Rent the Runway uses AI to make a comeback

ALL GIRLS KNOW THE DILEMMA.

Okay maybe not all girls. But broke girls like me.

You have an event. Not just any regular-degular event, though.

Maybe it’s a wedding. Or maybe it’s at an extremely classy venue you have no business being at. Maybe your ex AND your ex best friend are attending.

M-me? Speaking from experience? HAHA, pshh, never.

ANYWAY. You have nothing to wear in your closet that fits the brief, and your salary does not cover designer dresses. Particularly not one you’re only going to wear to a singular event.

If only there was some kind of service…

Oh wait. There are TONS.

And it’s all thanks to one business that started it all.

Rent the Runway was founded by Jennifer Hyman and Jennifer Fleiss in November 2009.

They met at Harvard Business School, where they would hang out and talk about ideas. But the concept for the company came about when Hyman and her sister were talking about a wedding her sister was attending. She ended up spending a ridiculous amount of money on her outfit.

When asked why she would spend so much, her response was that she didn’t want to be photographed in something she had worn before.

Which seems insane, but also makes total sense to me at the same time. Because I know I’ve done this exact same thing.

'I realised I was having a conversation with my sister about the experience of wearing an amazing dress - of walking into a party feeling self-confident and feeling beautiful, and that's what she cared about. And she didn't care about the actual ownership of the items in her closet,' recalls Hyman.

Hyman realised that feeling confident in a beautiful dress was an experience she could commoditise.

Originally launched as an e-commerce company, RTR then opened brick-and-mortar stores in all the major cities, including New York, Los Angeles, San Francisco, Chicago, and Washington, D.C.

By 2016, RTR had over six million customers, 400 designers offered on their site, and almost 1000 employees.

How the hell does one afford that many designer dresses? Well, that’s where a huge part of their genius lies.

Rather than buying dresses to stock its warehouse, Rent the Runway chose to partner with designers. This meant their designer partners could help them stock what was currently popular.

RTR also worked with up-and-coming designers to help them with exposure.

But their most innovative move was putting together a fit guide.

This guide helped their customers figure out what styles and shapes will look best on them. And it's something that's now commonplace on many fashion sites.

Over time, RTR branched out to begin serving the teen and college market. They then branched out again, into athleisure. The company did everything right.

However, in 2020, Rent the Runway saw its revenue completely dry up due to the lockdowns.

The company laid off its entire retail staff and cut its costs by 51%. During the pandemic, RTR’s job listings took a decline of 83%.

COVID blew apart RTR's business model. And the rental pioneers/ our event heroes/ girl-girls of the century were quiet for some time.

But wait!  This is not a defeat story! Strong women do not give up that easily!

Earlier this year, the fashion rental service announced they had hired Natalie McGrath as their CMO. For context, this is the first time in years they'd had a dedicated marketing leader role.

McGrath is the former VP of Marketing at Afterpay (so she knows her sh*t). She's worked in marketing at retailers including Boohoo Group, Coach and Alexander Wang. And she plans to build a marketing team that will move fast to tap into cultural trends and customers’ fluctuating behaviours.

In hiring McGrath, the company hopes to expand its customer base and return the brand to cultural relevance. 'This is really about refocusing on growth, which we certainly have not been doing over the last few years,' Hyman said.

But hiring a dedicated CMO isn't the only move the online retailer's made recently.

Rent the Runway's just seen a massive turnaround after their decision to lean into AI. 

The company’s stock quadrupled in April, hovering at around $5 per share, before leaping to $20.

This jump came after the company began testing an AI search feature that generated product listings based on search terms like 'Miami vibes.'

'[AI] is the biggest thing to happen to consumer-facing businesses since the launch of the iPhone,' Hyman said. 'You’re either going to be a beneficiary of AI as a consumer-facing company, or you’re going to die because of AI. Fashion overall is going to benefit.'

So what can we learn from Rent the Runway’s ups and downs?

Create smart partnerships.

Instead of buying inventory, RTR partnered with designers to stock its warehouse. This allowed them to offer a wide range of designer dresses without the massive upfront costs.

So identify potential partners in your industry who can provide complementary products or services. Collaboration can reduce costs, expand offerings, and provide valuable market feedback. Plus, it’s super cool to support other businesses in your community!

Focus on customer-centric innovation.

Rent the Runway introduced a fit guide to help women choose styles and shapes that suit them best, which enhanced customer experience.

So think about what tools or features will directly address your customers' pain points. This may be detailed guides, personalisation options, or enhanced customer support to improve their buying experience and satisfaction. Your customers will love you for it!

Let’s hope the positive momentum keeps going for them. I know I’m rooting for their success! Why? Because women support other women in business, okay! 

No tall poppies over here.

-Sophie, Writer