Rent the

Runway
MA SFM Group B Team 8

Duoduo Wei
Nitya Vashist
Simran Sanghavi
Sulan Chen
Tingrui Zhong
Table of contents
1. Company Introduction & Characterisation
2. Target Audience
3. Positioning & Competitor Analysis
4. Target Audience
5. Introduction to the Market & Pestle
6. Current Situation
7. SWOT Analysis
8. Primary Research
9. Customer Journey Map
10. Current Strategies & acquisition of retention
11. Problem to solve
12. Strategy Overview
13. Organizational Recommendations & Resources
14. Marketing Recommendations & Resources
15. Control-KPIs
16. Conclusion
About Rent the Runway
Found in November 2008, Rent the Runway is a subscription
model business that allows customer to rent or buy (resale)
designer styles for work, weekends and events. It is a public
(october 2021) with a female Founder/CEO, COO and CFO.
They allow customers to either purchase their subscription
models or rent a-la-carte. Mission: to empower women to
feel their best every day. Their currently have 19,000 styles
and over 780 brand partners. 84% of the revenue comes from
subscribers. They had 134,998 Active Subscribers and 177,213
ending Total Subscribers at the end of the first quarter of
fiscal year 2021 (churn rate: 23.8%)

FUNCTIONAL EMOTIONAL LIFE CHANGING

7Ps of the marketing mix
Product Price Place Promotion People Process Physical

Womens Rent: Trade Social channels: In contact with Everything -

apparel Accessories - channels: Twitter, Instagram, consumers: including
(evening wear, $6-$245 Digital only Facebook Sales and browsing,
ready-to-wear, Apparel - (Website, Majority is organic customer selection,
workwear, $20-$580 App,ThredU marketing and support staff payment and
denim, casual, p - revive word of mouth online returns is done
maternity, Buy: collection) Paid efforts are on the website
outerwear, Apparel $115- directed towards Internal staff: or the app
blouses, $3050 Sales both middle and 958 full-time
knitwear, Accessories- support: bottom-of-the-fu and 138 Swapping/
loungewear, $36- $1365 Social nnel. part-time returns:
activewear, ski media or Paid marketing: employees in the Products are
wear, Subscriptions chat on Influencers, brand US and Ireland sent with return
Accessories (per month): website ambassadors, Technology labels which
(jewelry, 4 items- $94 8 programmatic team: 206 can be dropped
handbags, items- $144 16 directed spend employees, off at a courier
jewelry, items- $235 and affiliate across service, staples
handbags, 20% discount marketing. engineering, data or opt for home
sunglasses) on your first analytics, IT, pick up
Home one time product, (selected areas)
rental software quality
assurance & UX
Target Audience
Geographic
The USA
Psychographic
Chasing fashion trends
Prioritize value for money
Concerned for the environment
Endorse fashion rental
Demographic
Women
Average age 20s-40s
Household income of $50,000 or more
⅓ Women have children or are pregnant
90% Have At Least a Bachelor’s Degree
90% working women
Behavioristic
75% Socialize 2x+ Per Week
Wear a variety of styles
Pursing well-known brands
Rarely consume expensive clothing
01 Market Analysis &
Positioning
Competition analysis

Rent the runway Nuuly More flexible

Subscription
3 3 1 2 1
plans

Size range 0-22 XS-XXL or 00-32 00-40 XS to XXL or 0-16 0-28

Get discount
✖ ✔ ✔ ✖ ✖
for purchasing
Low price High price
One time
✔ ✖ ✖ ✔ ✔
rental

