Why The Brand Behind Urban Outfitters Launched Nuuly, Its Own Rental Service
Nuuly is URBN's clothing rental service for its brands Anthropologie, Urban Outfitters and Free People, taking cues from growing consumer interest in economy, sustainability and novelty in a move set to disrupt how customers experience mainstream apparel
The increasing consumer demand for temporary rental alternatives has left no industry unaffected. In the fashion and apparel world, one of the first brands that comes to mind is Rent The Runway. With a straightforward name announcing its place in the access economy, Rent The Runway built its empire on the simple premise of renting out designer fashion at a much more affordable price than the garment's price tag. The idea was an instant hit, leading to multiple variations both in-house and across the industry.
The borrowed outfit effect is being felt worldwide: Led by China, Asian spending on rental apparel online will increase an estimated 11.4% annually between 2017 and 2023. With such a clear indication of consumer demand, it is only a matter of time until most, if not all, established brands offer some sort of rental alternative. The question remains: Who will lead the way?
Enter Nuuly, the recently launched monthly rental program from clothing titan URBN. For $88 per month, Nuuly subscribers select up to six styles from any of URBN‘s companies, third-party labels or vintage offerings, and can wear them as many times as they would like throughout the month. As the parent company of brands like Urban Outfitters, Anthropologie and Free People, URBN's established consumer base gives it a unique advantage over other apparel renting startups. PSFK caught up with David Hayne, president of Nuuly and chief digital officer of URBN, to learn how the brand is leveraging its consumer base, including in digital efficiency, trend storytelling and a packaging system built on recycled ocean plastic:
PSFK: Why did URBN decide to launch Nuuly?
David Hayne: Our job at URBN is to listen to our customers and serve them however they’d prefer to engage with our brands and products. We’ve been supporting the consumer’s shift into e-commerce, omni-channel and mobile experiences, and more recently we’ve perceived a growing interest in subscription and sharing economy business models among all our brand’s demographics.
Nuuly was born out of the idea that URBN has established a leadership position in brand and apparel product development, and has an opportunity to bring these skills to a new business model we think the consumer will find appealing.
What sets Nuuly apart from other clothing rental services that have been popping up?
We believe the Nuuly subscriber will appreciate our distinctive Anthropologie, Free People and Urban Outfitters brands and their proprietary assortments, and the breadth and variety of our overall assortment, which will begin with well over 1,000 styles and grow to 3,000 by year’s end. Over a third of the assortment will come from our URBN brands, and the remainder from hundreds of other brands and labels, as well as a unique vintage apparel offering.
We believe we will quickly have the most compelling rental fashion assortment in the US market, which will be a strong differentiator for Nuuly. We also believe we’ll differentiate our service from others through our strong visuals and trend storytelling. This is a strength URBN has honed over decades of practice, and one which will set us apart as consumers assess their rental fashion options.
How will this new rental model complement URBN's existing sales model? How will it attract new customers and increase spend among existing ones?
We believe Nuuly will drive increased engagement with both our URBN brands and other brands carried on the platform. Whether product engagement occurs in a rental model like Nuuly, a wholesale model or a store or ecommerce model, the more consumers engage with a brand’s products, the more likely they are to purchase. We fully expect Nuuly to be a discovery platform for brands and their products, which will ultimately lead to sales in other brand channels.
How do you anticipate Nuuly adding value to consumers' daily lives? What needs and desires does Nuuly fill? What occasions does it serve?
Nuuly’s value proposition is pretty simple. For $88 per month, subscribers get access to over $800 worth of initial retail value per month, on average, for a tenth of the price. Subscribers will be able to select the 6 styles they’d like to rent and then wear them for whatever occasions she has that month, wearing items as often as she’d like. This provides her with a tremendous amount of flexibility and novelty in her wardrobe, without the expense of retail.
Nuuly also gives her a way to experiment with new trends, fits and brands without the risk of purchasing something that will only be worn a few times. We see Nuuly as a way for subscribers to augment their wardrobe with items they’d like to experiment with. If she finds something she loves, she can also choose to purchase it from Nuuly, often at a discount from retail.
