“Hell will burn over before I work with Rent the Runway.”
That was the response Jennifer Hyman received when she pitched her company to Oscar de la Renta, an award-winning fashion brand known internationally since the 1960s. Like others, the prestigious fashion icon was worried that Rent the Runway would disrupt the entire fashion industry and cut into their bottom line. “These were the types of reactions I got from designers all the time,” says Jennifer “I’d have to just be like ‘Thank you so much for your feedback. I’ll be back in six months to re-pitch you.’”
Jennifer, who views ‘no’ simply as ‘not right now,’ did go back in six months. Today Oscar de la Renta is one of their biggest partners. “Everything is an opportunity for learning, especially the no’s,” she says.
[tweet_box design=”default” float=”none”]Check out these tips from @Jen_RTR of @RenttheRunway on how to #innovate in your #business—or justify that #innovation that everyone thinks is ‘crazy’![/tweet_box]
Jennifer has created a company that brings high fashion to the masses via renting versus traditional ownership. Inside the company, no one, not even Jennifer herself, is an ‘expert.’ Instead, each of the 1200 employees is encouraged to study the world around them to gather the information and data that will lead to innovation.
[tweet_dis]If you want to innovate in your company, market or industry—or justify that innovation that everyone thinks is ‘crazy’—try looking in these three places.[/tweet_dis]
3 Places to Look to Discover or Justify Your Innovative Business Ideas
The information you need to plan and justify your next innovative idea is all around you; you just have to know where to look. Here are three places where Jennifer found justification for her business and proof that she could create a multi-billion dollar company and become one of the few female CEOs to reach unicorn status.
1. Look at Other Industries
In 2008, when Jennifer first formulated her innovative business ideas for Rent the Runway, getting dressed each day relied on the ownership model and few people rented clothing except for the fanciest of occasions. However, as Jennifer examined the transportation industry, she noticed the trend toward rentals that could certainly cross over to fashion.
“It was 80 years ago in the transportation industry that you had the opportunity to lease a car—the first time you had a choice, you could buy a car, or you could lease a car,” explains Jennifer. “Sixty years ago, companies like Hertz and Avis said ‘Maybe you don’t need to lease a car for a year; maybe you’re going on a business trip, and you just need to rent a car for a week,’ and they gave you the opportunity. It was 25 years ago that Zip Car said ‘Hey, maybe you don’t need a car for five days of your business trip—maybe you need it for five hours for your trip to Costco.’ Uber and Lyft and the million competitors that they have are just the next generations of that. They say ‘Maybe you don’t need it for five hours, maybe you just need to be in a car for five minutes.”
What is trending in other industries and is there a way to apply those trends to yours? That just maybe your ticket to innovation, or to convincing potential investors that your idea shows promise.
2. Look at Changes in Demographics
Jennifer also examined demographic changes in the United States to plan out her company and to determine if her innovative business ideas were sound. Two major demographic transformations in America convinced her that she was certainly on to something.
For one, there is a trend in the US (and in fact the entire world) toward urbanization. By 2030, 60 percent of Americans will live in city areas, and the one sticking point is that when you live in a confined area, you lack the space that you have when you live in the suburbs or rural areas. On average, people acquire 64 new clothing items per year and amass 10 years’ worth of clothes in their closets. As more people move to cities, it is clear that the traditional ownership model will not work.
The other trend is the increase of women in the workforce. In the 1980s, women started going to work in droves and now 70 percent of women across the country work. However, women still control 85 percent of all purchases and do over 50 percent of the childcare. The major thing these busy women lack is time. They are looking for quick, efficient and frictionless shopping experiences, which is why Amazon has become so popular.
When Jennifer combined these demographic trends, she predicted that we will be moving to a third kind of behemoth in retail—renting versus ownership, which will benefit the lives of busy professionals living in cities who lack physical space, can’t buy all the things they want, and desire an efficient shopping experience to get what they need for the time period they need it.
What do demographic changes and predictions mean for your industry? Can you capitalize on these things to brainstorm a new model of business, product or service that will fit in with the changing times?
3. Look at the History of Your Industry
Looking at the history and present reality of your own industry can also help you figure out where the gaps are and where your ideas fit in. As Jennifer looked at her industry, she noticed that many fashion retailers were catering to one of two things (a) giving customers a high-quality product at a low price or (b) giving customers access to branded clothing that was pre-owned. However, both of these innovative business ideas haven’t been able to scale because they still rely on the ownership model, which means that customers aren’t buying at high enough frequency.
Digging deeper, Jennifer discovered that the only fashion retail businesses in the past 20 years that have been growing are companies like Zara, Forever 21 and H&M—a category of clothing called ‘fast fashion’ because it is low quality and often falls apart after it is washed a few times. These companies have primed people to be okay with disposable fashion. “H&M is the largest rental business on earth,” realized Jennifer. Essentially customers had already accepted low-use ‘rental’ clothing. With Rent the Runway, Jennifer could offer that experience and low price along with the status of designer brands that would otherwise be unattainable for most shoppers.
After meeting with higher-ups at a number of department stores, Jennifer once again received confirmation that shoppers would actually be interested in renting clothing—and they had been doing it in a sneaky way for years. “Oh my god, Rent the Runway has been happening in our stores for generations!” said the head of Neiman Marcus after Jennifer explained the idea for her company. As it turns out, January 2nd is one of the biggest return days at all the department stores because people purchase an outfit for New Year’s Eve, leave the tag on, then return it afterward. She found out that 70 percent of dresses returned to Neiman Marcus are returned after having been worn. Jennifer had even more proof that shoppers were interested in renting clothing and her business idea was sound.
“Every smart entrepreneur will do research to position their company in the market. If you have done it already—look again. Finding evidence that customers want your product or service and there is a gap in the market means you could be onto something big.”
Real-world data can justify your innovative business ideas or lead you to your next creative breakthrough, and those data is all around you. Jennifer has used her observations and research to obtain $19M in funding, more money than any woman in US history. She has then applied the knowledge within the business to build out infrastructure and nail down logistics that, in the future, could make it possible to rent any number of short-time-use items (think that ski equipment that you use for three months a year and then it just takes up space during the other nine). [tweet_dis]“You can’t be an expert on a world that’s continuously changing,” advises Jennifer[/tweet_dis]. Pay attention to the trends and changes, and you could disrupt your entire industry, just as Jennifer has.