Flexible rental
✔ ✖ ✔ ✖ ✖
time and mode

Number of Subscription
Unlimited 1 Unlimited Unlimited
swap requirements Less flexible
RTR USP
Additional
rentals
Subscription
requirements
Pay a one-time fee
Two extra items
limited
Pay a one-time fee Pay a one-time fee Variety of luxury brands
Flexible subscription models
AI powered personalization & discovery
 Scope of the market
37%
of fashion executives expect occasion
wear to be a top-three category for
year-on-year sales growth
(McKinsey State of fashion, 2022)
Growth of Second Hand &
Online Apparel in US
$3.3B
The global online clothing rental market
27%
Fashion and apparel each achieved 27%
reached a value of US$ 1.9 Billion in 2021 and average monthly subscriber growth in 2021
is expected to reach $3.3 Billion by 2027. compared to 2020.
(Business wire, 2022) (State of subscription commerce, 2022)
Rental
Subscription RE-Sale
Growth of online shopping
Political
- Hike in corporate tax upto 26.5% in
US (Fiber to fashion.2021)
- Digital Service tax on digital goods
and services, online sales, digital
advertisement (PWC)
Economic
- Despite Rescission, Customers are
willing to spend on fashion. Rising
inflation levels all around the world
gives renting service and edge in the
market.
(McKinsey & co,2022)
- Increase in energy cost and interest
rates that will have a great impact on
consumption patterns.
(McKinsey & co,2022)
Social
- 81% of HR and DEI practitioners view
DEI initiatives as beneficial to their
organizations (Culture Amp, 2022)
- All-white, ultra-thin models is no longer
the norm on the runway (Vogue, 2022)
Technology
- Use of innovative marketing techniques
like social media has become common in
a modern business environment.
(André Cavalcante, S, 2013)
- Artificial Intelligence can be a game
changer for a business growth.Evey ‘like’ or
‘dislike’, the AI learns what each customer
loves which makes recommendations
easy.(3DBlock,2021)
Environment
- A high awareness level reading
sustainability will encourage buyers to
prefer rental rather than over
consuming fashion.(Willersdorf &
Mitchell,2020)
- Rental business might have invisible
environmental cost which may include
transportation and cleaning cost.
(Chan, 2021).
Law
-Fashion rental industries are
also required to follow some legal
rules, policies, and regulations.
- Data protection has become an
important issue due to consumers’
privacy and security concerns.
(Wall, S., Minocha, S., & Rees, B.,
2009)
Current Situation

134,998 24% 80%+ 28.38%

(2022, Q2)

Active Users Workforce Cut WOM Churn Rate

To rein in costs Rising churn rate
But a 8% fall More than 80% of
compared to last customers are acquired
quarter through WOM
SWOT Analysis
Strength:
1. Products & Partnerships:diverse and premium brand selection
2.Flexibility: different subscription packages
3.Exclusiveness :Customer loyalty programs
4.Innovation:business model & data & technology advantage
5.Rising trends of ecommerce & sustainability
Opportunity:
1.Better use of data: more personalization
2.Omnichannel Marketing Strategy: engage more with
social media
3.Continue growth of share-economy
4.Improving in logistics: faster delivery & easier return
5.Globalization: provide service in more regions and
collaborate with more international brands.
Weakness:
1. Customer Dissatisfaction: poor customer
support service
2.Not Customer-oriented online shopping experience
3.Insufficient investment in marketing: WOM
4.poor inventory management: out of stock & wrong size
5.Sustainability Issue (controversial)
Threat:
1.Increasing number of competitors
2.Quality & Hygiene Control
3.Decline in global economy:changing consumer behavior
4.Customer's’ common concerns about renting
 Primary Research
1.Questionnaire 2.Focus Group & Netnography
Emergency Purchase
Are you an RTR subscriber? Hygiene
Female Second Hand DiversityTravellers
Logistics
Yes
No
Special Occasion
In mid
20s
Never heard of it Deadline to return Fitting Issue
Not Available
Based Gaping holes
in USA Inclusive in sizing
& UK Key reasons not to subscribe: Delivery errors
● Want to own clothing instead
of renting Stinks Sold out
Unnecessary recurring
●
expenses Late fees Didn’t ship

Relatable Models Detailed Product Styling Advice Cancelling my subscription

Description
Current Customer Journey Map
Official Website
Influencers/Brand
Subscribe!
Ambassadors Easy Order
Social Media - 1-2 day delivery
instagram, facebook,
Only Online Purchase Feedback & Review
pinterest, twitter
Collaborations Size Accuration Loyalty Program
Word of mouth Video of Products Brand advocacy

Awareness Consideration Purchase Service Loyalty

FIrst time offers Return label and bag

Flexible Membership Plans Home pick up (selective)
Initial subscription discounts Post purchase feedback
Luxury brands Return reminders
Clothing for diverse occasions
Customer reviews
Multiple categories available
Current Strategies for acquisition & retention
Increasing ethnic relatability
Diverse models: Increase from 40%-45% (2019-20)
Increased penetration of ethnic minority designers
from 4%-10% (2020-21)
Customer loyalty programs
Rewards for subscription tenures &
participation in promotional activities (early
access and extra renting)
Re-defining their subscription model
From 1 unlimited swaps model to 3 different
subscription models
Third party collaborations
Collaborations with businesses that
share value
Ex: Revive with ThredUp
Word of mouth marketing
81% of subscribers have shared RTR with
at least five people
Technological advancements
Shift from traditional hosting to google cloud to
manage website traffic & AI powered product
tagging
Problem to Solve

