How Rent the Runway is attempting to revolutionize the way we shop

The company that got its start renting out single dresses recently added a subscription service and expanded to brick and mortar stores.
6:37 | 01/02/18

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Transcript for How Rent the Runway is attempting to revolutionize the way we shop
Here's Rebecca Jarvis. I don't have a lot of time in the morning to be fussing over what I'm going to wear, but I want to look great. Reporter: Rachel Jo silver is a fashionable business owner always looking for ways to cut costs. I love clothes but I don't love shopping. Reporter: You'd never guess it from her wardrobe. This jacket more than $1,000. Her top and tote another $1,000. The value of her outfit likely exceeds several thousand dollars. But that's not what she's paying, not even close. Rachel rents her entire wardrobe through rent the runways unlimited service. So I know that I want a shirt. And like this is something maybe I would wear. Reporter: For $159, you can rent designer clothes from a virtual closet delivered straight to your door. A little like Cher's dream closet in the movie "Clueless" minus the Beverly hills mansion. So you have your pajamas, you have your bag from rent the runway, and this is what you have that's yours. Yes. There's only ever three or four things in this apartment that I'm going to wear. I know exactly what they are and I see them and I put them on. Reporter: The company got its start eight years ago renting out single dresses for special occasions. Now attempting to revolutionize how we shop with its subscription service becoming a kind of Netflix of fashion. I think between 10 and 15 years from now the closet will feel like a relic of the past just like a landline or a CD does today. Reporter: Jennifer Hyman is the co-founder and the company's CEO. She's raised more than any other female-led start-up according to the company. How did you start rent the runway? I had the idea with my younger sister who had just purchased a very expensive designer dress to go to a wedding that she knew that she was only going to wear once. And that dress put her into credit card debt. A delightful moment of if all we want is to walk into an event and look great in an outfit we'll only wear once, why can't we rent clothes? Reporter: Jenny loved the idea and became her co-founder. I suggested we call or e-mail Diane Von Fuerstenberg. We decided to write an e-mail at every variation of dvf and one went through. Reporter: The e-mails scored them a meeting with the legendary fashion designer. The meeting started off terribly because she hated the idea, but by the end of the conversation we learned she would be interested in working with us if we could introduce her brand to women in their teens, 20s, 30s and even 40s. Reporter: Eventually dvf along with 500 other designers whose clothes are available for rent on the site, came around to the idea. Since launching the unlimited service over a year ago, rent the runway says it has seen his subscription business grow more than 125%. A bright spot at a tumultuous time for retail. Retail is currently in a panic state. No one really knows what's going to happen or how many stores are going to close tomorrow. Reporter: Last year nearly 7,000 stores closed in the U.S., the most in recent history with major retailers like Macy's, JCPenney and gap shuttering locations across the country. We have too many shops and not enough shoppers. Reporter: To lure those shoppers, a slew of start-ups have emerged. At trump club we make sense of style. Reporter: Companies like trunk club and stitch fix active personal stylists delivering curated outfits for purchase directly to your door. Many big name retailers are also trying to reinvent themselves. Some like Ann Taylor even offering rental services of their own. Rent the runway is expanding, rolling out a new lower cost subscription option where for $89 customers can rent four items a month and opening physical stores with stylists on hand. Everyone in this store is here to rent as opposed to buying mg. That just alone is a very different concept for a store. We want everything to feel like this is your dream closet. Reporter: Which brings us back to Rachel. I just got out of an investor meeting, and now I'm going to go to rent the runway store. I want to return these two and swap them out. Reporter: Rachel treats the store like her own closet. After she's worn the clothes, she can drop them here or pop them back in the mail where they end up back here. So I wanted to take you through the life cycle of a piece of inventory. Reporter: Jennifer Hyman giving "Nightline" a look inside her facility in secaucus, new Jersey, where you'll find the world's largest dry cleaner and rack after rack of designer clothes. Starting at 5:00 in the morning we start to receive customer returns from all over the country. We're figuring out if there's any damage. If there is damage, we can expedite it right over to repairs. If there's no damage, we're scanning in every single unit of inventory and further prioritizing it. Reporter: It's an in depth process. Right here, this is dry cleaning. And what's happening right here is spotting. They're creating a new recipe based on what the stain is, to restore the garment to perfect use. Reporter: Next stop, a ride through the steam tunnel. To me this is just pure magic, where everything is getting lined up, ready to go into the steam tunnel. Reporter: And then on to quality control. We will check it for rips. You see that we're smelling it. We're wanting to make sure that it's absolutely clean. Reporter: Every rent the runway subscription includes the cost of dry clean kg and shipping. The units are placed on the trolley and we send the troller down to the auto bagger. This( is the finish line. This has already been packed. This garment bag is now being sent to a truck to go out this evening to get to a customer tomorrow. Reporter: But Jennifer says this isp all just the beginning of clothing on demand. Where do you see all of this going? What is the future vision? You wake up in the morning, you put on a pot of coffee, you go on our app, you tap here's what you want to wear today and it's delivered to you within a half hour. Reporter: For "Nightline," I'm Rebecca Jarvis in New York.

This transcript has been automatically generated and may not be 100% accurate.

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