The Black Tux v2: Rent The Runway (Unlimited) for Men
Recurring Revenue Land
Recurring Revenue is the goal which every company strives for. It is ideal if your offering is organically recurring (i.e. Netflix, gyms, Blue Apron) but for the ones that aren’t, there are a clever ways in which to transform into them.
Uber, for example, is not naturally recurring. You take a ride when you need it. It’s not yet optimized for a daily commute. Therefore, they released a monthly subscription to gain a discount to their entire product line, ranging from free Uber Eats delivery to free JUMP bikes to surge-free rides.
Rent the Runway, now a unicorn, started out as an occasion dress rental marketplace. As we wrote here, https://medium.com/@Citadines_Group/frequency-of-use-1f8e302f3fe5, there are only so many occasions that a woman needs to wear a $1,000 dress to. So they added high end, everyday wear to their catalog and launched their “Unlimited” offering. For $89/month, clients can rent 4 pieces at a time. This allowed them to become a billion dollar company.
RTR had a captive audience, now they have an alternative offering. They knew there would be a market for this because of the quick rise of fast fashion brands such as Zara and H&M.
However, fast fashion has received a negative connotation. From outsourced, underpaid and overworked manufacturers, to environment threatening practices to poor quality — millennials have been seeking an alternative. RTR provided an alternative to looking good on a daily basis without having to settle for poorly made clothing. Also the millennial closet space doesn’t get impacted as much.
If It Looks Like a Duck, Quacks Like a Duck
Just like RTR, The Black Tux, currently rents high end, occasional wear — just on the men’s side. They already have the infrastructure in place to take a user all the way from finding a suit to shipping it out to receiving and dry cleaning it for future customers.
The Black Tux currently collects a lot of useful information on their potential and active customers. Age, address, height, weight, measurements, and shoe size. These data points are very strategic for purchasing inventory to knowing which pieces to surface to the exact user, to ensure the best fit.
By leveraging the Nordstrom partnership and their 300+ locations, the cost of brick and mortar stores have been strategically offset. Even RTR didn’t do that. The Nordstrom storefronts can be “try on” centers where customers can see how they look in the pieces that they would be renting. This would allow The Black Tux to save a lot on shipping costs and have a larger presence in Nordstroms.
The Black Tux is also currently positioned to offer a high end product. This will help in ensure the everyday wear side is associated with a premium product and will not be directly competing with fast fashion brands. It’s like how you would feel comfortable ordering a burger from a steakhouse, but not as much ordering a steak from a burger place.
Assumptions
In order for this to be successful we have to take on several assumptions.
The first being that men would feel comfortable wearing everyday clothes that were previously worn by others. Maybe there is a slight nuance, where men might feel comfortable wearing anything that doesn’t directly touch their skin such as a sweater or jacket.
The second assumption is the habit of of wearing and then returning and then going back onto a portal to find the next set of clothes to rent would take.
Both assumptions can be tested leveraging highly engaged, past customers and researched OKRs.
Conclusion
Lastly, a constant engagement with the client would create a virtuous cycle of everyday wear lending share of mind to the tuxedo business and vice versa. In addition, the more frequent shipments of the brand’s boxes will help shipping costs double as marketing costs. There will be that many more impressions of the boxes, sparking curiosity and helping with customer acquisition.
Businesses don’t always start out knowing their ultimate path. Through serving an ever evolving market and then realizing that you already have all the tools in place to uncover a whole new segment, is what founders’ dream of.
If you liked this post, you might also like:
If you liked the overall message of this post, feel free to get in touch with us. We do speaking engagements — http://www.citadinesgroup.com/#contact
