CEOs Jennifer Hyman and Chip Bergh explain.

How Rent The Runway and Levi’s survived the pandemic

Conferences

How Rent The Runway and Levi’s survived the pandemic


So let's talk about the last 20 months. Uh, you know, there's, there's a cliche in in the business world and never let a crisis go to waste. So let's talk a little bit about what have the last 20 months allowed you to do to renew your businesses and innovate that you might not have been able to do otherwise. Uh, in your case, jen everybody says they think of your company as oh, you rent for special occasions, but in fact subscriptions subscribers are 83 85% of your revenue and you guys just bought a yoga wear brand. So I mean you have not been static. So jen maybe let's start with you. What have you been able to do? Uh thanks to this crisis? Well, um, We've made two major changes in the business. One was the continuation of a strategy that we kind of started in 2018 to diversify how she uses our product. So she uses our subscription to get dressed over 80 days of the year. It's a utility for her and prior to the pandemic, she primarily used us to get dressed for work and to get dressed for events she had in the evening, I think because of the pandemic, we were able to diversify her use case into casual occasions. Now she's using a 50% of the time for those kind of casual everyday moments and that also benefits all of our brand partners who like levi's who are in more casual, they offer more casual clothing. So now they're getting more utility, more customer acquisitions through that. So what we started to do is not only diversify her use case but diversify how we work with our brand partners to enable them to basically revenue share with us. So they're able to make more than what they would have made if we were to buy the product whole cell. They also get access to data that is extremely unique on how the customer fits in their clothes, how they use it, who the customer is, which has enabled many of our brands to actually change fit, change manufacturing target their customer differently. So really building the right kind of data partnerships with brands that are great for the consumer and great for the brands. So change basically how we acquire inventory and we changed our subscription product where we created a subscription platform that was personalized to the customer where she could now choose to upgrade how she uses us add more slots or roar items or use less less and less items, which she was certainly doing during the pandemic. So the ability to personalize the subscription basically kept many of our subscribers using the product and enabled us to now have a product with double the margins that we had before before the pandemic And how about YouTube? Well for us um I would say the pandemic created an opportunity to take what probably would have taken 5-7 years and compress it into about two years. Um We significantly kind of reshaped our P. And L. Were much more profitable company today than we were pre pandemic last quarter are even margins were almost 15%. Um You know, we were in the 10 ish percent range pre pandemic. So we've managed to just get much more disciplined from a cost standpoint, a lot more discipline from a from a cash standpoint. Everybody inside the organization began to appreciate the importance of cash during the pandemic. So that was one number two is we we really doubled down on digital um And we had a road map for our e commerce business for the next three years and we pulled a lot of it forward. We actually increased our investment in digital spending or e commerce business was losing money prior to the pandemic. It's now profitable because it has scaled so quickly and we had to build very very quickly capabilities like order online pickup curbside. Whoever heard of that before the pandemic, right, that became an important capability. Um We leverage our F. I. D. As well uh to give us real time store inventory When we closed our stores. We had to close our stores. I still remember the day March 20, I live out here in San Francisco. San Francisco went into lockdown on March 20. We closed our stores and at that point in time I thought we're closing the stores for two weeks, they were closed for 10 weeks and our stores around the world that at the early days of the pandemic were closed for 10 weeks. We turned our stores into mini distribution centers to clear inventory out of them. So we were fulfilling e commerce orders out of our stores. The store managers came into work every single day into their stores and fulfill the commerce orders. And then the third thing what you touched on is we've reshaped the portfolio of the company we acquired beyond Yoga, which we closed on last quarter. Um That puts us into the very fast growing ath leisure category with a relatively small brand that has been very very successful. They've grown double digits for 10 years in a row, still relatively small. But their capabilities, combined with our capabilities represent enormous upside opportunity for us. And and so the as you said, you know, the crisis creates an opportunity and we've really tried to take advantage of it.