What types of items will Nuuly offer? Will there be exclusive items that consumers can't normally purchase from URBN's stores?
Nuuly will initially offer women’s apparel. We will carry a broad range of items across lifestyle categories: tops and blouses, everyday dresses, skirts and shorts, sweaters and jackets, seasonal denim, and one-of-a-kind vintage items. We believe subscribers are interested in renting fashion over basics, so we will focus our energy more heavily on special fashion-driven pieces.
How does Nuuly tie into existing sustainability initiatives at URBN?
URBN has been quietly focused on sustainability initiatives for some time now, although we recognize there is always more that can be done. Our Pennsylvania ecommerce fulfillment center has one of the largest rooftop solar arrays in the country, and our home office campus in South Philly’s Navy Yard generates the bulk of its own electricity from a fuel cell power plant that turns natural gas and water into electricity.
Nuuly is an appealing new sustainability platform because it maximizes the utilization of clothing across a broad subscriber base, while also making subscribers happy with the variety, flexibility and cost-effectiveness it provides. For that reason it feels like a nice win-win for both the consumer and the environment. We are also exploring charitable outlets and other uses for our clothing once it has passed through our platform.
How will your digital platform ensure a frictionless customer experience? How will you assist shoppers in choosing the right items/sizes?
We focused a considerable amount of time and energy on the digital infrastructure to bring Nuuly to life. Everything about the custom-built website experience will be synchronized in real-time with our custom-built warehouse software, so subscribers will have a high degree of confidence in which items are available to rent at any given time.
We custom built a recommendation system to give subscribers styling suggestions based on her preferences, trend affinities and rental history. And after we learn about her sizing preferences, we’ll give her sizing suggestions so she can feel confident in her rental selections.
We will also give her a way to share back her styling suggestions with the community through reviews and uploaded photos wearing her rented styles. We are very confident that the user experience is going to feel familiar to a good ecommerce experience, but also more informed and helpful than most traditional ecommerce sites.
How will you streamline the delivery and returns process, and other logistics?
All Nuuly shipments will be delivered via UPS with 2-day service. It’s important to us that our subscribers feel like they can use their rented garments as much as possible during the month. Shipments will be sent in a returnable bag with a 2 Day return label included, so the shipping and return process should be very easy for subscribers.
We’ve spent a lot of time on the design of these returnable bags, and we’re quite proud of them. They’re made from recycled ocean waste plastic, so they try to solve a sustainability problem instead of creating one. We can also re-use them over many shipments, so once a customer returns their shipment to us, we can wash the bags and use them again on the next order.
It reduces our costs by requiring that we purchase less packaging, subscribers have an easy reusable return process, and we’re doing our small part to make this whole cycle more friendly on the earth.
We have also spent considerable time and effort developing our warehouse management software, which will enable us to track individual garments through the full lifecycle of the rental process.
After receiving returns, our teams in the warehouse can process them through one of 11 different wash cycles based on fabrication, color and other details, and process garments through a very detailed inspection process to ensure they are ready for the next rental.
How will you leverage the customer data you collect, such as wear rate and style preferences, to improve Nuuly's offerings? Do you have any plans to use this data to inform the design process for URBN's own brands?
Our initial plan is to focus the learnings from the program entirely around making the program itself more successful. With any new business, there is an intense learning period at the beginning where we will be focused on program optimization and ensuring that customers are finding value with the program.
Following that initial period, we will certainly be using rental data to inform our future merchandise buys, as well as to hone our recommendation and sizing algorithms. We also plan to share aggregated, non-personal information on details such as sizing preferences, product ratings, product durability and purchase information back to our 3rd party brand partners. Our goal with Nuuly is to be a partner to help the brands we work with grow their businesses.
Finally, how do you see Nuuly growing? Are there any plans to expand to other categories beyond clothing?
There are no immediate plans to expand the categories offered, but it is certainly an option for us in the future. There is no reason Nuuly wouldn’t also make sense for fashion accessories like bags and jewelry. It’s also not hard to envision apparel extensions into categories like maternity, athletic wear, even mens and kids.
Lead image: Nuuly