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In the 1995 popular culture classic, important character Cher Horowitz uses her state-of-the-art '90s computer to decide on her outfit of the day.
29 years later, a man-made intelligence-based fashion stylist is not any longer a screenwriter's pipe dream. Rent the Runway, the pioneer in online clothing rental, plans to depend on AI to spice up its sales. CEO Jennifer Hyman has launched an AI-powered search feature and desires to integrate the technology into the corporate's personal styling service.
Unfortunately, it would take greater than software-generated fashion suggestions to enhance the difficult economic situation of the clothing rental business.
RTR was founded in 2009 as a proper and big day clothing rental website. In 2016, it switched to a subscription-based model. Users pay between $94 and $235 per 30 days to rent designer clothing.
The business struggled during Covid. Post-pandemic, RTR needed to cope with a changing retail landscape. Inflation-weary consumers are spending less on clothing. Hybrid work styles mean sweatpants and leggings still predominate. It has also received recent competition from corporations like Nuuly and Armoire.
RTR reported 125,954 lively subscribers at the top of January. That's a 1 percent decrease from the identical period last yr and in comparison with 133,572 subscribers in January 2020.
Demand is only one problem. Another cost factor is the associated fee of buying, storing and cleansing designer clothing. Due to the capriciousness of fashion, the shelf lifetime of this inventory is brief. RTR's revenue of $298.2 million last yr was dwarfed by its incurred costs and expenses of $378.2 million. RTR has never made an annual profit.
The stock, which was valued at $345 when the corporate went public in October 2021, now trades at just over $11, giving RTR a market value of $41 million. Stitch Fix, one other clothing subscription service that uses AI, fared little higher. Its shares have lost 98 percent of their value since their peak in 2021.
Tellingly, one of the vital successful clothing retailers within the US today has little to no e-commerce presence. TJX, owner of TJ Maxx and Marshalls, is a reduction retailer. It buys excess inventory from top brands for pennies on the dollar after which resells it cheaply. Bargain hunters flock to stores hoping to find a hidden gem. TJX reported net income of $4.5 billion on revenue of $54 billion last yr, each record highs. Some shoppers simply want low-cost and plentiful inventory, not fancy software, when on the lookout for designer clothing.
