Rent the Runway’s Newest Look — Refunds


The designer clothing rental company Rent the Runway has long been lauded for its skillful balance of complex delivery and cleaning logistics. This balance was severely disrupted in September when a software issue led to widespread delivery delays and cancellations, eventually prompting the company to put a temporary hold on accepting new customers. While RTR has since announced it has restored full operation, how much damage has already been done?

We looked at our data to answer questions like:

  • Which companies have the most to gain from RTR’s blunder?
  • How did RTR’s inventory issue impact current subscriptions?
  • How did delivery issues impact refunds?

Read on for our full analysis.

A Look Towards Competing Styles

Subscription clothing boxes, luxury consignment, and concierge stylists have all hit the market in recent years. We looked at the market share dynamics between a few players in the space: Stitch Fix, Poshmark and The RealReal to see which companies may be poised to gain from RTR’s recent issues.

Stitch Fix currently commands 61% of market share in this group, and 16% of current Rent the Runway customers also shop with Stitch Fix, putting the publicly traded personal stylist company in a prime position to win RTR customers already using a subscription model.

Poshmark and The RealReal have also been picking up share and increasing customer overlap with RTR in recent quarters.

Fewer Subscribers, More Refunds

Following two years of growth in 2017 and 2018, our data showed a dramatic drop of 11% in RTR’s YoY growth of End of Period Subscribers in Q3 2019, directly coinciding with the disruption to RTR services in late September. Only time will tell if customers will come back to RTR now that the glitch has been resolved.

We analyzed the change in share of refunds vs. payments from RTR customers. After a fairly steady balance between refunds and payments in the first eight months of 2019, Earnest data shows that in the last week of September, 27% of share for all transactions for RTR were refunded transactions. This was the highest share of refunds observed since the beginning of the year, and more than double the average, according to Earnest data.

Problem Solved?

Rent the Runway began accepting new orders again in early October and claims that the software issue that caused the snag has been resolved. In addition to the refunds that have already been handed out, RTR is also offering $200 in cash to impacted customers to smooth things over.

We’ll continue monitoring the situation to see if RTR will bounce or whether the glitch caused irrevocable damage.

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