Rent the Runway sued by rental competitor

Dive Brief:

FashionPass, an apparel rental business founded in 2016, filed a lawsuit Tuesday against competitor Rent the Runway, according to a complaint filed in the superior court of the state of California.
The lawsuit alleges that FashionPass has "suffered, and will continue to suffer, damages as a result of Rent the Runway's monopolistic and anti-competitive conduct." Rent the Runway did not immediately respond to a request for comment from Retail Dive.
The company further alleges that Rent the Runway "devised a scheme to eliminate competition from FashionPass by using coercive tactics to pressure the manufacturers with which FashionPass conducts business, to refuse to sell merchandise to FashionPass." FashionPass named 20 manufacturers, including labels like The Jetset Diaries, Saylor and ASTR the Label, as having been pressured to sell exclusively to Rent the Runway or lose business altogether.

Dive Insight:

As Rent the Runway closes in on a decade in operation and hits unicorn status, it's facing more competition than ever within the rental economy it helped popularize in retail. As more players like FashionPass crop up, Rent the Runway is under pressure to differentiate its merchandising mix and offer value in other ways to retain subscribers. Whether it's crossed a legal line in warding off competition will be up to a judge.

Last year, CEO and founder Jennifer Hyman told Retail Dive that roughly 9 million women are Rent the Runway members, but could not reveal specific numbers on how many active subscribers the company has. Unlimited customers, who pay $159 a month, use Rent the Runway 150 days a year, Hyman said at the time.

The Rent the Runway subscriber has changed dramatically from the early days, which targeted professional and formalwear needs. Now, subscribers can rent everything from jeans to beach bags and ski jackets.

The business prides itself on being a mashup of the world's largest dry cleaner as well as a logistics operator, style consultancy, subscription service and tech company. Last year, the company also began monetizing its expertise in supply chain through the launch of a logistics arm that helps brands through the process of offering their clothing for rental. It's a compelling value proposition for brands looking for growth given the sharing economy is estimated to hit $40.2 billion by 2022, according to 2017 estimates from Juniper research.