Rent the Runway, which gives members a way to don thousand-dollar dresses for special occasions without buying them, is updating its business model to cope with the effects of COVID-19.
The company, which closed its five brick-and-mortar locations on Aug. 14, is updating its rental options.
The new options, which will take effect next week, will include a lower-cost membership plan aimed at the customers who rent the most dresses.
In an open letter posted on the company's website, Co-founder and Chief Executive Jenn Hyman wrote: "The goal of our new membership structure is to provide customers with a flexible plan that can adapt seamlessly to their changing lifestyles, needs and budgets – with price points that reflect the number of styles received per month."
Rent the Runway was founded in 2009 and adopted a membership model in 2016, according to the company's website.
"Our members remain at the core of our business. Their feedback and real-time interaction continue to inform how we grow. Even prior to COVID-19, most of our Unlimited Swap members — 70 percent — were renting fewer than eight items per month (at $159/mo)," the letter states. "With our new subscription structure, these members can opt into a lower-priced plan and receive the same or more items as they did before."
The letter points out that only 6 percent of members who were part of the Unlimited Swap plan were renting 16 items or more per month. With the change, those high-use members will pay more.
"We believe that when a member is in the right plan that matches their needs and budget, they’ll stay with us longer and keep renting — helping us on our mission to reduce clothing waste and build a better future for fashion," Hyman wrote.
Rent the Runway's new offerings fall into three tiers:
- The least expensive plan will cost $89 per month and will send one shipment, offering clothes costing up to around $350.
- The next tier up, at $135 per month, will allow up to eight items per month with clothes costing up to $3,500.
- The most expensive tier, at $199 per month, will allow 16 items per month, sent in up to four shipments, with clothes costing up to $3,500.
The letter further states: "This means we are phasing out the Unlimited Swap plan early next year, and will no longer accept new members into that plan as of next week. However, current and paused Unlimited Swap members can (and should!) enjoy their memberships through early 2021, at which point we will be in touch to help transition them into one of our new plans."
Rent the Runway's implementation of new leasing options follows a similar move made in March of this year.