Is Rent the Runway's 'retail price' misleading customers?
When someone visits the Rent the Runway website looking for an upscale dress to rent at a reasonable price, they might think they've gotten a great deal compared to the retail price. But in some cases, the retail value Rent the Runway posts on the website isn't the price you would find the dress selling for on the rack. That's because some of their dresses never make it on racks — brick-and-mortar or virtual — in the first place.
Rent the Runway recently began offering a private label brand of dresses called Slate & Willow alongside their selection of designer goods, reports Consumerist. The Slate & Willow dresses available to rent are given a "retail price" despite never actually being available for sale. That value is calculated based on the cost of production, according to a source quoted in a Buzzfeed article on the practice. The Rent the Runway website does not indicate that the item is a house brand.
So-called "Never-ending sales" have grown controversial. The Consumerist article noted recent lawsuits against Kohl's, T.J. Maxx and other retailers for offering merchandise at an apparent discount with a suggested retail price that the store never actually charges.
Source: renttherunway.com
The rental element adds a twist to Rent the Runway's practice. Customers come to the site not to buy an expensive dress, but to wear one at the fraction of its retail price and then return it. So customers are not, strictly speaking, buying something on sale.
But a high "retail price" gives a dress a perceived value that could encourage a customer to rent one dress over another. One has to wonder, for example, were two dresses — one designer and one private label — to both be listed as retailing for $500, if the company would net more by renting the house brand.
A New York Times article from 2014 hypothesized that the boom in the rental economy is a result of a post-recession shift towards consumers valuing experiences over possessions. In the article, a Rent the Runway board member indicated "fallow assets" — expensive items that customers rarely use — were the best bets for the rental economy.