College tours & curated merch: How Rent the Runway is hoping to capture the Gen Z market
When Rent the Runway launched in 2009, much of its marketing revolved around working millennials. Now, with a new generation gaining spending power, the company is increasingly setting its sights on Gen Z.
This month, Rent the Runway is embarking on a university tour across the U.S. to position itself as an option for student formals, sports games and other gatherings. At the same time, Rent the Runway is relaunching its college ambassador program to have a greater focus on “content creation,” co-founder Jennifer Hyman told Modern Retail in an interview. The company also has a new tab in its app that highlights in-demand styles among college students, and it’s introducing a subscription tier that it hopes will resonate with Gen Z. The plan, which launched on Thursday, starts at $119 a month for five items and is “highly targeted for Gen Z,” Hyman said.
Rent the Runway gives customers access to designer brands like Jason Wu and Badgley Mischka for a fraction of the retail price. Still, the company offers more than formal wear. “I think it’s a misnomer about Rent the Runway, that it’s just for special events,” Hyman said. One in five of Rent the Runway’s customers belong to Gen Z, and they’re renting more casual clothes like denim, tops and day dresses, Hyman said.
As Rent the Runway enters its 15th year, it’s now adjusting its marketing and merchandising strategies to woo these coveted young consumers, many of whom are growing their discretionary income. Gen Z makes up about 20% of the U.S. population, according to 2023 Census data, and its spending power is expected to reach $12 trillion globally by 2030, per Nielsen IQ.
Hyman believes there’s potential to grow the company’s Gen Z audience tremendously. “[Gen Z] is gaining more of their financial independence,” she said. “They’re entering the workforce. And our aim is to be their go-to destination across all of their life stages and make sure that our product offerings are aligned with their needs.”
Rent the Runway is courting Gen Z amid its larger turnaround efforts. Rent the Runway’s sales dropped during the pandemic as people started working from home, wearing more casual clothing and curbing discretionary spending. By the end of 2022, the company had laid off nearly a quarter of its workforce. By the end of 2023, Rent the Runway’s subscriber count had declined for the first time since the company went public in 2021, per Telsey Advisory Group.
Still, Rent the Runway has worked to adapt. In September 2020, it got rid of its unlimited rental option. Later, it honed in on resale via partnerships with the likes of Saks Off 5th. Rent the Runway boosted inventory levels to improve in-stock rates in the second half of 2023, and in February 2024, it brought on a new chief marketing officer. The changes are starting to pay off; in September, Rent the Runway reported that its second-quarter revenue rose 4.2% year over year to reach $78.9 million. At the same time, the company also reported a quarterly net loss of $15.6 million.
Rent the Runway’s college tour, called “RTR On The Road,” is stopping by eight large universities in the southern U.S., a “key organic market” for the company, Hyman said. As part of the tour, Rent the Runway is giving out goodie bags, displaying school-specific merchandise and sharing more about how the company works. It’s also recruiting for its college ambassador program, which has tens of thousands of members, Hyman said.
Rent the Runway has visited colleges in the past, most notably when it first started out. But this new tour has a different audience, one that’s used to shopping at fast-fashion retailers like Shein and keeping up with trends on platforms like TikTok. For Rent the Runway, this latest tour represents an effort to stay competitive, introduce its inventory to a new audience and gather feedback as it broadens its assortment.
Rent the Runway carries 800 brands and is preparing to launch more in 2025 as it works to win over Gen Z. “Because of the influence of social media, [Gen Z is] more comfortable with using fashion to express themselves, so they’re willing to wear bolder and more editorial fashion than college girls of the past were,” Hyman said. “We’re taking that into account as we diversify our assortment to ensure that we’re offering them the coolest, trendiest looks.”
To better tease these items, Rent the Runway added a “college” tab to its app earlier this month. The tab highlights brands such as Alexis, Ronny Kobo, Rabanne and Coperni. “Maybe when someone’s entering college, they don’t associate Rent the Runway as being for that college girl,” Hyman said. “Well, when you go to this college tab, we have all of this designer fashion that a college girl would die to wear.”
Customers can rent clothes individually via the company’s “reserve” business or get up to 20 items a month through one of three plans. Rent the Runway had 129,073 active subscribers as of its second quarter.
Vic Drabicky, founder of the consultancy January Digital, believes Rent the Runway’s college tour will help to “humanize the brand and the product.”
“If done well, [it] can lead to a small groundswell of new customers,” he told Modern Retail. Drabicky added that Gen Z “has a unique ability to adopt and quickly grow brands they believe in.”
Hana Ben-Shabat, the founder of research firm Gen Z Planet, told Modern Retail that Rent the Runway could be compelling to Gen Z because it offers quick access to items while also championing sustainability.
However, she said that in order to retain Gen-Z customers, the business model has to be “supported by other elements that are important to Gen Z.” This entails offering “the right product, at the right price, with a strong ambassador program that can represent the brand once the hype of pop-ups and giveaways subsides,” she added.