Innovation Insight is a new feature on the Colourworks Insights page. In these articles, we look at global businesses, products and ways that innovation makes a difference in their industries and helps shape the future. In this edition, our Marketing Manager, Cara-Ann Potgieter, gives insight into how Rent the Runway brought haute couture to the people.
Businesses that consider where customers will be in the future are geared for success. But if you play by tomorrow’s rules, it usually means you need to disrupt today’s market.
Market disruption refers to an innovation that makes such an impact that it interferes with a current, traditional market to form a new market. Many start-up businesses aim to disrupt a market, but very few get it right. We look at Rent the Runway and why we think this company’s unique business model could disrupt the fashion industry.
Rent the Runway was founded by Harvard Business School graduates Jennifer Hyman and Jennifer Carter Fleiss. The business idea came to Jennifer Hyman when her sister was attending a wedding and didn’t know if she could justify spending a huge amount of money on a designer dress that she would only wear once or twice.
“The world saw a dress. We saw an opportunity.” Rent the Runway
The American market is a place where designer fashion is highly-desired but very costly. While a few can afford the luxury, there are many who can’t.
Rent the Runway offers a subscription, allowing anyone to wear designer clothes without having to own them. Expensive haute couture now becomes available to anyone and a traditionally exclusive market is now democratised.
The business model revolutionises retail, aligning the high-fashion industry to the lives of ordinary people.
Within the first week, more than 20 000 people subscribed.
“A Netflix model for haute couture.” The New York Times
An innovative reservation system ensures that customers get the dress they want, when they want it. On-call stylists advise on materials, body types and the best fit. They have a 24-hour return and include a free extra size. To top it all off, they include a “fit kit”, including double-sided tape, bra strap adjusters and deodorant stain removers.
There are basically three stages in the customer experience:
- Raid your dream closet
Browse through more than 250 000 designer pieces as if you’re looking through your own A-list sized closet.
- Rent worry-free
Insurance is included in the rental fee along with a free backup size.
- Insanely easy returns
Drop your dress in a free envelope at UPS. Returns and dry cleaning are free.
With a holistic approach, making each business department as important as the rest, they sell more than a fashion or a subscription – they sell a culture.
“We’re in the fashion-technology-engineering-supply-chain-operations-reverse-logistics-dry-cleaning-analytics business.”
With 250 000 designer items, 300 partner designers, 5 stores, an app and an online store, it requires an operation extraordinaire to run this business.
Their business process is clear and simple:
- Partner with designers to expand the product offering.
- Engineer products to filter and navigate through the large amounts of data hosted on their site.
- Fulfil all orders at the fulfilment centre with quick turnaround time.
- Process, inspect, dry-clean and steam-press all returns.
- Learn from analytics to help inform change and new opportunities.
- Consumer-centric ideas drive market democratisation and could lead to disruption.
- A holistic business view creates space for comfortable growth. On Fridays the Rent the Runway team has a “meeting of all meetings” where they brainstorm solutions across departments.
- A successful subscription business model requires optimised navigation and easy explanations. Create simplicity through steps – and centre these steps around the consumer user experience.
- Incentivise users to generate content and build a community.
- Use data, content and community feedback to drive business insights and don’t be afraid to scale the business accordingly.
It’s been seen with various innovative businesses, including Uber and Airbnb, that if your business is adaptable to extend its business model to other offerings, it’s set for the future. Rent the Runway’s unique business model wasn’t aimed at changing an existing market. Rather, it sought to create a new one.
The experience is currently exclusive to America. All we want to know is… when does Rent the Runway South Africa launch?!