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Why Rent the Runway’s Ending Unlimited Fashion Rentals

In a year marked by chaos and disruption, Rent the Runway has a big change in store for some of its fashion-loving faithful.

The original innovator in rental fashion is ending its popular $159-a-month Unlimited membership that let subscribers receive four garments and accessories per shipment with no cap on swaps across four weeks. The change to the four-year-old membership option, announced Thursday, comes after months of upheaval that saw RTR sack staff, shutter stores and suffer allegations of unsafe conditions at the warehouses that fulfill customers’ fashion fixes.

New York-based RTR says the seismic shift in its subscription strategy has been “18 months in the making,” though the coronavirus crisis has admittedly rocketed that time frame forward. The fashion unicorn, valued at more than $1 billion at a 2019 funding round, claims the previous one-size-fits-all membership plans no longer jibe with how its customers operate and what makes sense for their lifestyles, which today look very different than they did before Covid-19 wended its way out of Wuhan.

In a blog post detailing the tweaks, co-founding CEO Jenn Hyman contends that sunsetting Unlimited affects a small swathe of RTR’s subscriber base. “Even prior to Covid-19, most of our Unlimited Swap members—70%—were renting fewer than 8 items per month (at $159/mo),” she wrote, noting that the new membership structure rolls out next week. “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.”

Just 6 percent of Unlimited members, Hyman claims, were power users accessing 16 or more designer wares each month. “We wanted to provide a new plan for those members,” she wrote, “albeit at a slightly higher price point that aligns with a premium level of access.”

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Now, a $199-per-month plan gives users four shipments each month and access to the company’s entire roster of designers and products. RTR’s basic plan remains untouched, giving consumers access to one shipment of four casual, weekend, and work-friendly items from a limited assortment each month for $89. But a $135-per-month plan is new this summer, allowing members to refresh their closets with two shipments of four items from RTR’s full breadth of product in a four-week span.

Whether consumers are temporarily adjusting their behavior for the pandemic or for the long term remains up for debate. But RTR’s lower-priced plans now account for nearly three-quarters of new sign-ups since the beginning out of the viral outbreak in mid-March, while subscriptions—versus one-off rentals—drive more than 75 percent of the business, it says.

Cutting down on the number of shipments ferried from home or office to warehouse will clean up the rental company’s sustainability profile, too. Though many Unlimited members took advantage of RTR’s sprawling network of drop-off boxes to quickly change up their style, many shipments sit on carbon-emitting vehicles for their journeys from point to point. And lately those journeys have been fraught with delivery delays as surging digital commerce across industries pushed supply chains and logistics to the breaking point.

Beyond the carbon cost of shipping subscribers a steady stream of style, RTR admits that the clothing on its platform could use a sustainability boost, too. It says it’s making strides in manufacturing more sustainably, pointing to its collaboration with reality TV star Whitney Port as an example of how it’s producing platform-exclusive fashion with better-for-the-planet recycled fabrics. Subscribers are helping to fuel investments in sustainability, with a twofold increase over the past year in the number of members who say the company’s services help them get dressed “more mindfully.”

Fashion rental pioneer Rent the Runway announced Thursday plans to phase out its popular Unlimited subscription membership next year.
CEO Jenn Hyman says just 6 percent of Unlimited members were renting 16 items or more each month. Courtesy of RTR

Prior to Covid, RTR had major ambitions to infiltrate even more points and places in the modern women’s life, even after a supply-chain meltdown marked by missed shipments and a crush of membership cancelations sparked a painful, public furor. In December, RTR announced a partnership with Marriott-owned W Hotels, giving customers rental fashion waiting to be collected at hotel check-in. At the time, Hyman said the new venture fulfilled her goal of jet-setting “luggage-free,” which today might seem like a distant dream amid travel bans brought on by a global pandemic.

For now, though, consumers accustomed to working from home in leggings and loungewear may not find a reason to re-up lapsed memberships or justify new ones, even as trend data signals an appetite to rediscover fashion after months of quarantine dressing. In recent years, RTR has taken pains to branch out from the evening gowns and cocktails frocks that built its fame and diversify into categories like athleisure, kids’ and ski, broadening its appeal for a wider audience base.

The new memberships might be easier for some consumers to swallow, even as unemployment numbers and uncertainty about what the coronavirus crisis will bring next remain top of mind for most. Regardless of what the economy offers, RTR’s hypothesis is that its membership refresh will fuel “better retention when people are paying for exactly what they receive.”