Are you familiar with Netflix? It’s the subscription-based film and TV program rental service that offers popular media to subscribers via Internet streaming and via U.S. mail.
Now, Rent the Runway hasn’t yet figured out how to stream a designer gown to a subscriber, but it’s worked hard to master a reverse logistics system that has tens of thousands of haute couture garments criss-crossing our nation on any given day.
The 6-year-old company created by two 20-something Harvard MBAs rents designer dresses and accessories (necklaces, jewelry, handbags, etc.) via a photo-rich e-commerce website. Customers looking for something special to wear to a wedding, gallery opening or just a night out on the town click through the latest fashions available from some 300 designers—they include Diane Von Furstenberg, Halston, Helmut Lang, Hervé Léger, Jill Stuart, kate spade, Oscar de la Renta, Vera Wang and Versace—and make their selections, which are then shipped to them via UPS.
All inventory is available every weekend for rent, which means the company has to stay on top of receiving, cleaning and shipping at all times.
To support the apparel rental business, Rent the Runway maintains what it says is the largest drycleaning operation in the country. During the National Cleaners Association’s recent TexCare exhibition, it hosted a tour of the company’s Secaucus, N.J., facility.
“People rent dresses for the weekend,” says Charles Ickes, Rent the Runway’s vice president of operations. “They get them, typically, for four days. They rent for Thursday/Friday, wear it Friday/Saturday, return it Sunday/Monday. Everything that we do comes back to us in two days. It’ll either be one- or two-day ground, then we expedite to two-day air to get everything back on Tuesday/Wednesday so we can make it available for the next weekend.”
Prices vary depending on the garment—a $650 Badgley Mischka dress rents for $95, a $1,395 Marchesa Notte gown for $200, for example—but Rent the Runway also is trying out an “unlimited” service for $99 a month, Ickes says.
“We have what we call a classic model; you pick a date, we send it to you and you get to keep it for four days,” he explains. “We also have a subscription service that’s in beta [testing]. There are 3,500 customers in that. It’s basically Netflix. Pick any three items you like. Keep one, two, three as long as you like. Once you return one to us, we flip it, look at your queue and send you another one.”
There is rail space for some 300,000 pieces of inventory, according to Ickes. On the day of the tour, the plant housed 100,000 dresses and 23,000 accessories.
Customers can order a dress in two different sizes (for example, sizes 2 and 4) so that there are limited “fit” issues, Ickes says.
High-utilization dresses “turn” approximately four times per month, he adds. Rent the Runway attempts to get 32 rentals out of each dress before it is removed from inventory and offered in a “sample sale.”
BUILDING TO CRESCENDO
This time of year, it’s busy at the Rent the Runway drycleaning plant. The week prior to the NCA tour, the company shipped 25,000 units, which is the equivalent of 50,000 dresses. The plant as currently equipped and staffed can process about 2,000 dresses per hour; every garment that goes in or out is bar-coded.
“We are in season right now. Back to school. There are events going on. Rush [week] is going on. Christmas, of course, is our peak. Right now, we’re building to the crescendo.”
When Ickes started working for Rent the Runway four years ago, it utilized a 9,000-square-foot space in Manhattan. It moved to a 40,000-square-foot facility 3½ years ago, but then outgrew it and moved to its current spot in November 2014.
It’s now outgrown the one side of the plant—80,000 square feet—and, at the time of the NCA-organized tour, was preparing to double the production area to 165,000 square feet. The expansion, which will include automating the fulfillment system, will cost an estimated $13 million, Ickes says. It’ll be adding 17 drycleaning machines, 22 washers and 22 dryers; the current plant utilizes 18 drycleaning machines, all with 80-pound wheels.
Rent the Runway employs 400-plus people in Secaucus. Workers are hired on a temporary basis and must reach certain performance criteria to advance to permanent status. Current ratio is 70-30 temporary to permanent (10% of staff are trainers).
“Every person has a metric. I could show you every person, how fast they went in the last minute. This is why I walk around with this [tablet]. I can see it at department level. How fast the throughput is going. I know how much [inventory] I need for the day. I’m watching every department to see that the throughputs are high enough.”
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