Situation analysis
“Every woman should have access to this Cinderella experience for the special occasions in her life. Rent the Runway sells the self-confidence that comes when a woman wears brands she never dreamed she would be able to afford. Whether a woman is 15 or 55, she wants to feel beautiful. Rent the Runway makes refreshing your wardrobe a magical, convenient experience. —Jenn Hyman, co-founder and CEO (1)
The Business model analysis.
The Business model is validated, although, it is not perfect. There are many problem that affect customers, efficiency and profit. There costs per visit are normal. GTM is sluggish but effective. PPC is the complete opposite and was made quickly and is ineffective.
CPV. The website was not refined,
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user friendly and did not have additional features. Most customers are from the age of Age group 15-30 years, and they market to them with newspapers and magazines. Cinderella affect is when a women falls in love with a dress and feels empowered and beautiful. They have begun to think about saving money reduce waste. The Exclusivity of their company is attractive. Guaranteed fit helps women feel safe and sure about their purchase. GTM- A Credit for one referral is 20 dollars. This promotional tool is highly affective but cuts into their profit by how much? Becoming a member is by Invitation only. When they did their market trials 40% new customers through referrals and 60 % was by word of mouth. The Market trials brought interesting results. 125 out of 140 women came to their event. Those who came were by invitation only and proved that their advertising and referral system was a validated method. There are very few physical store sites and there is sound reasoning for this. During this event, 75 percent of the women rented and 85 percent of the dresses were returned within 24 hours. 51 out 53 dresses were returned with little damage. The three dresses that were not returned perfectly only had light strains that were easily and affordably removed. It seems that there would be about 7000 dresses in inventory from the information and time of this article. ( 3) PPC -PPC is purchase per click and they need to improve and start on these key issues; Key works, Stylist, manage inventory, waitlist. Their website must be fine-tuned and improved to incorporate these functions and be more attractive. Although we know the history, we should understand what situation this leaves the company is in. The situations can be grouped into three categories, namely owners, customers, and company. Sixty percent of the new customers are from referrals and forty percent is by word of mouth. Those who are referred by a friend are most likely to rent and become customers. Started with a seed of 1.75 million. Bain capital ventures is one funding group we know of. They are The Trust of owners is a major threat. The hire familiar people they are comfortable with, which threatens efficiency and promotes corruption. They paid their Web designer 50 percent of the project money in advance. This is unheard of and extremely a risky action Action plan Expand-they need to increase funding and advertising immediately in order to grow their business and expand inventory. At the time of this article buying 2000 new dresses at whole sale and enough accessories for 500 complete outfits seems doable. This would cost 650,000 to 1,000,000 dollars. Change pitch- and gain new brans and funding. This market is very aggressive and cannibal as described by von Ferguson and their performance and increase sales of their goods in the market will help them not only be comfortable, but want to associate with RTR. To overcome this fear of a The Cannibal market must be addressed and they must adapt their pitch to encourage and promote designers to everyone, especially the designers themselves. They need to produce a fashion line themselves. They then can make an upwards of 100 dollars rent. They would first hire out a fashion company to produce some of their desired products and then test them with women. To spread their name they could do a raffle of free products at new store locations. More stores and strategic located stores- Cinderella affect is real and amazing. We want to have this experience happen all over the world more regular Brand ambassadors and Facebook marketing will become a reality very soon. Fashion advisors need to become a reality. Major cities like new York, Chicago , Paris, Italy and many other major location needs to have at least one store location to promote excitement and awareness. Dress up section of the website.-The Website and team was ineffective and ill-chosen in the beginning. Web designers and managers-“Unfortunately, the look he created was all wrong,” said Fleiss. “The imagery was orange and pink: too young, teenybopper, girly.” (See Exhibit 2a for an image of the initial design and Exhibit 2b for an image of the launch design.) “He had 20 years of experience and he thought his designs were perfect. Our philosophy is to iterate, make mistakes, learn, and change. He was never going to be someone who had the flexibility to make changes that way,” she said. (Reference 2.) Offer a “buy now” feature-People often love products and get attached. Some women may forget to return and will want to buy a dress. This option should be available and will make then more profitable as well. In this market of Cinderella affects this will happen. In this exhibit we see a very poorly made organized and juvenile looked website. It does not seem sophisticated and is proportioned terrible. It is not classy or sexy and would have ruined their company. The need to Resolve shipping efficiency and system Begin company movement into becoming cooperation, this would bring addition revenue and a worldwide business to a reality. Website issues need for powerful experience (site 7) The RTR Team must have more connection, communication and accountability. The need to hire business managers for hiring and they must become like celebrities and get on talk shows and other media. The Company could be worth as much as 10,000,000 in 2 years. Startup fashion company’s clients and investment usually less than their initial investment. The market- “For apparel brands and retailers the rebalancing is excellent news as the global women’s apparel market growth rate will increase by 50 percent over the next 12 years. Historically the market has grown at just over 3 percent per year; by 2025 the growth rate is expected to approach 5 percent per year. Yet, in most markets the growth rate will slow down and the acceleration is driven by the increasing weight of emerging markets in the total. Emerging markets account for 37 percent of women’s mid-market apparel today, but by 2025 their share is expected to rise to over 50 percent. During this time these markets will have grown three times faster than mature markets. This trend is occurring for mid-market and luxury apparel. In 2004, emerging countries had a share of only about 7 percent in the luxury apparel market; today they account for 14 percent of the market, and by 2025 they will have approximately 25 percent of it. [Exhibit 1 4 ].” (referance 5) “Founded in 2009, the New York-based company is planning to generate $48 million in revenue this year and projects $80 million next year, according to investors who have seen Rent the Runway’s financials.
