The pandemic cramped Rent the Runway’s style—but here’s how the company is fashioning a comeback in 2021

The pandemic has wreaked havoc on the style trade, and clothes rental service Rent the Runway has actually felt the squeeze. Earlier in 2020, the New York City-based firm considerably reduce prices by instituting layoffs and shuttering its handful of brick-and-mortar shops, amongst different measures. That stated, co-founder and CEO Jennifer Hyman has large hopes for a stronger-than-before comeback in 2021—and for various seems to be to develop into fashionable after a prolonged interval wherein folks have been trapped inside carrying sweatpants and T-shirts. What’s extra, she’s much more optimistic about Rent the Runway’s future now that the corporate has been compelled to exist with a lot decrease income. “What was great is that it [the pandemic] accelerated a movement towards being a much higher margin business, and it accelerated our path to full profitability,” Hyman advised Fortune in a current interview which came about over, what else, Zoom. “It brought a lot of the metrics that we were aiming to accomplish in 2023, into 2020 or 2021.”

Fortune spoke to Hyman about what the New Year holds for Rent the Runway and the broader vogue and retail trade—plus the long run for feminine entrepreneurs resembling herself.

This interview has been edited and condensed for readability.

In what methods has COVID impacted your enterprise, accelerated sure developments or compelled you to do issues otherwise?

We’d already seen that about 90% of the transactions in our retail shops had been really clients coming in and choosing up their subscription order or dropping off their subscription order. So primarily 90% of the experiences weren’t about vogue discovery, they had been about first-mile and last-mile supply the place the shopper was wanting extra frictionless delivery expertise. So I’d say that COVID accelerated the choice that we made to shut our retail shops, however to develop our pick-up and drop-off bodily footprint across the nation. 

Another factor that was within the works is altering our membership packages, from being all-you-can-eat to a pay-as-you-go sort of mannequin. The objective has at all times been to create a extra personalised subscription program, the place folks might flex up or flex down their utilization primarily based on what was happening of their life, and that will correspond to flexing up or down the worth that they paid. Thank God that was within the works previous to the pandemic as a result of, clearly, folks have had much less use circumstances for carrying garments in any respect this yr.

Also, I believe that we now have seen a dramatic change throughout the board, in commerce throughout all classes. In vogue, that change has been much more dramatic, as a result of vogue was far more behind by way of on-line penetration and different classes. The pandemic has accelerated adoption of on-line and discovery on-line, which is improbable for us. It has additionally accelerated the elemental imaginative and prescient and mission of Rent the Runway: To construct a round platform and a closet within the cloud. I believe that popping out of the pandemic, which is likely one of the few instances in current historical past the place the entire world goes by means of the identical factor, on the similar time, everybody on this planet goes to be a way more aware client by way of how they give thought to well being and sustainability, and the way they give thought to the monetary affect of their choices. Our enterprise has at all times been about shopping for much less stuff in favor of with the ability to entry no matter you wished, having a wardrobe on rotation, however not having to build up dozens of things that you simply don’t want. Secondhand clothes is now utterly regular. 

You’ve talked about that, from the start of the pandemic, you didn’t imagine vogue would make a restoration till a vaccine was extensively out there. Are you assured that vogue will make a full comeback at any level, even then?

I believe the again half of 2021 goes to be the perfect second in time for the style trade that I’ve seen in my profession. Fashion is about self-expression, it’s about displaying up on this planet as you need folks to see you. And I believe that within the again half of subsequent yr, once we’re capable of rejoice, we’re capable of take holidays, we’re ready to return into the workplace, individuals are going to need to present up in their very own lives with ardour. And as that corresponds to vogue, I believe that individuals are going to be carrying bolder outfits, they’re going to care about being observed. I’ve advised our chief service provider that from May 1 [2021] onward, each single article of clothes that reveals up on the Rent the Runway web site, I need it to be an article of clothes that nobody would have ever worn in 2020. If you’d have worn the merchandise throughout this yr of COVID, it shouldn’t be a part of Rent the Runway. 

By the best way, I don’t suppose that individuals are going to return into the workplace 5 days every week, I believe they may return into the workplace two days every week or three days every week. But even with that, I believe once they do present as much as their lives within the workplace, they’re going to indicate up wanting prepared for his or her “boss” second. On the opposite two or three days every week, once they’re sitting at house, they’re now not going to be locked of their home. They might really meet a colleague for lunch and exit and seize a espresso. So you’re not going to be working from your home in sweatpants and a T-shirt anymore. People aren’t going to be dressing like they did in 2020. Again, vogue is about self-expression. No one needs to be in the identical way of thinking in 2021 as we’ve been in 2020. We have to maneuver ahead. 

