Jennifer Hyman, Lease the Runway
Scott Mlyn | CNBC
Lease the Runway hopes a brand new membership possibility will encourage much more ladies to purchase fewer garments, and switch to renting.
The clothes and accessories rental service is launching a two-swap plan, it introduced Tuesday.
Up till now, Lease the Runway had supplied two plans. There may be an infinite subscription, the place customers pay $159 monthly to borrow 4 objects at any time, swapping these out as often as they need in the course of the month. It additionally provides a one-swap plan, the place clients pay $89 month-to-month to have 4 objects directly that may be swapped on the flip of every month.
The brand new two-swap mannequin offers customers the power to (you guessed it) swap out 4 objects two occasions every month. It prices $135 monthly.
“We’re persevering with to push the envelop to make [Rent the Runway] as simple to make use of as doable,” mentioned Anushka Salinas, its chief working officer, in an interview. “You will proceed to see increasingly of that from us this yr.”
The corporate mentioned present clients have been on the lookout for a “center of the street” possibility. They didn’t essentially want an infinite Lease the Runway subscription, however wished greater than 4 items of garments or equipment every month.
The corporate expects a few of its one-swap customers will likely be upgrading to the two-swap plan, based on Salinas. Lease the Runway additionally anticipates gaining new clients with this launch, she mentioned. However there’s all the time the danger that a few of its limitless members may decide to downgrade.
Final yr, Lease the Runway acquired a brand new funding that boosted its personal market valuation to $1 billion. All advised, the corporate has raised greater than $330 million.
Its enterprise is rising as conventional retailers, together with Kohl’s and J.C. Penney, have seen ladies’s attire gross sales battle. Some retailers, together with Categorical, have even launched their very own related rental fashions to compete with Lease the Runway.
Lease the Runway has additionally expanded into new classes. It now rents ski gear, exercise attire and extra not too long ago formal Indian put on. It additionally provides purses, jewellery and residential items. And it has partnered with corporations together with Nordstrom, WeWork and Marriott International to place drop containers, for its clients to return their garments extra speedily, at a few of their properties.
However the development has not come with out obstacles.
Lease the Runway last fall briefly halted taking on new customers, citing kinks in its provide chain. Some pissed off customers noticed delays and even full cancellations of their orders. Lease the Runway mentioned it made an improve to its system to get again to enterprise as typical in October.
The corporate then introduced final month that it had employed a former Amazon exec, Brian Donato, to grow to be the start-up’s chief provide chain officer, taking the helm of Lease the Runway’s logistics and customer support. It has additionally added Mike Roth, a former vice chairman of Amazon’s North America operations, to its board.
“On the finish of the day, we’re a really giant logistics firm,” Salinas mentioned. “We have to proceed to give attention to this.”
Lease the Runway was named to CNBC’s 2019 Disruptor 50 list.