The pandemic has wreaked havoc on the fashion industry, and clothes rental service Hire the Runway has definitely felt the squeeze. Earlier in 2020, the New York Metropolis-based firm considerably minimize prices by instituting layoffs and shuttering its handful of brick-and-mortar shops, amongst different measures. That stated, co-founder and CEO Jennifer Hyman has massive hopes for a stronger-than-before comeback in 2021—and for various seems to grow to be well-liked after a prolonged interval by which individuals have been trapped inside sporting sweatpants and T-shirts. What’s extra, she’s much more optimistic about Hire the Runway’s future now that the corporate has been pressured to exist with a lot decrease income. “What was nice is that it [the pandemic] accelerated a motion in the direction of being a a lot larger margin enterprise, and it accelerated our path to full profitability,” Hyman instructed Fortune in a latest interview which came about over, what else, Zoom. “It introduced a whole lot of the metrics that we have been aiming to perform in 2023, into 2020 or 2021.”
Fortune spoke to Hyman about what the New 12 months holds for Hire the Runway and the broader trend and retail business—plus the longer term for feminine entrepreneurs similar to herself.
This interview has been edited and condensed for readability.
In what methods has COVID impacted your small business, accelerated sure tendencies or pressured you to do issues in a different way?
We’d already seen that about 90% of the transactions in our retail shops have been really prospects coming in and choosing up their subscription order or dropping off their subscription order. So primarily 90% of the experiences weren’t about trend discovery, they have been about first-mile and last-mile supply the place the client was wanting extra frictionless delivery expertise. So I might say that COVID accelerated the choice that we made to shut our retail shops, however to increase our pick-up and drop-off bodily footprint across the nation.
One other factor that was within the works is altering our membership applications, from being all-you-can-eat to a pay-as-you-go type of mannequin. The purpose has all the time been to create a extra customized subscription program, the place individuals might flex up or flex down their utilization primarily based on what was occurring of their life, and that might correspond to flexing up or down the worth that they paid. Thank God that was within the works previous to the pandemic as a result of, clearly, individuals have had much less use instances for sporting garments in any respect this 12 months.
Additionally, I feel that we now have seen a dramatic change throughout the board, in commerce throughout all classes. In trend, that change has been much more dramatic, as a result of trend was far more behind by way of on-line penetration and different classes. The pandemic has accelerated adoption of on-line and discovery on-line, which is incredible for us. It has additionally accelerated the elemental imaginative and prescient and mission of Hire the Runway: To construct a round platform and a closet within the cloud. I feel that popping out of the pandemic, which is without doubt one of the few occasions in latest historical past the place the entire world goes by means of the identical factor, on the identical time, everybody on this planet goes to be a way more aware client by way of how they give thought to well being and sustainability, and the way they give thought to the monetary influence of their selections. Our enterprise has all the time been about shopping for much less stuff in favor of with the ability to entry no matter you wished, having a wardrobe on rotation, however not having to build up dozens of things that you simply don’t want. Secondhand clothes is now utterly regular.
You’ve talked about that, from the start of the pandemic, you didn’t imagine trend would make a restoration till a vaccine was broadly obtainable. Are you assured that trend will make a full comeback at any level, even then?
I feel the again half of 2021 goes to be one of the best second in time for the style business that I’ve seen in my profession. Trend is about self-expression, it’s about exhibiting up on this planet as you need individuals to see you. And I feel that within the again half of subsequent 12 months, after we’re in a position to rejoice, we’re in a position to take holidays, we’re in a position to return into the workplace, individuals are going to need to present up in their very own lives with ardour. And as that corresponds to trend, I feel that individuals are going to be sporting bolder outfits, they’re going to care about being observed. I’ve instructed our chief service provider that from Might 1 [2021] onward, each single article of clothes that reveals up on the Hire the Runway website, I would like it to be an article of clothes that nobody would have ever worn in 2020. For those who would have worn the merchandise throughout this 12 months of COVID, it shouldn’t be a part of Hire the Runway.
By the way in which, I don’t suppose that individuals are going to return into the workplace 5 days every week, I feel they may return into the workplace two days every week or three days every week. However even with that, I feel after they do present as much as their lives within the workplace, they’re going to point out up wanting prepared for his or her “boss” second. On the opposite two or three days every week, after they’re sitting at residence, they’re now not going to be locked of their home. They may really meet a colleague for lunch and exit and seize a espresso. So that you’re not going to be working from your own home in sweatpants and a T-shirt anymore. Individuals are not going to be dressing like they did in 2020. Once more, trend is about self-expression. Nobody needs to be in the identical mind-set in 2021 as we’ve been in 2020. We’ve to maneuver ahead.