On the subject of a return to the workplace: What might that appear like for Rent the Runway? 

Our personal plan is to lean into flexibility. We’re solely going to require our staff to come back into the workplace two to a few days every week. So we’re not leaning into absolutely distant, however we’re leaning into flexibility. And we predict that’s a significant change from how we’ve operated prior to now.

We’ve seen how productive everyone seems to be from wherever. The purpose why we do need folks to come back in two to a few days every week, is as a result of our enterprise is so collaborative, it’s a lot about neighborhood. I believe that, basically, folks keep at firms the place they’ve enjoyable, and the place they benefit from the folks they work with. And while you go into a totally distant atmosphere, and also you don’t take pleasure in falling in love along with your colleagues and the tradition of that group, your job is only a job. Think of the switching value of transferring from one firm to a different firm [in a fully remote environment]—it’s similar to shifting from one zoom display screen to a different. 

If you had been beginning Rent the Runway at this time, throughout the pandemic, what would you’ve gotten carried out otherwise? Would you’ve gotten even began it within the midst of all of this? 

When we launched Rent the Runway, it was in the course of a recession. A recessionary atmosphere is a superb atmosphere for Rent the Runway, however a pandemic is a horrible atmosphere. Fashion is predicated on social interactions, whether or not these social interactions are taking place at work, or they’re taking place in your private life. If you’re spending a day alone, you’re probably not going to dress for the day. So I’d say that whereas the pandemic goes to result in an unbelievable quantity of innovation for a lot of totally different causes, I believe that innovation because it pertains to vogue specifically, isn’t going to occur till we’re in a post-pandemic world.

Once we’re there, if demand does enhance fairly shortly as a result of individuals are able to exit and do the issues that they actually miss doing, do you’re feeling assured which you could ramp again up by way of staffing—with regards to logistics and customer support and every part else?

Yes, sure. I imply, it’s difficult. This is a little bit of a hyperbole, however as difficult because it was to go from, like, 1000 to zero during the last 9 months, it’s going to be 10 instances more difficult to go from zero to 1000. What we’re seeing proper now, if you happen to name wedding ceremony venues, as an example, is that weddings are being booked 5 nights every week within the again half of 2021. I used to be simply on a name with the CEO of a journey firm they usually stated the quantity of bookings that they’ve for the summer season of 2021 is equal to what they’d in 2018 and 2019 mixed. People are able to go on trip once more, they’re able to go to eating places, they’re prepared to indicate up at a celebration, they’re able to reside. Our enterprise thrives in these sorts of environments. When individuals are busy, they’ve loads happening of their life. And Rent the Runway is a brilliant, environment friendly, superb strategy to dress, to have selection in your wardrobe. So at present, each single space of the enterprise is concentrated on May. I don’t really even care what occurs over January and February, which I believe are going to be our two worst months because the starting of the pandemic.

So we’re actually targeted on how will we present up in May. We have big restoration plans by way of advertising, operations, and customer support. I imply, to go from X variety of shipments to what we predict will likely be in a four-week interval, doubtlessly 5 or 10 instances the variety of shipments that we now have at this time, ramping as much as what is perhaps 20 instances by the top of the yr. It is a ramp that that we’ve by no means needed to do. In the previous, development was incremental, and you can plan for that. This is totally different. Because we don’t know the depth of how the restoration will happen, we’re doing the perfect that we will. But it’s onerous to scale any logistical infrastructure as shortly as what we imagine this ramp is perhaps. 

Can you give an instance of one of many steps you’re taking to raised place you for that anticipated, quick ramp-up of demand?

One of the issues we’ve carried out is we’ve basically modified how we take into consideration customer support, which is one thing that was once troublesome to ramp as a result of we had a customer support crew that was sitting in a bodily location, working a selected shift. We discovered that in COVID, when our crew went absolutely distant as a result of they needed to, our customer support scores really rose to the best ranges that they’ve ever been within the final 11 years within the enterprise. This occurred throughout one of the crucial troublesome instances for the enterprise. At a time the place individuals are extra prone to complain, we’ve had the best customer support satisfaction that we’ve ever had. And that’s as a result of our customer support crew is extra productive, happier, and has a extra versatile life-style. That additionally means we’ve been capable of ramp up hiring now from wherever and all over the place. We don’t have to only rent folks that reside within the Dallas space, or within the New York space, we will rent customer support expertise from everywhere in the nation. So we’re discovering far more numerous expertise swimming pools, and subsequently it’s enabled us to scale and ramp the crew with rather more pace than prior to now. 

