If you believe Jennifer Hyman, CEO of Rent the Runway, her company is a major disruptor in fashion. It rents out designer clothes from some 500 different brands to subscribers who pay a monthly fee, allowing them to borrow a high-end wardrobe for much less than it would cost to actually buy. The company has thrived, topping $100 million in revenue last year and becoming profitable for the first time.
One particular segment of fashion retail should be afraid, Hyman says, and that’s fast fashion. “I plan to put Zara out of business,” she told Glossy after Rent the Runway announced a new, lower-priced subscription plan that will make the service accessible to more customers. The new $89 plan allows subscribers to borrow four items per month. The standard plan, which offers unlimited items per month, is increasing to $159, but now allows customers to borrow four items at a time, rather than the previous three.
The narrative of Rent the Runway’s narrative as a fast-fashion killer (paywall) is one Hyman has been pushing for some time. She raised the point last year, for instance, when speaking with Quartz about a partnership the company established with Neiman Marcus. As Hyman sees it, people shop fast fashion for trendy items, while they invest more in classic wardrobe staples that they’ll keep for years.
It makes sense, then, that people would prefer to rent fleetingly fashionable items instead of buying them. Consumers are also increasingly open to renting what they want through a service, rather than owning something outright. Think of the way streaming services such as Spotify have changed the music industry and eliminated the need to actually own the music you listen to.
But there’s more than a little hyperbole in Hyman’s comments about putting Zara out of business. For starters, Zara pulled in €15.4 billion (about $18.1 billion) last year, across 93 global markets. Rent the Runway’s revenue, while growing fast, is still a drop in a bucket that size—and the company only operates in the US. According to research firm NPD’s Checkout Tracking data on e-commerce apparel, which analyzes actual spending by consumers who have opted into their panel, only 5% of Zara’s US online buyers also subscribe to Rent the Runway.
Still, Rent the Runway’s success does raise some questions about the future of shopping: Could clothing rental, including Rent the Runway and the growing crop of similar businesses, steal enough customers from fast-fashion brands in the US to make a noticeable dent in their sales?
Read more at Quartz.