noticed that there is no longer an Unlimited subscription available. Today they offer different subscription levels with between 2 and 4 swaps per month with 4 items per order. After seeing this change I wanted to see what caused this change. Was it because of the pandemic? How did Rent the Runway do during the pandemic? A clothing rental business highlighting high-end designers meant for the office, weddings, events, and more does not seem pandemic friendly. Lastly, I looked at the business through a digital transformation course lens. How did they know what size would fit me, how were they serving up my outfit suggestions and how did they deliver me the items the following day? 

According to the CEO, Rent the Runway hit a subscriber low in May 2020. The vast partnerships with businesses such as West Elm (where I originally got my free months of RTR) and WeWork for drop-off locations came to a halt in early 2020. The company offered an indefinite pause for customers in hopes they would return. Rent the Runway also closed 5 retail stores and laid off many employees as a result of the pandemic. Just a few months later, the company announced the end of the Unlimited Subscription plan. This decision was said to be in the works before the pandemic started. RTR leveraged user data to drive this decision. The change supported tighter control on costs, promotes faster deliveries to customers, and is an even more sustainable option than Unlimited. The company saw that 80% of new joiners during Covid were renting four to eight items per month. The new subscription pricing options are lower and provide customers an opportunity to pay per usage. Customers are now more likely to be paying for what they are using, while the company can save on cost and decrease waste, emissions, and is a more environmentally friendly option. As of this summer, RTR saw subscription levels at about 60% of pre-pandemic levels. I am sure this has ticked up even further with people going back to the office like myself!

How does the whole process work? RTR processes clothing through a multi-step process in their central hubs. Items are bagged and barcoded into the RTR computer system and the stock can be sorted whether or not it is being sent back out the next day. 60% of items are sent back out the same day. A fun fact- Rent the Runway hosts the largest dry cleaning facility in the world located in New Jersey. Leveraging the technology in-house allows for the process to move efficiently. Logistics are of extreme importance to the company and this allows for me, the customer, to receive my shipment in swift timing.

Rent the Runway says its 250,000-square-foot warehouse in Secaucus, N.J., is the largest dry-cleaning facility in the world

When a customer joins RTR, she can provide data on her height, weight, usual sizes, style preferences, and more. A customer can “heart” items and filter whether the item is available right now or not. Users post reviews of the items including pictures, how they describe the fit, and their measurements. This is extremely helpful to see how other people styled the items as well as how it fits on real women. The company leverages data to provide customers with exactly what they are looking for and is able to pivot to different trends that arise. One example is an increase in demand for crop tops four times the amount the company saw in 2019. RTR is also seeing a demand for more daring fashion choices and will use the information to better provide for their customers. The founder and CEO Jennifer Hyman sees opportunity after the pandemic where women are looking to make the most out of each moment and want her style to reflect it. The company has stocked more bold and out-of-the-box items on their site as a result. Many competitors have cropped up over the years as the market for rental wear has grown. Rent the Runway must continue to leverage technology and provide a superior customer experience in terms of logistics, clothing options, and customer service to continue to compete. 

In my opinion, the growth of the rental market has been exacerbated by social media. Many people “do it for the gram” and do not want to be seen wearing the same thing twice. Millennials and Gen-Z also want designer brands without paying at that price point. Closet space and sustainability are also a factor. I believe there is an opportunity in the rental space for house decor, dinner party accouterments, and serveware, as well as menswear.

The value of my rental last week was $1,273.00 … crazy!

While I have tried a few different clothing rental services over the years I find Rent the Runway to provide the best experience with the fastest logistics. Have you ever used a clothing rental service? 

3 comments

  1. bengreen123 · ·

    Great post. I also touched on rental services in my blog but I didn’t really consider this. There are a lot of new and good sources of passive income popping up. Maybe I should rent out my tux or start a service that allows me to.

  2. Tanker 2 Banker · ·

    I forgot about this service, so thank you for giving a great post explaining it. I hope they do add a menswear option and if they do I would consider subscribing. Interestingly, this coincides with a CNBC video that discusses the rise in buy-now-pay-later companies like Affirm which allows consumers to pay over time for purchases, large or small. In a way, it is similar to RTR by providing a new method for accessing high end goods and services without the use of credit debt.

  3. Christina S · ·

    I was also wondering as I read this if they will branch into menswear – seems like a huge untapped market! As a RTR user, I found this super interesting. I was curious how the pandemic would impact them. I was also surprised to learn about the dry cleaning!! That makes sense, but towards the end of my subscription pre-pandemic I was starting to become really dissatisfied with the cleanliness of items. RTR was always very responsive in offering new items or giving me a credit, but my frustration was more that it happened in the first place and I couldn’t wear a particular piece to an event as planned. I hope that the pandemic gave them an opportunity to take a look at that process and revamp it, and wean out clothes that are past their useful life.

    Speaking of “useful life” – for my fellow accounting nerds, RTR IPOed with some unique accounting that doesn’t include product depreciation. Surprising for a company whose product most certainly depreciates and perhaps even does so on an accelerated basis, but that’s a discussion for a whole other class!

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