University campuses seem an unlikely place to generate demand for designer dresses. But over the years the number of occasions have gone up that require you to dress up. For example the social calendar of Kappa Kappa Gamma sorority members at the University of Georgia holds about 10 formal or semiformal events per semester. And in this digital age and social networking sites the pressure on women not to repeat a dress is unimaginable. This trend has given birth to a new commercial opportunity to rent designer dresses and jewelry to women.
Rent The Runway is a year and a half old company that is exploiting this trend to the fullest and roughly 25% of their business comes from the campuses and it is giving them a large loyal customer base that is likely to stay with them through their life. Jennifer Hyman, the Chief Executive of the company explains how their relationship with the customer grows overtime and becomes stronger. It is thrilling to watch the girls try out Alice & Olivia, D&G, Missoni, Diane von Furstenberg, Trina Turk and other designers—often for the first time. It starts out with prom and moves on to graduation.
Renttherunway.com is based in New York. They buy designer clothes in bulk at wholesale prices and then rents them out in the range of $50 to $200 for a period of two days. The dresses are mostly from current season collections and the pricing strategy followed is to charge as rent about 10% of the retail price of the dress. Jennifer, who has earlier worked in the marketing division of Starwood Hotels, believes that they operate more like a hotel company than a fashion company because of the level of service involved. They pay a $5 premium for insurance cover of the dress. They receive back the dress in their pre paid, pre addressed bubble mailers, dry clean it and offer it to the next renter.