Rent The Runway store, Topanga, CA – Photo: Rent The Runway
Are Neiman Marcus and Rent the Runway meant for each other?
Neiman Marcus and Rent the Runway seem an unlikely match. The first is a traditional upscale department store that seeks to sell luxury goods at full price to an older customer base. The second is an online startup that rents apparel and accessories to Millennials who want to look like they walked off a fashion runway without paying the price of ownership.
Neiman Marcus today is opening a 3,000-square-foot Rent the Runway shop inside its store in San Francisco. The space will be used to display clothing and accessories available for rent along with complementary items for purchase from Neiman Marcus.
The goal of the exercise is straightforward: each company is hoping to attract new customers and gain insights they can use to attract similar shoppers on their own.
Neiman Marcus is in search of youth. According to Bloomberg, the average age of its customers is 51 compared to 29 for Rent the Runway. Neiman saw comp sales, which includes online and stores, fall 4.1 in its last fiscal year.
Rent the Runway, for its part, is continuing to explore a future for itself in brick and mortar. The fashion e-tailer, which launched in 2009, will have seven stores to showcase its offerings by the end of the year. Earlier this year, it partnered with Woodbury Common Premium Outlets over four consecutive weekends in May and June as part of the shopping center’s first-ever pop-up sample sale.
Jennifer Hyman, co-founder of Rent The Runway, believes both companies will benefit from the arrangement. In a past interview referenced by The Washington Post, Ms. Hyman observed that the items people rent are different from those they purchase.
“We’re in some ways running toward the shared economy instead of running away, because clearly the shared economy is here to stay,” Neiman Marcus CEO Karen Katz told Bloomberg. “Whether it’s Rent the Runway or Uber, any of the ways people are participating in the shared economy, it’s part of our world today.”
Discussion Questions
DISCUSSION QUESTIONS: Do you think Neiman Marcus and Rent the Runway will each benefit from their business arrangement? What, if anything, does this arrangement suggest about the future of “shared economy” retail in the U.S.?
Poll
BrainTrust
Lyle Bunn (Ph.D. Hon)
Strategy Architect – Digital Place-based Media
Carol Spieckerman
President, Spieckerman Retail
Rent the Runway is a perfect fit for a woman who needs a dress for a special occasion but isn’t willing to drop $400 on a garment that will be worn once. Bringing Rent The Runway into the store may draw Millennials, who may be perfect candidates for Neiman Marcus’ cosmetics and accessories. This looks like a perfect match.
Being in the business of meeting apparel needs, this partnership makes great sense. Rent the Runway is an access point that allows Neiman Marcus prospects to grow to appreciate looking great. It generates store visits and cross-sell opportunities and is savvy marketing to align with the Uber movement.
In a word, yes! Recently Neiman Marcus launched a program allowing their loyal customers to return slightly-used designer clothing for dollars off on their next purchase. Playing into the hands of their high-end customer who is loyal, wants just-off-the-runway looks and typically only wears their items a few times. Now enter the Millennial, especially the Millennials with more disposable income. Rent The Runway brings them in, Neiman’s loyalty program keeps them coming back — win-win!
For my 2 cents.
I think this is a very smart move for Neiman Marcus. In this competitive environment retailers need to focus on providing the best experience possible for their consumers, which means convenience and options. It’s no secret that there are many shoppers out there who buy an item with the intention of wearing it once then attempting to return it for their money back. People want to be able to look good for special occasions without breaking the bank. This gives consumers that option without causing Neiman Marcus a headache. The partnership will also likely expand Neiman Marcus’ customer base to shoppers who can’t afford their regular prices but would be interested in renting. This concept allows the brand to expand their demographic without devaluing their product through sales and price slashing, which should be a win-win for everyone.
I like this idea. It shows that Neiman Marcus is focused on their customers. So a customer rents the dress, but don’t you think the customer will want to accessorize a bit? Neiman Marcus will pick up incremental business as a result of the “rental relationship.”
We are in a new age of retail. Online is now mainstream, but just a few years ago it was a trend. The sharing economy is trending toward becoming business-as-usual.
I’m sure this was a tough sell within the Neiman’s organization initially, but it makes nothing but sense. Rent the Runway will build a bridge between Millennials and Neiman Marcus while introducing fashionistas-in-the-making to designers who are part of the Neiman’s stable. For the long term, this partnership should translate into purchases from new customers. In the meantime, the rental business will boom. Visions of hours-long mother-daughter trips to Neiman’s!
Brilliant idea to enhance the scope of Rent the Runway and Neiman Marcus simultaneously. There are so many possibilities of new customers, increased sales, enhancement of brand awareness for the items offered for rent — and on it goes. Finally, I think it’s another destination within the store that generates engagement while providing a great shopper experience, whether they’re in that section to rent or not. Bravo!
The BrainTrust respondents to this question seem unanimous in their perceptive respective comments. The question was also answered in the body of George’s article: “Each company is hoping to attract new customers and gain insights they can use to attract similar shoppers on their own.” Great sign of Neiman Marcus’s (and Rent The Runway’s) acuity to stay current and modern and creative and relevant and forward-looking.