Dive Brief:
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Rent the Runway on Friday announced the April 15 debut of its first children's apparel offer. Initially the program will cater to girls' sizes 3Y to 12Y, and the platform will have the flexibility to add more than four items per rental order.
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Rent the Runway Kids is working with 13 designers, including Chloé, Fendi, Stella McCartney, Little Marc Jacobs, Marni, Philosophy, Milly Minis and LoveShackFancy Kids. It operates as an extension to members' monthly subscription services as well as through its Reserve option, which allows one-time rentals for four or eight days, according to a company press release emailed to Retail Dive.
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The company also announced the launch of "Extra Spots" for Unlimited and Update memberships. The new feature allows the addition of a limitless amount of items to Unlimited and Update accounts, with the ability to flex up or down each month. Each addition will cost $39 per month for Unlimited and $25 for Update.
Dive Insight:
When Rent the Runway achieved unicorn status last month, after collecting $125 million in further investment that brings its total to some $337 million since inception, the rental service said it would use the cash "to dramatically accelerate ... and continue to innovate." This announcement may give an indication of what that meant, at least in part.
The expansion into kids is a savvy move, considering how swiftly kids grow out of their duds, making designer apparel a fleeting acquisition even for shoppers open to buying upscale brands. And it's a natural one, according to Kantar Apparel Analyst Tiffany Hogan, who noted in an email to Retail Dive that "children use special occasion clothing the most sparingly of any consumer." It's the company's first product expansion to a new customer and, that along with its West Elm partnership, "could signal intentions to become a destination for the whole family," including men and older kids.
The company has seized on younger consumers' openness to temporary use over outright ownership, and Wells Fargo hailed the market opportunity in a recent client note. The company's customer is 29 years old, on average, "with good income," note Wells Fargo analysts led by Ike Boruchow, which means that many have or soon will have families.
"Rent the Runway partners with over 600 brands (doubled over the past few years) — with the key selling points to the brands being that it's an important new sales channel (with many other channels stagnating), the brands can gain access to different types of data relative to what they get from other partners and Rent the Runway is a very valuable marketing partner," the analysts wrote in comments emailed to Retail Dive.
The service's new Extra Spots options also leverages key attributes among its customers as described by Boruchow's team: Rent the Runway patrons are "highly experimental (they try 15 new brands on average), 94% come to the service organically (word of mouth is very prevalent here), they are very loyal (their highest-use customers wear Rent the Runway product 120 days per year) and they ... provide a surprising amount of feedback/personal info to help find product that works better for them (e.g. information such as weight or bra size — which demonstrates a high level of comfort with the service)."
