How does Rent the Runway use data and AI to manage a shared inventory?
Rent the Runway made its biggest-ever inventory bet in 2025, then turned to AI recommendations, search and outfit generation in 2026. What it has reported, and what rental teaches about inventory.
KEY TAKEAWAYS Summary by the editors
- Rent the Runway says fiscal 2025 was its largest-ever inventory investment, with purchases of rental product of $75.9 million versus $49.2 million in fiscal 2024, which it calls the main lever for subscriber growth.
- In December 2025 Rent the Runway launched AI-driven 'similar styles' recommendations on product pages, and in February 2026 a new search algorithm that it says performs about 10% better on subscription conversion.
- Rent the Runway piloted AI-generated outfits in May 2026 and rolled them out to all customers by the end of June; customers with the feature added items to their bag about 12% more often during the pilot.
- For fiscal 2026 Rent the Runway guided rental product acquired down to $53 million to $55 million, while reporting Q2 2026 revenue of $97.7 million, up 20.8%.
- Rent the Runway paused its online marketplace pilot and on-site advertising in 2026 to concentrate on rental, after leadership changes that included a new chief executive from September 2026.
Rent the Runway uses data and AI to decide how much inventory to buy and to help subscribers find the right items in a shared closet where every garment is rented many times. In fiscal 2025 it made its largest-ever inventory investment; in late 2025 and 2026 it added AI recommendations, a new search algorithm and AI-generated outfits, aiming to get more value from that inventory while buying less of it in 2026.
Why is inventory the core problem in fashion rental?
In rental, a dress is not sold once but sent out, returned, cleaned and sent out again. The business earns money when items are in use, so the key questions are which items to buy, how many units of each size, and how to steer demand so items are not idle while subscribers cannot find what they want. Availability shapes customer satisfaction: a subscriber who cannot find items in her size and for her occasion is likely to pause or cancel.
Rent the Runway's recent history shows the trade-off. In its fiscal 2025 results, published in April 2026, co-founder and then chief executive Jennifer Hyman said: 'Last year, we made a calculated bet that increasing our inventory investment was the strongest lever to unlock growth.' Purchases of rental product rose to $75.9 million from $49.2 million, and ending active subscribers grew 20.1% to 143,796.
How does Rent the Runway use AI for recommendations and search?
The company has disclosed a sequence of discovery changes rather than a single AI system:
| Date | Feature | Reported effect |
|---|---|---|
| August 2025 | Personalised recommendations based on favourite designers, style preferences and planned occasions | Not quantified |
| December 2025 | AI-driven 'similar styles' recommendations on product pages | Not quantified |
| December 2025 | 'Quick Hearting' browsing | Drives 28% of new hearts |
| February 2026 | New search algorithm | About 10% better subscription conversion |
| May to June 2026 | AI-generated outfits (complete looks) | About 35% engagement; about 12% more add-to-bag in pilot |
| August 2026 | Avatars showing looks on different body types | Not quantified |
| 2026 | Virtual try-on | In pilot |
The August 2025 recommendations were described on an earnings call, as reported by RetailBoss, where Hyman also said the company planned to use 'AI for review summaries and fit improvements'. The later features and their effects come from the company's fiscal 2025 and Q2 2026 results releases. For fiscal 2026 the company said it planned to move from a traditional e-commerce grid to AI-powered discovery, including outfit-based browsing, conversational search and product pages showing items in motion and in the customer's size.
How does better discovery connect to inventory?
In a shared inventory, discovery is a form of inventory management. Recommendations and outfit suggestions can spread demand across more of the closet, surface items that are available in a subscriber's size and reduce reliance on buying extra units of the most popular styles. Rent the Runway has not published utilisation data that would show this effect directly, but its guidance points in that direction.
For fiscal 2026 the company first guided rental product acquired to $45 million to $50 million, then in its Q2 2026 release to $53 million to $55 million, both well below the $74.9 million it reported for fiscal 2025 on that measure. At the same time it reported Q2 2026 revenue of $97.7 million, up 20.8%, and a gross margin of 36.1%, up from 30.0%. Ending active subscribers were 140,826, down 3.8% year on year, while average active subscribers rose 1.0% and add-on bookings rose 81%.
- Demand shaping: outfits and 'similar styles' redirect interest from unavailable items to available ones.
- Size-aware discovery: showing items in the customer's size aims to reduce dead ends.
- Add-ons: outfit suggestions can increase items per shipment, which raises use of existing stock.
- Fit information: planned review summaries and fit improvements target a key reason for disappointment in rental.
Rent the Runway's fiscal 2025 release adds context on customer response. The company said its subscription Net Promoter Score rose 39% year on year in fiscal 2025, and that add-on revenue growth accelerated through the year to 67% in Q4. A customer survey in 2025 found 86% of respondents interested in buying complementary items from Rent the Runway, which motivated the marketplace pilot that was later paused. The company also listed answer engine optimisation (AEO) and SEO among its fiscal 2026 plans, reflecting the shift of discovery towards AI assistants.
What did Rent the Runway stop doing?
The 2026 strategy narrowed. In its fiscal 2025 results the company said it would diversify revenue with an online marketplace and B2B services. By Q2 2026 it had paused the marketplace pilot until it could be integrated with the core rental experience, paused on-site advertising, and said it would no longer pursue new B2B dry-cleaning opportunities, while continuing to serve an existing partner.
Leadership also changed. Hyman stepped down as chief executive in May 2026, Teri Bariquit served as interim chief executive, and Paige Thomas became chief executive and president on 14 September 2026. Thomas described the plan as 'an acceleration of the strong foundation the team has built'.
What are the risks and lessons for fashion inventory?
Rental magnifies inventory risk: buy too little and subscribers churn, buy too much and capital sits in garments that depreciate with every wear. AI discovery can help balance the two, but only if the underlying data on size availability, condition and fit is reliable. Rent the Runway also carries significant debt and reported cash of $29.0 million at 31 July 2026, which limits how much it can invest in either inventory or technology.
- Treat recommendations and search as inventory tools, not only marketing tools.
- Use outfit-level suggestions to raise items per order from existing stock.
- Measure feature effects with pilots before full rollout, as Rent the Runway did with AI outfits.
- Link purchasing decisions to discovery data so buying reflects what customers can actually find and wear.
Frequently asked questions
How does Rent the Runway use AI?
Rent the Runway uses AI for 'similar styles' recommendations, search, AI-generated complete outfits and avatars that show looks on different body types. It was piloting virtual try-on in 2026 and has said it plans AI review summaries and fit improvements.
Did AI outfits work for Rent the Runway?
The company reported that AI-generated outfits reached all customers by the end of June 2026, with about 35% engagement. During the pilot, customers with the feature added items to their bag about 12% more often.
How much inventory does Rent the Runway buy?
Rent the Runway reported purchases of rental product of $75.9 million in fiscal 2025, its largest-ever inventory investment. For fiscal 2026 it guided rental product acquired to $53 million to $55 million.
Who is the CEO of Rent the Runway?
Paige Thomas became chief executive and president on 14 September 2026. Co-founder Jennifer Hyman stepped down as chief executive in May 2026, and interim chief executive Teri Bariquit became non-executive chair.
One edition every weekday morning. Read in five minutes. Free for industry professionals.
