According to Bloomberg, the average Neiman Marcus shopper is 51 years old. But that’s about to change, thanks to a new partnership with Rent the Runway (average customer age: 29).
Neiman Marcus and Rent the Runway are joining forces to create a shopping experience aimed at hooking Millennials. In addition, the luxury department store and the up-and-coming e-commerce business are hoping to expand their profits and solidify their positions in the luxury fashion marketplace.
Neiman Marcus, which has suffered through four straight quarters of declining sales, will open its first in-store Rent the Runway boutique in San Francisco this Friday. The 3,000-square-foot space will offer a variety of clothing and accessories for rent. A Rent a Runway stylist will be on hand as well to help shoppers design their look.
“Partnering with Rent the Runway’s innovative model, combined with their affinity amongst Millennials, provides an excellent opportunity for us,” said Karen Katz, CEO of Neiman Marcus Group. “Together we’re helping the next generation of luxury consumers discover and fall in love with designer fashion.”
Neiman Marcus could certainly use the youthful energy. In the most recent quarter, comparable sales fell 4.1 percent, losing the retailer $407.2 million. Katz noted the likely cause: shoppers are interested in buying what they see on the runway right then and there. They don’t want to wait months for those styles to come into stores.
Enter Rent the Runway, founded in 2009 by two Harvard Business School graduates, Jennifer Hyman and Jennifer Fleiss. Rent the Runway began as an online-only rental store, but by the end of this year, it will have seven brick and mortar locations. Earlier this year, the company was valued at $500 million, with 2015 revenues estimated between $70 and $100 million.
The question must be asked, though: Wouldn’t offering clothing for rent take away from potential sales? In fact, the businesses involved aren’t concerned. They’re more interested in having the opportunity to create a physical experience for their shoppers. “Most people want to touch, feel, and look before they make a purchase. They do like the tactile experience,” said Brendan Witcher, an analyst at Forrester Research.
The typical shopping cycle these days involves preliminary online research followed by an in-person purchase. With the option to rent an outfit rather than buying outright, Neiman Marcus and Rent the Runway are hoping to expose shoppers to a wider variety of brands, thereby creating customer loyalty and leading to sales down the road.
Will this new runway be a flop or a success? Only time will tell.