Hiring the Runway plan to close all its stores for good, the company announced on Friday.
The clothing rental service told CNBC that it is making the decision to focus its investments on digital and adding more dropboxes for customers.
The New York City flagship will be transformed into a permanent drop-off site, while stores in Chicago, Los Angeles, San Francisco and Washington, DC will be closed. The stores had given customers a place to drop off their items and exchange for the new clothes as well as accessories that laid the shelves. It also offers styling services at these locations.
Rent the Runway said it plans to continue to grow its network of dropbox locations. The company has so far collaborated with WeWork, Nordstrom and West Elm.
“This has been an evolution in the past two to three years,” Anushka Salinas, Rent the Runway president and chief executive officer, said in an interview. “We always knew we wanted to and will continue with a physical presence strategy. What we do know now is the physical presence strategy is about dropboxes. ”
Many Rent the Runway subscribers are now focused on “keyboard-up dressing” (think cute tops and jewelry, not bottoms) for Zoom calls and other home video chats.
A number of retailers were shut down during the pandemic, in part to cut costs, as many fell into a sales slump. Others use the opportunity to simply source resources and move online. Microsoft announced plans in late June to close its 83 retail locations permanently. Kate Spade and Coach owner Tapestry said this week they are planning a wave of closures. Off-price chain Stein Mart has also filed for bankruptcy this week, saying it will close all of its roughly 280 locations. More than 6,000 permanent store closures have already been announced by retailers this year, according to a tracking from Coresight Research.
Rent the Runway knew it had to make early cuts because of the pandemic. The business model revolves, in part, around women renting designer ball gowns and party dresses for special events, such as weddings, birthdays and black-tie events – which were stopped when the pandemic hit.
In March, it fired all its retail staff during a Zoom call, saying it had to “dramatically redesign” its business model, according to a Verge report. Rent the Runway declined to say how many jobs were eliminated.
Costs were cut by 51 percent at the start of the pandemic, the company said. And it rewrote the terms with its suppliers to turn to a revenue-sharing concierge model, away from a wholesale model that required additional capital in advance, without a guaranteed return.
Rent the Runway has also raised fresh funding during the coronavirus pandemic, said a person familiar with the round. The amount of the round could not be determined immediately. But the new funding was expected to be valued below its previous $ 1 billion valuation and so-called unicorn status, Bloomberg reported in May. Rent the Runway has raised roughly $ 380 million in cash so far.
At least the company seems to be crawling back now, with more women looking to dress again, according to the company’s COO.
“The vast majority of our subscribers did not cancel their accounts,” Salinas said. ‘They put them on guard or just keep goods at home. … That tells me there is optimism. ”
She added that, after the bottom line, businesses started ticking in June as local restrictions on restrictions in the country became less severe. Many Rent the Runway subscribers are now focused on “keyboard-up dressing” (think cute tops and jewelry, not bottoms) for Zoom calls and other home video chats.
In a recent interview with The Wall Street Journal, Rent the Runway co-founder Jenn Hyman said she hoped the company would bounce back, and the company would emerge even stronger from the pandemic than before it went into it.
“We have relocated the company financially and structurally to take advantage of the pandemic,” Hyman said in the interview. “We do not need people to work back. We just need people to leave their homes. ”