On the subject of a return to the workplace: What might that appear like for Hire the Runway?
Our personal plan is to lean into flexibility. We’re solely going to require our workers to come back into the workplace two to a few days every week. So we’re not leaning into totally distant, however we’re leaning into flexibility. And we predict that’s a significant change from how we’ve operated up to now.
We’ve seen how productive everyone seems to be from anyplace. The explanation why we do need individuals to come back in two to a few days every week, is as a result of our enterprise is so collaborative, it’s a lot about group. I feel that, essentially, individuals keep at firms the place they’ve enjoyable, and the place they benefit from the individuals they work with. And if you go into a totally distant atmosphere, and also you don’t take pleasure in falling in love along with your colleagues and the tradition of that group, your job is only a job. Consider the switching price of shifting from one firm to a different firm [in a fully remote environment]—it’s identical to shifting from one zoom display to a different.
For those who have been beginning Hire the Runway at this time, through the pandemic, what would you have got achieved in a different way? Would you have got even began it within the midst of all of this?
After we launched Hire the Runway, it was in the course of a recession. A recessionary atmosphere is a good atmosphere for Hire the Runway, however a pandemic is a horrible atmosphere. Trend relies on social interactions, whether or not these social interactions are occurring at work, or they’re occurring in your private life. For those who’re spending a day alone, you’re probably not going to dress for the day. So I might say that whereas the pandemic goes to result in an unbelievable quantity of innovation for a lot of totally different causes, I feel that innovation because it pertains to trend particularly, isn’t going to occur till we’re in a post-pandemic world.
As soon as we’re there, if demand does enhance fairly shortly as a result of individuals are able to exit and do the issues that they actually miss doing, do you’re feeling assured which you could ramp again up by way of staffing—in terms of logistics and customer support and all the things else?
Sure, sure. I imply, it’s difficult. This can be a little bit of a hyperbole, however as difficult because it was to go from, like, 1000 to zero over the past 9 months, it’s going to be 10 occasions tougher to go from zero to 1000. What we’re seeing proper now, for those who name marriage ceremony venues, as an example, is that weddings are being booked 5 nights every week within the again half of 2021. I used to be simply on a name with the CEO of a journey firm and so they stated the quantity of bookings that they’ve for the summer season of 2021 is equal to what they’d in 2018 and 2019 mixed. Individuals are able to go on trip once more, they’re able to go to eating places, they’re prepared to point out up at a celebration, they’re able to dwell. Our enterprise thrives in these sorts of environments. When individuals are busy, they’ve loads occurring of their life. And Hire the Runway is a brilliant, environment friendly, superb solution to dress, to have selection in your wardrobe. So presently, each single space of the enterprise is concentrated on Might. I don’t really even care what occurs over January and February, which I feel are going to be our two worst months because the starting of the pandemic.
So we’re actually targeted on how can we present up in Might. We’ve enormous restoration plans by way of advertising, operations, and customer support. I imply, to go from X variety of shipments to what we predict shall be in a four-week interval, doubtlessly 5 or 10 occasions the variety of shipments that we now have at this time, ramping as much as what could be 20 occasions by the top of the 12 months. It’s a ramp that that we’ve by no means needed to do. Previously, development was incremental, and you would plan for that. That is totally different. As a result of we don’t know the depth of how the restoration will happen, we’re doing one of the best that we will. However it’s arduous to scale any logistical infrastructure as shortly as what we imagine this ramp could be.
Are you able to give an instance of one of many steps you’re taking to raised place you for that anticipated, quick ramp-up of demand?
One of many issues we’ve achieved is we’ve essentially modified how we take into consideration customer support, which is one thing that was once troublesome to ramp as a result of we had a customer support workforce that was sitting in a bodily location, working a selected shift. We discovered that in COVID, when our workforce went totally distant as a result of they needed to, our customer support scores really rose to the best ranges that they’ve ever been within the final 11 years within the enterprise. This occurred throughout one of the crucial troublesome occasions for the enterprise. At a time the place individuals are extra more likely to complain, we’ve had the best customer support satisfaction that we’ve ever had. And that’s as a result of our customer support workforce is extra productive, happier, and has a extra versatile way of life. That additionally means we’ve been in a position to ramp up hiring now from anyplace and in all places. We don’t have to simply rent those who dwell within the Dallas space, or within the New York space, we will rent customer support expertise from all around the nation. So we’re discovering far more numerous expertise swimming pools, and subsequently it’s enabled us to scale and ramp the workforce with way more velocity than up to now.