Poor Customer Experience Marketing Problems

1. Poor inventory management 1. Unclear marketing goals
2. Lacking quality check 2. Ineffective marketing methods
3. Inconsistent and dissatisfactory (low investment in marketing)
customer service 3. Lack of transparency
4. Lack of product information on 4. No engaging content on social media
product page to built audience.
5. Absence of a cohesive feedback
platform
02
Strategic
Recommendations
 Strategy Overview

The strategic recommendations aim to increase customer acquisition and

retention, and also lower the current churn rate for Rent the Runway. In
order to achieve goals, Rent the runway should concentrate on two areas:
organisational strategy and marketing strategy. The cost of acquiring a new
customer is higher than the cost of keeping an existing customer. Therefore
the organisational strategy for Rent the Runway is to retain current
customers by delivering promised value with better shopping experiences.
Additionally, the marketing plan seeks to expand its consumer base by
redefining its marketing goals through omnichannel personalized marketing.
Organizational (Internal)

Better Inventory Management Faster Delivery and Easier Return

1. Increase availability in size 1. Deliver in the time promised and expand

2. Align marketing content to inventory available home pick up network
3. Upgrade inventory for scarce brands or 2. Improve tracking and communication with consumer
remove brand
Resources: Logistics department, partnerships
Resources: inventory management team, purchasing team,
logistics

Strong Customer Support Better Quality Control

1. Integrate all feedback channels and have a 1. Create a strong quality control system to make
customer support team to address issues Standard hygiene conditions are met before delivery
2. 24/7 online chat

Resources: Online customer service team; IT development Resources: product cleaning team, product team, quality
investment; Official web design input. control team
Marketing (External)
Personalized marketing
1. Use data acquired through customer
journey to provide one to one,
personalized omnichannel shopping
experiences.
Community development
1. Pop-ups to compensate for lack of a
physical space:
A place to bring together customers
in the consideration phase and brand
advocates
Resources: Venue, pop-up logistics, on site
event team
Collaborations & Partnerships
1. Align influencer collaborations with what the
consumer relates to in terms of demographic, age
and nudge
2. Partner with businesses to grow acquisition
channels (Ex: ThredUp)
Resources: marketing & PR teams, content creators,
visuals, designers, budget for collaborations
Diversity in body types
1. Include diverse models in size and
age to increase relatability
Resources: Investment in virtual models/
budget for physical photo shoots,
photographers, studios, stylists and editors
Redefine marketing goals Improved product page

A/B test campaigns focused on a single
offering
Resources: social media team, content
creators
Avoid misinformed shopping resulting in a negative experience
Enable conversation
Increase purchase confidence
Resources: Product team, stylists, inventory team, investment in
technology

Additions:

Detailed description

Diversity in body type

Latest product photos

Styling advice

Monetary benefit
Objectives & KPIs

Objectives KPIs

Increase in revenue by 32-40% from $203.3 million in 2021 to $295.0 million to

Revenue growth
$305.0 million in the fiscal year of 2022.

Lower Churn rate Decrease from 23.8% to 15%

Grow by 60-70% at the end of 2022 fiscal year when compared to 82% end of
Customer acquisition fiscal year 2021 (reason for lower target: to focus more on retention as
acquisition cost and current churn rate is higher)

Increase to 20+ compared to a current NPS of 17 (46% promoters, 25% passives, 29%
Net Promoter Score detractors)
Conclusion
Rewrite the mission statement:

OLD - Our mission is to power women to feel their best every day.

NEW - Our mission is to enable women to feel confident and fashionable through ever evolving variety,
transparency, relatability and our customer-first approach.

In terms of revenue and subscribers, Rent the Runway has recovered from Covid-19. It began as an
occasion-only rental business and quickly became a casual, work, and family-oriented rental service.
However, the organization didn’t take into account the resources needed and adopted strong
organizational infrastructures to support the expansion.

Rent the Runway has a significant scope to internationalize due to the demand in areas outside the
US. However, this is in the far future as they will have to cater to positive customer experiences to
the US market before they could expand.

The organization can also benefit by A/B testing and executing marketing strategies with different
values/ concepts as the center of attention. This will help convey the brand identity better and reach
consumers with multiple motivations.
Thanks!
Any questions?
References
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Primary research
Netnography:
https://drive.google.com/file/d/1q-o9Z_UL9BCNH5Sfx_F0SVq0w6aaVuui/view?usp=sharing
Questionnaire:
https://docs.google.com/spreadsheets/d/112osvDu8--j53obYok_SKLf5SZM_eL3oY3iQCSOo0P8/edit?usp=sharing