Urban Outfitters Inc. is going to launch a rental clothing service for its customers this summer.
The company, which also owns trendy retailers Free People and Anthropologie, said the new business — called Nuuly — will run as a “separate entity,” The Wall Street Journal reported.
Customers have the option to pay $88 a month to rent six items from the retail chain. After a month, customers return the items to the company where they will be washed and sent to another customer. Customers also have the option of purchasing the items as well. When the month is over, customers have the option to rent six new items and can choose from items sold at Urban Outfitters along with more than 100 third-party brands such as Reebok, Paige and Anna Sui.
David Hayne, Urban Outfitters' chief digital officer, said company executives began discussing the rental service as a way to diversify business at the stores. Besides selling clothing, Urban Outfitters also sells houseware and beauty products.
Hayne said he expected Nuuly to have 50,000 subscribers within a year of operation and more than $50 million in annual revenue.
“We certainly don’t think the customers are just going to stop purchasing,” Hayne 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.”
Urban Outfitters’ stock is down about 19 percent so far this year, according to The Wall Street Journal. Barron’s says the retailer’s stock has fallen 27 percent the past 12 months.
Like Urban Outfitters, Ann Taylor and American Eagle have also started renting out their clothes using CaaStle. Companies such as Rent the Runway have been doing similar tactics since it was founded in 2009.
|URBN||URBAN OUTFITTERS, INC.||36.40||-1.10||-2.93%|