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Rent The Runway

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Caroline Rice

on 15 November 2012

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Transcript of Rent The Runway

Industry Analysis LOW Buyer Power High number of buyers relative to sellers
Low switching cost
Moderate product differentiation
Low threat of buyer's backward integration
Ability to write reviews MODERATE Supplier Power High number of suppliers
Low switching cost
High product differentiation
Low importance of industry to suppliers
Low threat of firm's backward integration
Low threat of supplier's forward integration LOW Threat of Substitutes No exact substitute of "renting apparel online"
Moderate buyer propensity to substitute
Buy clothing at a discount (Gilt)
More expensive
Rent at B&M stores
Time commitment
Less options Low barriers to entry
High capital requirement
Low switching cost to buyers
High brand equity
Few incumbents LOW Rivalry Among Existing Firms Very few competitors
New Market
Strong competitive strategy Environmental Analysis Players in the Online Fashion Rental Industry include: designers (supplier), RTR (platform), and users (consumers). Economic $20 billion annual revenue
$612 billion industry
Average household spending: $1,700
3.5% of average annual expenditures
New York City fashion industry:
5.7% of NYC workforce
$10 billion in wages Social Fashion industry affects the media industry and social culture
Fashion affecting mass-production and trends
Supply chain shift from small craft shop model towards the mass manufacturing model Technology Production technology: progressive bundle system
organized such that each worker is specialized in one or few operations Legal Issues Licensing
Ethical compliance
Commercial sales Competition Nature of Competition & Challenges Online fashion rental relatively new field
RTR only has one direct competitor
Word-of-mouth and social media
Rental credit
Challenges include constant updating of rental products
Concerns of retail cannibalization of designer brands Consumer Analysis Demographic Segmentation The RentTheRunway market is largely homogeneous geographically Age


Location 18 - 24 Female Urban Behavioral Attitudes toward fashion Psychographic Values
Lifestyles Geographic Highly Urban
"Key Locations" "Our values and culture are pushing people toward consumption now instead of consumption later. You don't invest in things you want to keep because you're not building a nest. It's a major change in the U.S. economy." - Michael Silverstein,
Boston Consulting Group Consumption Patterns Why Rent The Runway? Volatile Nature of the Fashion Industry

Low Budget: 10% of retail price

Trial Opportunity

Easy-to-use Service: "No Hassle"

The "Cinderella Experience"

Engaging Business Model Fashion Consumers Designers Factors to consider:
Changing consumption patterns
One current direct competitor
Majority dominance in market
Barriers of entry include large start up cost, user base and inventory
Threats that an Open Market bring

Short term competition is low, but long term competition is probable Rent the Runway's Future Caroline Rice
Gwen Beland
Jane Shin
Derek Ko
Yena Lee Group 7 MODERATE to HIGH
Threat of New Entrants Seasonality Current Measures being taken In 2011, raised $15 billion in new funding

Holiday and Birthday promotions

Friend Referrals

Creation of "Our Runway" and accompanying video advertisement
... but there is still low brand recognition among target audience Moving Forward Brand Recognition - through marketing and advertising

Strengthen and Sustain User Base - through measures such as registration incentives and a loyalty/rewards program
Full transcript