Rent the Runway boosting physical store strategy with new flagship

Dive Brief:

Upscale designer apparel rental company Rent the Runway continues its investment in brick and mortar with its biggest store yet, a 5,000-square-foot space at 30 W 15th Street in Manhattan that will replace its current Flatiron District flagship.
For the space, which is three times larger than Rent the Runway's other stores, the startup tapped architects Heitler Houstoun (who also worked on Dry Bar’s retail stores) and Warby Parker’s contractor Patrick Conlon — designers familiar with the needs of retail companies crossing over from the digital to the brick-and-mortar worlds, according to Fast Company.
Rent the Runway has been building out its physical footprint for a while now: It first opened a brick-and-mortar space in October 2013 on the second floor of Henri Bendel in New York, and launched its first standalone store in September 2014. The company also has plans for a space in upscale department store Neiman Marcus’s San Francisco location.

Dive Insight:

Add Rent the Runway to the list of disruptive e-commerce concepts turning to old-fashioned brick-and-mortar stores to connect with customers and grow sales.

That trajectory has become an e-commerce truism, with the likes of Warby Parker, Birchbox and even Amazon finding that stores allow them to provide customers with an experience that can’t be matched in front of a computer or phone. For apparel, including items that will only be in your closet for days or weeks, fit and feel are important to customers, and the new Rent the Runway store’s 16 fitting rooms will go a long way to helping customers try out dresses and other high-end items on the racks. But it also brings a sense of place to the shopping experience, according to Rent the Runway president Maureen Sullivan.

"It's more like a club, or a place that you feel like you're kind of a member of," Sullivan told CNBC.

That’s a description of an ineffable feeling, of course, but it’s also backed up by numbers. While internet darlings like Warby Parker and Casper Mattress are often thought of as examples of the success of pure-play e-commerce, they’re likely to see entrenched success by opening stores, according to a report released earlier this year by business intelligence firm L2. In fact, many such pure-play ventures are well aware of the need for brick-and-mortar; Two-thirds of venture capital-backed e-retailers raised funds “with the explicit purpose of building stores,” the report says.

A spokesperson for Rent the Runway told Retail Dive that the company has reached profitability, but that as a private company "they unfortunately cannot disclose financial specifics." Sullivan told CNBC that this year it had its "highest revenue growth" in its seven years and has reached a "profitability milestone.” Re/Code reported earlier this year that the company may have seen some $100 million in sales this year; it’s also been playing around with its membership models and has raised more than $126 million in venture capital funding, some of which has gone into developing its brick-and-mortar strategy.