I additionally need to ask you about what we’re seeing with funding {dollars} going to feminine entrepreneurs. There was a large lower on this quantity in 2020. We’re additionally seeing a whole lot of scrutiny of female founders. Does this concern you? Do you suppose this recipe can result in a longer-term regression in funding going to feminine entrepreneurs?
The data here speaks for itself. Establishments, whether or not these establishments are enterprise capital corporations or non-public fairness corporations, and even the media, have much less confidence in ladies than they’ve in males. This isn’t nearly feminine founders, it’s about us as a society having much less confidence in ladies. When issues get tough, we go to the default reply, which is a white man. We’re like, okay, there are extra examples of white males being profitable up to now, so let’s make investments the place we all know that it’s going to be a winner. And what we contemplate to be extra of a dangerous asset class, and ladies are definitely in that class, we transfer our investments away from these dangerous asset lessons.
I wrote a piece that I posted on LinkedIn, about one of the crucial shifting experiences in my total profession. So I sit on the I sit on two public boards, I sit on the board of Estee Lauder, and I sit on the board of Zalando, a $20 billion ecommerce enterprise in Europe that sells trend. It’s based by three guys who’re my age, and so they based it 11 years in the past, identical to I based Hire the Runway 11 years in the past. One of many founders, Rubin Ritter, determined to step down. He made a public assertion that he had determined to spend extra time together with his household, which is completely regular. Everybody says that. However assertion quantity two was, “I’ve spoken with my spouse, and we now have determined that her skilled ambition ought to take precedence on this subsequent section of our life.”
It principally indicated to the world that due to his huge success over the past decade, that his spouse has needed to deprioritize her skilled ambition, that she was inevitably the one of their residence and of their household who was carrying extra of the load. This instance is going on in each residence in each couple internationally, the place individuals get married. The one who is incomes extra naturally will get prioritized. It’s not that males are discriminating towards their wives. It’s that we don’t have pay parity and since, even between the ages of twenty-two and 32, ladies are making much less cash in much less senior positions. When that pure distribution of labor occurs in your loved ones, it’s the rational resolution to prioritize the one that earns extra, which in 90% of the instances goes to be the person.
So the truth that this occurred, that Rubin stated publicly, “I need to prioritize my spouse’s skilled ambitions,” it was one of the crucial shifting moments of my total profession. I began tearing up in a board assembly once I heard this, as a result of if this was achieved with extra frequency, it will really be a lever that modified the scenario from ladies. You already know, it’s not the one lever. However it’s one thing that we simply must say out loud. That’s an instance of one thing actually optimistic that I’ve seen.
One other optimistic factor is that, I feel due to the pandemic, we’re going to see extra ladies enter the C-suite and keep within the C-suite than ever earlier than. So whereas this [COVID] has been devastating for girls who’re junior or mid-level of their profession, for girls on the prime, the pandemic is one of the best factor that ever occurred due to office flexibility. In a world the place I’m not anticipated to do as a lot enterprise journey, as a result of now a whole lot of these conferences can occur over zoom, and in a world the place I solely have to come back into the workplace two or three days every week and I can prioritize working from residence the opposite days of the week, this can naturally be an atmosphere the place ladies will be capable of have extra of that steadiness that they want and that they need. As a result of even ladies who’re extraordinarily profitable nonetheless taking over extra duty of their residence life and of their household life. So I feel that we’re going to see far more ladies in a position to have C-level jobs and be tremendous profitable in these jobs, as a result of the necessities of what it takes to be a C-level govt is essentially altering.
One final query: Do you see any scenario the place you’ll dabble in brick and mortar once more?
I feel bodily retail is a really inefficient factor to scale. I imply, even when we have been in each metropolis, across the nation, a whole lot of our prospects dwell in suburb. In rural areas, they don’t have entry to the bodily areas. So I simply I feel that whereas there could be a world by which we’re again into bodily codecs sooner or later, I feel they’re going to tackle totally different attributes, not only for Hire the Runway, however for everybody in commerce. A bodily retailer really has to supply a differentiated degree of service expertise.
So I’m not going to say, ”No, we’re by no means going to try this sooner or later.” However it must be so particular and differentiated and one thing that we couldn’t supply on-line. I feel that there are going to be only a few of these examples throughout the board in any business.
Extra must-read retail coverage from Fortune:
- 14 of the biggest bankruptcies of 2020—and who could be subsequent in 2021
- Individuals are extra apprehensive than ever about coronavirus—however are doing less to combat it
- From pet adoptions to D.I.Y. residence enchancment to sweatpants: 10 COVID-fueled consumer trends that will endure
- How FedEx, UPS, and Amazon prepared for holiday shipping deadlines this year
- How Peloton’s $420 million Precor deal positions the corporate for post-pandemic life
