Shannon Stapleton | Reuters
Rent Runway is overhauling its membership plans, doing away with an unlimited rental option, as consumers change what they wear and how they buy clothes during the coronovirus epidemic.
CEO Jane Hyman said the changes have been made for about 18 months even before Kovid-19.
However, the epidemic has accelerated many decisions and investments that the company is making. It announced plans last month to permanently close its plans, focus on digital and expand its network of drop boxes.
“There is definitely going to be a segment of unlimited users who are very upset about this decision … and it’s not a decision we’ve made lightly,” Hyman said.
The unlimited option allowed Rent Runway customers to pay $ 159 per month as they wanted to exchange as often as they wanted, so long as they only had four items at once. Now, they can choose from plans that offer four, eight and 16 items each month, with the ability to add additional pieces for an additional fee.
“We have seen that 80% of people have joined us through Kovid and are choosing four or eight items per month,” Hyman said. “We think it is important for members to pay for their use. Paying per use is also an economically viable decision. [us] Long term. ”
According to Hyman, this switch should help the runway keep strict control over its costs and ensure rapid delivery to all customers. She also sees an environmentally friendly move by cutting carbon emissions with reduced shipments and less plastic packaging.
As it sunsets its unlimited options, here’s what the fare is going to offer customers:
- Four-item plan for $ 89 per month, with access to a thinner version of items including casual and work wear
- An eight-item plan for $ 135 per month, with access to rental runway inventory, including formal wear
- 16-item plan for $ 16 per month, which equates to four shipments of four items each month, with access to all of its inventory
Rent Runway stated that 6% of its unlimited customers are exchanging more than 16 items per month and 70% of its unlimited members are actually renting less than eight items per month. The company is suggesting that many current users will be able to save money by swapping in new plans.
According to Hyman, after the initial decline in subscriptions at the start of the epidemic, the business is starting to take off – a subtle signal that consumers have to remodel after months of living in pajamas and sweatpants.
“August is usually a slow moment for us, but in August we saw a really strong momentum in acquisitions and both in business … people who were on break and then started coming back in really large percentages.” he said.
She said that women too have started renting more formal dresses to go back to weddings, parties and other social gatherings.
“I think it’s an incredibly difficult time to lead a business because of the amount of uncertainty,” Hyman said. “But what has forced businesses like Rent the Runway is accelerating plans … from a gross-margin point of view. We are a lean-lean business.”
“I think a good company thinks about surviving through an epidemic,” she said. “A great company thinks about how you can grow the business to a more strategic location because of this epidemic.”
The rented runway has raised renewed financing during the epidemic, but gave importance to its start below the so-called $ 1 billion valuation, losing its so-called unicorn status. It has so far raised $ 380 million in equity.
Rent Runway’s new membership structure to debut next week, the company told customers on Thursday. It states that the existing unlimited members will have until the beginning of next year to withdraw from their plan before choosing a new scheme.
Fare runway is five times Cnbc disclaimer 50 Company, recently Ranked number 5 In the 2019 list.