Nordstrom and Rent the Runway drive future of retail

Clothing rental companies are shaping the future of retail at department stores.

Nordstrom is expanding its partnership with Rent the Runway, the New York-based clothing rental company valued at $1 billion that lets shoppers rent styles from designers like Gucci and Oscar de la Renta, in more stores across the U.S.

Rent the Runway drop-off boxes will be available at 30 Nordstrom locations, an expansion from its previous five stores, starting Nov. 18. Customers will be able to return their clothing like designer dresses or ready-to-wear work attire, at drop-off boxes inside Nordstrom. The Seattle-based department store will also incorporate some of its own inventory into the platform, so shoppers will able to be rent looks they love from the store via the partnership instead of buying them.

Nordstrom’s expansion into the rental market is the latest way department store retailers aim to keep up with e-commerce sites and get customers in stores.

Burberry announced a partnership that would motivate customers to buy and sell items through the RealReal, a luxury consignment marketplace, last month. And Hudson’s Bay announced in August it would sell Lord & Taylor to clothing rental subscription service Le Tote for $100 million, which gives it control of more than 38 of the store’s locations, online sales and all of its inventory. The rental trend extends beyond the luxury market. Outdoor retailer REI announced earlier this year it would offer some of its products like skis, camping equipment and hiking gear for rent.

The move towards integrating rental models into retail comes amid rising rent costs as department stores struggle to stay in business. Barneys filed for bankruptcy in August and was acquired by Authentic Brands Group, which owns Nine West and Vince Camuto, last month. And Dressbarn is set to close all of its stores and reposition itself as an e-commerce-only retailer early next year.

Rent the Runway, which started off as a direct-to-consumer designer dress rental service, has since expanded to workwear and clothing for every day. In addition to opening brick-and-mortar stores for shoppers to try on clothing, it’s been leveraging hubs like WeWork adding drop boxes in offices for users to more conveniently drop off their clothing rentals. And department stores could benefit if shoppers decide to shop around after returning clothing rentals to stores like Nordstrom.

Renting the runway instead of buying it seems to be the future of retail as more clothing stores start offering rental subscription options in recent months. Even affordable retailers like American Eagle and Urban Outfitters started renting out jeans, tops, bottoms and dresses earlier this year for between $50 and $88 per month.

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Nordstrom said its initial pilot program with Rent the Runway was a success.

“We’ve received great feedback from our customers about the convenience of the Rent the Runway Drop-Off Boxes in our Los Angeles area Nordstrom locations and are excited to offer the service to customers in cities like San Francisco, Chicago, Dallas and more,” Jamie Nordstrom, president of Nordstrom stores, said in a statement. “The expansion of our partnership helps us better serve our customers through innovation around products and experiences.”

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