I additionally need to ask you about what we’re seeing with funding {dollars} going to feminine entrepreneurs. There was a large lower on this quantity in 2020. We are additionally seeing lots of scrutiny of feminine founders. Does this concern you? Do you suppose this recipe can result in a longer-term regression in funding going to feminine entrepreneurs?

The information right here speaks for itself. Institutions, whether or not these establishments are enterprise capital corporations or non-public fairness corporations, and even the media, have much less confidence in girls than they’ve in males. This is not only about feminine founders, it’s about us as a society having much less confidence in girls. When issues get tough, we go to the default reply, which is a white man. We’re like, okay, there are extra examples of white males being profitable prior to now, so let’s make investments the place we all know that it’s going to be a winner. And what we think about to be extra of a dangerous asset class, and girls are actually in that class, we transfer our investments away from these dangerous asset courses. 

I wrote a chunk that I posted on LinkedIn, about one of the crucial transferring experiences in my total profession. So I sit on the I sit on two public boards, I sit on the board of Estee Lauder, and I sit on the board of Zalando, a $20 billion ecommerce enterprise in Europe that sells vogue. It’s based by three guys who’re my age, they usually based it 11 years in the past, similar to I based Rent the Runway 11 years in the past. One of the founders, Rubin Ritter, determined to step down. He made a public assertion that he had determined to spend extra time together with his household, which is completely regular. Everyone says that. But assertion quantity two was, “I’ve spoken with my wife, and we have decided that her professional ambition should take priority in this next phase of our life.”

It principally indicated to the world that due to his huge success during the last decade, that his spouse has needed to deprioritize her skilled ambition, that she was inevitably the one of their house and of their household who was carrying extra of the load. This instance is occurring in each house in each couple internationally, the place folks get married. The one that is incomes extra naturally will get prioritized. It’s not that males are discriminating towards their wives. It’s that we don’t have pay parity and since, even between the ages of twenty-two and 32, girls are making much less cash in much less senior positions. When that pure distribution of labor occurs in your loved ones, it’s the rational resolution to prioritize the one that earns extra, which in 90% of the circumstances goes to be the person. 

So the truth that this occurred, that Rubin stated publicly, “I want to prioritize my wife’s professional ambitions,” it was one of the crucial transferring moments of my total profession. I began tearing up in a board assembly after I heard this, as a result of if this was carried out with extra frequency, it might really be a lever that modified the state of affairs from girls. You know, it’s not the one lever. But it’s one thing that we simply must say out loud. That’s an instance of one thing actually constructive that I’ve seen. 

Another constructive factor is that, I believe due to the pandemic, we’re going to see extra girls enter the C-suite and keep within the C-suite than ever earlier than. So whereas this [COVID] has been devastating for ladies who’re junior or mid-level of their profession, for ladies on the prime, the pandemic is the perfect factor that ever occurred due to office flexibility. In a world the place I’m not anticipated to do as a lot enterprise journey, as a result of now lots of these conferences can occur over zoom, and in a world the place I solely have to come back into the workplace two or three days every week and I can prioritize working from house the opposite days of the week, this may naturally be an atmosphere the place girls will be capable of have extra of that stability that they want and that they need. Because even girls who’re extraordinarily profitable nonetheless taking up extra duty of their house life and of their household life. So I believe that we’re going to see far more girls capable of have C-level jobs and be tremendous profitable in these jobs, as a result of the necessities of what it takes to be a C-level govt is basically altering.

One final query: Do you see any state of affairs the place you’d dabble in brick and mortar once more?

I believe bodily retail is a really inefficient factor to scale. I imply, even when we had been in each metropolis, across the nation, lots of our clients reside in suburb. In rural areas, they don’t have entry to the bodily places. So I simply I believe that whereas there is perhaps a world wherein we’re again into bodily codecs sooner or later, I believe they’re going to tackle totally different attributes, not only for Rent the Runway, however for everybody in commerce. A bodily retailer actually has to supply a differentiated degree of service expertise. 

So I’m not going to say, ”No, we’re by no means going to do this sooner or later.” But it must be so particular and differentiated and one thing that we couldn’t provide on-line. I believe that there are going to be only a few of these examples throughout the board in any trade. 

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