A fashion company once known for helping shoppers rent designer dresses for weddings and special occasions is now making a broader bet on the future of retail.
Rent the Runway is expanding beyond its traditional subscription rental model, testing a new marketplace and advertising platform to unlock new revenue streams. The move will help reposition itself for its next phase of growth.
The shift comes at a pivotal time, as the online clothing rental market is on track to reach a record $2.8 billion in 2026, according to Future Markets Insight.
The industry is expected to grow at a 9.6% Compound Annual Growth Rate, driven by consumers’ changing preferences toward ownership.
But while the opportunity is growing, competition is intensifying.
Established names like Nuuly, Armoire, and Stitchfix are pushing deeper into fashion discovery, personalization, and apparel subscriptions.
Rent the Runway is now moving aggressively to protect its position.
Rent the Runway’s push beyond subscriptions
For years, Rent the Runway was closely associated with occasion wear, designer dresses, and event outfits, as well as short-term wardrobe access.
But with increasing competition and slowing growth, the company is signaling broader ambition.
During the company’s recent earnings call, CEO Jennifer Hyman said that in March, the company piloted a marketplace with a small group of loyal customers.
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The new feature will allow customers to purchase complementary products alongside rentals to complete the look.
The curated assortment will include:
- Shoes
- Shapewear
- Basics
- Beauty products
- Accessories and essentials
“The goal is to increase the attach rate of orders by providing the wardrobe essentials that complete her rental book. Our research shows the demand,” said Hyman, elaborating on the company’s strategy.
And while this may sound like a small step, strategically, it marks a major shift, placing the company in direct competition with other major players in the industry.
Instead of relying only on monthly memberships and one-time rentals for revenue, Rent the Runway is creating a multi-revenue model.
This also makes shopping easier for customers who have to purchase accessories to complete their rental look. And Rent the Runway is trying to capitalize on that gap by providing complete curated looks.
AI is the key to the next chapter
A major part of this next chapter will be technology, especially artificial intelligence.
Management said that the company is increasingly using AI and data tools to improve personalization, merchandising, and recommendations.
That matters because the whole point of these rental platforms is to help customers find the right items that complement current trends and are quick and easy to locate.
While sticking to certain price categories for designer pieces, making renting a better shopping experience.
“Our customers will no longer have to do the work of imagining what combination of items they should rent together or how one would wear a specific item to make it more dressy, more casual, appropriate for the office, or vacation-ready,” said Hyman at the company’s earnings call.
“Think of it as having a stylist in your pocket at all times.”
And to ensure this, the company is leveraging AI to increase “visual versatility,” meaning customers can see complete looks across different models and sizes, images, and motion, so renting becomes a less risky option.
For customers, this means a smoother shopping experience, while for the company, it could translate into increased basket size, repeat spending, and loyalty.
Every day wardrobe becomes Rent the Runway’s big opportunity
Rent the Runway is also looking beyond weddings and formal events.
The company’s strategy reflects a push toward more frequent use of clothing, including workwear or casual dressing options, according to Retail Dive.
The company plans to launch over 30 new brands in 2026 and is increasing its everyday and workwear assortments by 20% each.
As special-event demand can often be seasonal and inconsistent, the company is adopting competitor Nuuly’s strategy and increasing options in the everyday and workwear categories.
Nuuly’s rise raises pressure
Over the years, Nuuly has proven to be a profitable bet for Urban Outfitters and currently has over 420,000 subscribers, a substantial share of the increasingly growing rental market.
It has gained momentum by focusing on casualwear, denim, trend-driven apparel, and everyday flexibility, along with a strong social media presence and continued support from many influencers.
Urban Outfitters’ Q4 2026 earnings reported that its subscription segment net sales increased 42.6%, mostly driven by a 40.3% increase in average active subscribers.
But Rent the Runway has been trying to work its numbers around. It also partnered with Amazon in 2023 to sell pre-loved clothes and expand its customer base.
Improving performance gives room to expand
The company’s latest earnings report suggests growing momentum.
Rent the Runway reported $91.7 million in revenue in Q4, up 20% year over year, along with a 20% increase in active subscribers, ending 2025 with 143,796 active subscribers.
For the full year, revenue climbed 7.7% to $329.8 million and net income rose to $22.6 million, compared with a $69.9 million loss a year earlier.
But gross margin declined 32.6% from 37.9%, highlighting pressure from inventory ownership, dry cleaning, shipping, and fulfillment costs.
This year, the company will use computer vision to “salvage inventory” by getting timely checks on wear and tear, ensuring “more units remain in peak rotation for longer while reducing manual labor costs.”
This expansion into the marketplace and advertising revenue program is part of the company’s mission to make Rent the Runway a leading place for fashion.
And the company is not shying from spending on advertising and SEO strategies to increase visibility across search engines.
It already offers B2B dry cleaning services, and with a new online marketplace, “outfit groupings” which give a complete outfit in one place instead of searching through a sea of single items, and an increase in everyday clothing purchases, Rent the Runway is heading straight into becoming a strong competitor.
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