Urban Outfitters jumps into clothing rentals

Urban Outfitters is entering the fast-growing apparel rental market and it's taking all its brands with it.

The retailer plans to launch this summer a monthly subscription service that will offer items from its Urban, Free People and Anthropologie brands, along with third-party labels and one-of-a-kind vintage pieces for rent via a custom-built digital platform. Subscriptions will cost $88 for one, six-item box per month.

The new service, called Nuuly, will stock over 1,000 styles at launch, with plans to add over 100 new styles a week and triple style count by year’s end, according to the company. The assortment will span a wide range of categories and sizes (00-26).

Urban’s entry into clothing rental comes as other traditional retailers, including American Eagle and Express, are testing variations of the model. The online clothing rental market size is expected to reach $1.8 billion by 2023, according to Allied Market Research. It is dominated by Rent the Runway, valued at $1 billion in its latest round of funding, which has expanded into kids’ clothing rentals and, in partnership with West Elm, home furnishings rentals.

According to Urban, a dedicated team of engineers, product managers and data scientists are developing the complex technology needed to power all aspects of its rental service’s user experience, with a focus on data driving many aspects of the business. A dedicated warehouse and fulfillment center outside Philadelphia houses state-of-the-art laundry equipment operated by veteran laundry technicians.

Nuuly will be led by David Hayne, the company’s chief digital officer, who said that Urban enters the rental landscape with many strategic advantages. Hayne told The Wall Street Journal he expected Nuuly to have 50,000 subscribers within a year of operation and more than $50 million in annual revenue.

“We bring our distinctive brands and their proprietary assortments, millions of existing customer relationships with rich preference histories, long-standing brand partnerships, a broad point-of-sale distribution network, as well as deep, operational know-how and investable capital,” Hayne said. “When paired with our proven ability to develop creative lifestyle brands, we believe Nuuly is uniquely positioned to deliver the dynamic subscription rental experience the modern customer desires.”

Hayne does not think Nully will cannibalize sales at Urban’s physical stores, according to the Journal report.

“We certainly don't think the customers are just going to stop purchasing," he told The Journal. "Purchases make sense for things you know you're going to use often; rental makes sense for things you would like to try."
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