Luxury fashion rental companies have become unlikely allies for designer brands.
Platforms like Rent the Runway, armed with data on what their customers like, are working with high end brands to inform their collections of luxury dresses, accessories and outerwear. Some items on Rent the Runway are even designed exclusively for the platform, where customers can rent them for 10 to 20 percent of the full retail price.
If a designer collection isn’t eye-catching enough, or trendy enough, Rent the Runway will consult with the designers in order to get pieces custom-made specifically to appeal to the company’s customer demographic. Sarah Tam, Rent the Runway’s svp of merchandising, works with labels like Tanya Taylor, Jason Wu, Marchesa and others to guide them in designing more rentable pieces.
Even in a sharing-obsessed economy, after all, customers won’t be renting their entire wardrobes. So, they pick out designer items that are trending statement pieces, like a patchwork peacoat from Tory Burch, or a sequined floor-length gown from Badgley Mischka. The Rent the Runway customer likely already owns the standard black blazer or pair of cropped trousers, but she’ll borrow the eye-catching pieces to pair with them.
“Our customer is different than the core customer the designer is serving,” said Tam. “We may ask designers to change the hem line, or the type of sleeve, or to offer a black dress in a brighter color or print, all based on what our customer likes. The brands work with us to really understand what she’s looking for.”
Rent the Runway also reports back to designers after their items have been rented and reviewed to give a better understanding on how items fit, what customers did or didn’t like about them, and whether or not they’re likely to buy them in the future.
“When you’re able to get information on what customers are renting, that’s really valuable to a designer who’s trying to understand and nail down their new consumer,” said Neda Whitney, managing director at R/GA. “It’s more data than they would get on their own.”
For the designer, that valuable customer data can justify the additional work required to make or change items for the millennial-minded Rent the Runway customer. But the accessibility of Rent the Runway’s collections (a $400 dress can be rented for $40, for example) puts designers in front of an attractive customer: the millennial woman who’s still figuring out which brands she’s loyal to. As Tam put it, “brands are very keen to reach a millennial customer, and we know what she likes. We have 5 million of them.”
Working with a company like Rent the Runway is also a way to get a piece of the sharing economy, which generates about $15 billion in annual revenue, according to PricewaterhouseCoopers. The figure is expected to balloon to $335 billion by 2025.
“Designers are smart to think about how they can make particular looks more wearable for this customer,” said Whitney. “Some high-end looks aren’t wearable for a broad demographic, so designers are capitalizing on the Rent the Runway partnership to fill that void.”
Whitney said that when looks are slightly altered for Rent the Runway, the designer wins on two fronts: it builds brand awareness by getting its products into the hands of more customers, and it manages to do so without undermining its allure.
“If you’re creating specific styles for Rent the Runway, it doesn’t hurt the main business,” she said. “You can rent a similar style, but if you want the real thing, you have to go to the brand itself. And if you’ve rented one item and liked it, you’re more likely to go back and buy it.”
Armarium, a luxury rental marketplace appealing to a slightly older and more affluent market than Rent the Runway, also considers itself a “try-then-buy” platform for brands. But rather than working with designers to build collections around the customers’ preferences, Armarium works with designers to make their least commercially viable pieces available to consumers: the statement-making runway looks that buyers didn’t want to take a risk on.
A dress available to rent on Armarium.
“We want to give people access to these one-hit wonders, the pieces that are typically only available for A-listers. We’re a place of discovery for our customer because we might be the only outlet that has a certain piece,” said Trisha Gregory, CEO and founder of Armarium. “Designers see us as a customer acquisition channel and a marketing tool.”
Gregory said that Armarium isn’t out to cultivate a “rental customer,” but instead hoping to convert renters into buyers later on. It also recently announced a partnership with Net-a-Porter that adds links to products for sale on the e-commerce site that complement a rental item, and, similarly to Rent the Runway, shares consumer feedback and data around how certain items were received.
Meanwhile, earlier this year, Rent the Runway debuted its Unlimited service, digging its heels into the promise of the sharing economy, and the idea that people want to add new, temporary pieces to their wardrobe on a daily basis, rather than for special occasions only. The company projects that by the end of the year, Unlimited will account for 20 percent of their annual revenue.
“The mindset around the sharing economy has changed, and [our customer] is comfortable with it,” said Tam. “Clothing rental is the natural next step, and designers are benefitting from the information we give back.”