Urban Outfitters Bets on Rental Revival: Nuuly Returns Drive Foot Traffic Boost

Philadelphia, PA – Urban Outfitters is doubling down on its burgeoning rental business, Nuuly, with a new initiative designed to drive foot traffic to its brick-and-mortar stores. The company is integrating Nuuly’s return process directly into Urban Outfitters locations, offering customers both a streamlined rental experience and a discount on future purchases. The move comes as Urban Outfitters struggles with declining in-store sales, while Nuuly experiences rapid growth, marking a strategic attempt to leverage one brand’s success to revitalize the other.

For months, Urban Outfitters has seen flat or declining numbers in its retail segment. Recent reports show a decrease of 8.9% in comparable retail sales. The company recognizes a need for innovation to draw customers back into its physical stores. Integrating Nuuly returns is a calculated risk, aiming to create a synergistic relationship between the two brands.

“We’re looking at ways to bring the Nuuly customer into the Urban Outfitters ecosystem, and vice versa,” stated a company representative. “The program is about convenience, incentivizing returns, and ultimately, driving traffic and sales.”

The Rise of Rental and Nuuly's Success

The clothing rental market has exploded in recent years, fueled by changing consumer preferences, a growing emphasis on sustainability, and the desire for variety and affordability. Players like Rent the Runway have paved the way, but Nuuly has quickly become a significant contender, carving out its own niche with a curated selection of over 500 brands and 22,000+ styles, offered for a flat monthly fee of $98.

Nuuly has differentiated itself through its robust brand assortment and a model that has delivered profitability – a rarity in the rental space. This is in contrast to some competitors, who are still striving for sustainable financial models.

“Nuuly has been a bright spot for Urban Outfitters,” explains retail analyst Sarah Miller. “They've tapped into a demand for access over ownership, and they’ve done it effectively. This integration is a logical next step.”

A Strategy to Reverse Declining Foot Traffic

The new program allows Nuuly subscribers to drop off their returns at participating Urban Outfitters locations. Subscribers receive a 15% discount on in-store and online Urban Outfitters purchases with each return – a significant incentive to visit a physical store. Select locations are also offering a small gift with each return, while supplies last.

The strategy is multi-faceted. First, it simplifies the return process for Nuuly subscribers, making the rental experience more convenient. Second, it exposes Nuuly customers to the Urban Outfitters brand and encourages them to browse and purchase additional items. Finally, it aims to bring foot traffic back into Urban Outfitters stores, which have been struggling to attract customers.

“We’re hoping to create a virtuous cycle,” says the company representative. “More Nuuly returns drive more foot traffic, which leads to more Urban Outfitters sales.”

Customer Response and Concerns

Early reports suggest that the program is well-received by Nuuly subscribers. Many appreciate the convenience of dropping off returns while shopping, and the 15% discount provides a compelling incentive.

“I love being able to drop off my Nuuly box and browse Urban Outfitters at the same time,” says one Nuuly subscriber. “It’s a win-win.”

However, some concerns have been raised about the condition of rented items. Feedback from online communities indicates that some subscribers have received damaged or excessively worn clothing. While Nuuly generally addresses these issues with credits or replacements, maintaining consistent quality remains a challenge.

“Sometimes the clothes arrive with small stains or are stretched out,” says another Nuuly subscriber. “It's not a major issue, but it’s something they need to address.”

Another area of concern is the availability of popular items. Subscribers report that some styles are frequently out of stock, making it difficult to curate a desired box.

Beyond the Immediate Impact: A Shift in Retail Strategy?

The integration of Nuuly returns into Urban Outfitters stores may signal a broader shift in the company’s retail strategy. By embracing the rental model and catering to a growing demand for access over ownership, Urban Outfitters is positioning itself for the future of retail.

“This isn’t just about reversing declining foot traffic,” says Sarah Miller. “It’s about creating a more sustainable and customer-centric business model. Rental is a growing trend, and Urban Outfitters is smart to get in on it.”

The success of the program will depend on several factors, including the company’s ability to maintain consistent quality, manage inventory effectively, and deliver a seamless customer experience. However, if Urban Outfitters can execute its strategy effectively, it may be able to revitalize its brick-and-mortar stores and position itself for long-term growth. The company’s bet on rental could prove to be a crucial step in adapting to the evolving demands of the modern consumer.

As one retail expert put it, “Urban Outfitters is recognizing that the future of retail isn’t just about selling products; it’s about building relationships and offering customers value in new and innovative ways.”