Urban Outfitters' parent company is making a bet on millennials' changing shopping habits

Urban OutfittersUrban Outfitters’ parent company has launched a new rental clothing service, Nuuly.

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  • Urban Outfitters’ parent company is launching a new clothing rental company called Nuuly this summer.
  • For $US88 a month, customers will be able to rent clothing from across the company’s brands, including Anthropologie and Free People, as well as from 100 other brands. Nuuly will also offer vintage pieces sourced from flea markets for rent.
  • Nuuly’s president, David Hayne, shared why he’s taking a bet on the rental market and his thoughts on how young consumers are changing the way they shop for clothes.
  • Visit Business Insider’s homepage for more stories.

David Hayne doesn’t believe that people are going to stop buying clothes in the future, but he does think they will buy less.

And, he just made a bet on it.

Hayne is the president of Urban Outfitters’ new sister company, Nuuly, a clothing rental service that launches this summer. The new company is fully owned by URBN; a company spokesperson declined to comment on how much it has invested in the new venture.

Nuuly offers customers the chance to rent six items at a time for an $US88 monthly fee from across the URBN group brands, including Anthropologie and Free People, as well as from many others.

But Hayne doesn’t seem to think it will take away from Urban Outfitters’ customer base.

“Consumers are going to continue to buy,” Hayne recently told Business Insider. “Ownership is still going to be a key piece of [the core customer’s] wardrobe.”


Read more:
Urban Outfitters is launching a new clothing rental service, and it’s just the latest sign that fast fashion as we know it is dying

The potential end of ownership

Last year, Business of Fashion called out the end of ownership as being one of the next big trends in the fashion industry and a natural progression from what has been happening elsewhere.

“In more and more categories, consumers are choosing to rent rather than own goods outright,” a group of writers wrote in the publication’s State of Fashion report for 2019, naming Netflix, Spotify, and ZipCar as examples. If millennials aren’t buying houses, cars, or the latest movie, why would they keep buying clothes?

Since then, more retailers including American Eagle Outfitters and Express have jumped on the bandwagon, offering their own Rent the Runway-style clothing rental services. Rent the Runway is the leading player in clothing rental right now, and it was recently valued at $US1 billion after raising $US125 million in a round of funding.

But Hayne disagrees that ownership in fashion is dead or dying. This isn’t like music or film, he said, comparing buying clothes to buying cars.

“People are still buying cars, and car ownership is still very much a reality,” he said, adding that the same is true of apparel. Unlike music, for example, clothes and cars are physical goods that consumers often want to keep.

NuulyCourtesy of NuulyNuuly’s team of directors.

Hayne’s response was predictably diplomatic for someone who has spent the better part of a decade and a half working in various roles at Urban Outfitters’ brands, and most recently, as the chief digital officer of URBN.

Plus, the new business is being entirely funded by the URBN family, one of the biggest clothing chains in the US, so Hayne is unlikely to call the end of clothing ownership forever.

The purpose of Nuuly is to give the customer an “alternate option” to buying, he said. It’s “an option to rent the things that [the core customer] would like to try, to rent the things she’d like to use here and there, once or twice,” he said. And, he said, these items would most likely be the “fashion temporary” ones rather than timeless pieces.

This should immediately raise alarm bells for fast-fashion store such as Zara, H&M, and Forever 21, which specialize in of-the-moment clothing, especially as young consumers become more sustainability-minded with their shopping.

Clothing rental would allow these shoppers to stay ahead of trends without worrying so much about the colossal waste associated with fast fashion. According to the US Environmental Protection Agency, 26 billion pounds of textiles end up in a landfill each year, and fashion is one of the world’s most polluting industries.

Hayne is adamant that his new company won’t cannibalise sales at Urban Outfitters’ own stores, either, despite the fact that the company is also known for its trendy and reasonably cheap clothing. He’s hoping that Nuuly will become a try-before-you-buy service instead. Customers have the option to purchase any item after they rent it.

“We do think there is still a pathway to purchase. [The core customer] is going to use Nuuly as an experimentation point and potentially make purchases following those experiments,” he said.

Hayne is expecting to take on 50,000 subscribers and generate $US50 million in revenue in Nuuly’s first year. It will launch with more than 1,300 different styles including vintage pieces sourced from flea markets and dealers, and it plans to add 100 or more styles per week from then on.

“There is an opportunity to leverage a lot of what URBN brings to the table and some of the strengths that we have. I think our brands and proprietary assortments that those brands create is a big differentiator for us and something that we can bring to the table uniquely,” he added.

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