Urban Outfitters launches new clothing rental service: report

Urban Outfitters is launching a new clothing rental service this summer, The Wall Street Journal reports.

For $88 a month, customers will be able to rent clothing and accessories from across the company's brands. It also owns Anthropologie and Free People.

Renting has become a major fashion trend as younger consumers who crave newness look for more sustainable ways to shop.

This shift in shopping habits spells trouble for fast-fashion retailers that churn out new styles each week.

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Urban Outfitters is launching a new clothing rental service this summer.

According to The Wall Street Journal, the trendy retail chain is setting up a new business, known as Nuuly, that will run its rental offering. And it seems this idea has been in the making for a while, as a trademark was filed for the business in July 2018.

Customers will be able to rent out items of clothing from across the brands that Urban Outfitters owns, including Anthropologie and Free People, as well as from third-party labels such as Nike and Reebok that are stocked at its stores.

These shoppers can borrow up to six items at a time for an $88 monthly fee. Once the month is through, they can trade those items in for six more things.

The returns process functions in a similar way to other rental services, such as Rent the Runway. The cost of postage is included in the membership fee and clothing is washed and dry-cleaned before being sent out again, according to the Journal.

A spokesperson for Urban Outfitters did not immediately respond to Business Insider's request for comment.

Nuuly will be run by David Hayne, who is currently listed as chief digital officer at Urban Outfitters on Linkedin. Hayne is the son of the company's cofounder and CEO.

Rental is in vogue

Last year, Business of Fashion called out the rental market as being one of the next big trends in fashion.

“In more and more categories, consumers are choosing to rent rather than own goods outright. Think of Spotify supplanting CD sales and downloads, Netflix replacing video stores and ZipCar standing in for car ownership among many young urbanites,” a group of writers wrote in the publication's State of Fashion report for 2019. “This is a fundamental evolution in consumer behavior and we expect it will have an impact in the fashion business in the years ahead.”

Companies such as Rent the Runway, which was recently valued at $1 billion, are paving the way in the rental market, and mainstream brands are increasingly joining in.

Read more: Rent the Runway is now reportedly a $1 billion company in its quest to become 'the Amazon Prime of rental'

As Business of Fashion noted, Express recently launched its “Express Style Trial” service, which allows consumers to rent up to three items at any given time for a monthly fee. And earlier this year, American Eagle launched an almost-identical clothing-rental subscription model known as “American Eagle Style Drop.”

For $49.95 a month, members can rent up to three items at a time and make an unlimited number of exchanges. The shipping costs are covered each way, and dry cleaning is free. If customers decide they like a piece, they are able to purchase it at a 25% or more discount.

Experts say that the rental market has the opportunity to thrive because it remedies a major conflict in the younger generation's shopping habits. These customers not only crave newness, but they are also more conscious about sustainable living and preserving the environment. Renting clothes allows them to stay fashionable without buying cheap clothes from fast-fashion retailers.

This could spell trouble for retailers such as H&M, Forever 21, and Zara, whose businesses are built around newness but don't offer the same level of sustainability.

Mike Barry, director of sustainable business at UK retailer Marks & Spencer, recently told The Guardian that while the backlash is brewing against fast fashion, it isn't widespread yet.

Still, “it would be a very brave business leader who didn't look into the next 12 to 18 months and say we are not heading there,” he said.

“The signals are [fashion is] on the same trajectory as plastics and forests and alternatives to meat,” he added.

Nuuly CEO Hayne said that the new service won't cannibalize sales at its existing stores and that customers will have the option to buy items after they rent.

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