Fashion Entrepreneurs Capitalizing on High-End Rentals
BY Lauren Folino
Companies that offer designer duds for rent are the saving grace of fashion-forward women who can't afford such upmarket tastes in the recession.
Rent the Runway
Rent the Runway CEO Jenn Hyman (left) and President Jenny Fleiss wearing RTR dresses.
Avelle CEO Mike Smith and a Bulgari clutch
Handbags, dresses and shoes are frequently the reason for the dwindling sum of cash in a woman's bank account, and keeping up to date with the latest trends is difficult when both jobs and funds are in short supply. Luckily, fashionistas don't have to commit to spending an arm and a leg on trendy digs that are in one day and out the next when they can rent instead.
Membership-only designer rental companies that offer costly, elegant attire for just a fraction of the retail price have been experiencing a boom in the down economy. With a mail-order model similar to Netflix, companies are able to rent out high-end merchandise to customers for a short period of time. The renter gets to look and feel glamorous for a week or a month and then drops the items in the mail once they've lost their luster.
Manhattan-based start-up Rent the Runway (RTR) launched November 9, with about 35,000 members, and is quickly growing. The company was co-founded by two Harvard Business School graduates, CEO Jenn Hyman, 29, and 26-year old President Jenny Fleiss.
Hyman said RTR was formed because the pair saw an opening in the market to facilitate a mutually beneficial relationship between customers and designers. "There are all these woman out there who continue to spend a significant portion of their salary on fashion, regardless of whether they're making $50,000-a-year or $200,000-a-year," explains Hyman. "If you can capture customers earlier and build brand loyalty, that's a win-win for both the customer and the designer."
RTR currently offers more than 33 designer brands ranging from Hervé Léger, Proenza Schouler, and Badgley Mischka for $50 to $200. The duo works to build direct relationships with the designers and continues to add new designers weekly.
"We are grooming this next generation of customers," Hyman says. "We feel that once a girl puts on a Hervé Léger dress, she realizes that the way it feels, the way it looks, is so different than the $200 imitations. If she wears that dress to a special occasion in her life, she creates an emotional connection around that brand, and therefore is more likely to become a full-priced customer of that brand later."
Avelle, the New Bag Borrow or Steal, which gained monumental success after being referenced in the Sex and the City movie, is another Web-based rental company getting a lift from the recession. Although the Seattle, Washington-headquartered business was formed in 2004, CEO Mike Smith said that after Sex and the City was released in May 2008 membership increased threefold, and Avelle now boasts more than 1.5 million members.
Smith explains that Avelle is currently in the midst of heavily expanding both the product and service lines of operations, including outside repairs from department stores and individuals.
"Handbag refurbishing and repair is a business that we really want to grow," reveals Smith. "We've gotten some great response to that, and we've actually had some other companies send us their bags in mass to refurbish, so that's a business we're going to be investing further in."
With more than 100 featured designers and 4,000-plus different styles, Avelle recently began leasing watches, sunglasses, and jewelry on the site, in addition to designer purses. Membership is not required to rent, but it will get your prefered pricing - the rental price for merchandise varies from less than $40 to more than $400, depending on the item - and products may be rented by the week or month.
"We're a way to enjoy more fashion without the guilt, without the clutter, and without your husband saying, 'Why do you need another handbag when you've got 25 perfectly good ones in your closet?" says Smith.