(A separate person close to the company says revenue is projected to top $100 million next year.) In 2013, Rent the Runway generated $28 million, which was 25% lower than internal projections, and lost $14.5 million. In 2012, the company brought in $17.8 million and lost $12.3 million. In 2011, it brought in $10.9 million and lost $5 million.”(exhibit 2 5)
Contacts -Agreements/contracts
“ . After launch, however, RTR collected data that proved that opportunities for incremental retail sales through broader exposure far outweighed cannibalization risks: 98% of RTR’s customers rented brands they had never owned, and 90% reported after their rental that they either had purchased or had high intent to purchase that brand. Based on this data, only a small fraction of designers subsequently requested an exclusive selling window for department stores.” (Exhibit 2)
Realistic- growth rate is upwards of 50 percent in the next ten years.
Profit rate or marginal profit is as high as 10 percent. While this seems very negative at first. Data seems to be 5000 signed up at this time and will increase as the website and PPV techniques are
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used. Credit card- would bring substantial revenue and prestige to the company edit also promotes purchases with any business. It would increases sells as well. Having credit or the ability to pay later has proven to increase sells and at times prestige. (Site 6) Timely (timeframe) First- expand and buy new inventory and accessories Second- improve website and refine company Contacts- make more store locations, hire new employees, and build more store locations. Risk assessment. These actions are in the best interest of the company, and the safest path possible. What could go wrong? The company could lose customers due to untimely deliveries and a unusable website. How would the recover? They can recover through debt, and assistance from affiliating parties. How could they adapt? If they have too much inventory they can store buying new inventory and invest elsewhere. How safe is expansion vs resolve now. The must grow to gain customers, gain strength as a company and raise addition capital for their website and fashion line. Dilution of ownership The still need to release and have their own line of fashion for others like von Ferguson to fund or associate with their company. The following are concerns and improvements the company may make, New generation customers marketing, more Fashion advisors, Variety, Lack of associations and connections, marketing, they screening process of new employees, faster Business processes. Hire through legitimate sources and companies Lack of knowledge and experience in retail and business, Measurable, Money made on every dress. Exhibits are to illustrate a key point in the text of the essay. 1.
Pg 1 opening statements.
2. Pg6 Merchandising operations, paragraph 2. Eismann, Thomas. "RENT THE RUNWAY."Https://byui.brainhoney.com/Component/ActivityPlayer?courseid=17010445&enrollmentid=45330748&itemid=KHBP2. Harvard Business School. Web. 20 Jan. 2016.
3. Pg. 7 Designing and building the website paragraph one. Eismann, Thomas. "RENT THE RUNWAY."Https://byui.brainhoney.com/Component/ActivityPlayer?courseid=17010445&enrollmentid=45330748&itemid=KHBP2. Harvard Business School. Web. 20 Jan. 2016.
4. Original exhibit pg2 Remy, Natalie. "Unleashing Fashion Growth City by City."Http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/marketing and Sales/pdfs/unleashing_fashion_growth.ashx. Web. 20 Jan. 2016
5. Original exhibit pg1 Griffith, Erin. "Rent the Runway Raises $60 Million." Fortune Rent the Runway Raises 60 Million Comments. 19 Dec. 2014. Web. 20 Jan. 2016.
6. Picture Heggestuen, John. "Emerging Payment Technologies Will Create New Winners And Losers In The Giant Credit Card Industry." Business Insider. Business Insider, Inc, 18 Sept. 2014. Web. 20 Jan. 2016
7. "Necessary Clothing." Trendy Designer Fashion at NYC. Web. 20 Jan. 2016.
Referenced at a relevant point within the
essay
Maxx benefits from chaos by picking up the pieces, merchandise at a discount, when other retail stores close, or have overruns, or unexpected changes in demand and in return pass these savings on to their customers who shop for value (Levine-Weinberg, 2016) This is the demand-side benefits of scale when the consumer rather pay less for name brand merchandise than to pay more for the same designer in the department store. The stores that where having difficulty in the retail market left themselves vulnerable by not defending their position and T.J. Maxx proactively attacks this opportunity with its purchasing power and passes the savings to its customers. This proactive process of attacking and defending is what Wee (2016) calls the holistic and balanced perspective of handling competition. Moreover, this business warfare strategy of attacking struggling competitors is called offensive marketing warfare strategy (Grewal, 2014).
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Berry, Hannah. “The Fashion Industry: Free to Be an Individual.” The Norton Field Guide to
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Werle, Simone. Fashionista A Century of Style Icons. New York: G.P. Putnam's Sons, 1977. Print.
By mid-2005 AT kearneys revenue had fallen for 11 straight quarters and it had been unprofitable for the last quarter of 2004 and the first two of 2005, amounting to loss of $36m.
Deregulation for 16 years (1978) has resulted in an icnrease of domestic carriers from 36 in 1978 to 100 in 1985.
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Revenue Mix: REVPAR measures only the total rooms’ income generator and it doesn’t take into account revenues from other areas of the hotel. This resulted in an inaccurate analysis when comparing hotel performances.
Petro, G. (2012, November 5). The future of fashion retailing --- the H&M approach (part 3 of 3). Retrieved from http://www.forbes.com/sites/gregpetro/2012/11/05/the-future-of-fashion-retailing-the-hm-approach-part-3-of-3/
Gardner, Marilyn. "Fast Fashion Is a Problem." The Fashion Industry. Ed. Roman Espejo. Detroit: Greenhaven Press, 2010. Opposing Viewpoints. Rpt. from "Fashion Industry Gives Rise to a 'Disposable Culture, '." The Christian Science Monitor. 2007. Opposing Viewpoints in Context. Web. 22 Nov.