Can Innovative Retailers Avoid Rent the Runway’s Growing Pains?
Ten years ago, the idea of renting clothing seemed quite outlandish, but a lot has changed in a decade. Fashion rental pioneer Rent the Runway has achieved unicorn status and been valued over $1 billion. One recent report suggests the garment rental market will double and reach $51 billion in the US over the next five years, growing almost five times faster than the wider clothing market.
In the next few years, there will be new business models and technologies that retailers want to adopt, and they need to be prepared for that from a technology perspective. And successful expansion means adding technology and complexity without disrupting your current business.
Why this trend is here to stay
In part, the appeal comes from a public interest in terms of sustainability and closing the loop for a circular economy. For others, simply having access to beautiful clothing that would ordinarily be out of budget. And for a new generation who may never own homes, the concept of ownership is changing. Millennials are less interested in owning pieces forever – a little while is enough. In addition, people may be more likely to invest in a pricey item if they knew they could get a significant portion of their investment back.
Combining rental subscriptions with a physical location has the potential to capture more revenue as consumers buy clothes in addition to their subscription, and may also help reduce serial returns problems, giving traditional retailers even more incentive to try it out.
The importance of seamless innovation
Rent the Runway recently opened a second 300,000 square foot fulfillment center in Texas, and presumably required a technology upgrade. This is not the first time Rent the Runway makes logistically significant changes. In 2017, the company went from an online-only business to opening five locations, which enabled them to offer customers personalized attention and services. Having physical stores as touch points for customers to come in, pick up and drop off also reduces shipping costs.
But the company landed in hot water this time when a new warehouse inventory system transition did not go as smoothly as expected, and customers did not receive their garment in time for an event. Delivering on time is part of the company’s brand promise, which makes the stakes much higher than other rental services.
The short-term damage was enough to make the CEO issue public apologies, subscription refunds, and $200 in cash to those affected, and to stop taking on new customers until mid-October. RTR’s truly innovative supply chain is certainly more complex than most, and was bound to experience some growing pains. But the breakdown underscores the need for retail technology platforms which are designed to implement innovation seamlessly.
As more retailers look to adopt different business models, it’s important to have a retail technology platform that is agile and configurable enough innovate incrementally and adapt to innovation seamlessly.
To find out how Openbravo Commerce Cloud makes it easier to expand and implement innovation, watch our on-demand webinar by Openbravo COO, Ismael Ciordia, Innovate faster and boost retail business agility with the Cloud.
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