Urban is betting the clothing rental trend is here to stay by launching a new brand with its own, new fulfillment center.

Urban Outfitters Inc. plans to launch a rental clothing subscription service called Nuuly this July.

The service, which is $88 per month, will allow shoppers to select six garments from more than 1,000 SKUs across its Urban Outfitters, Free People and Anthropologie brands, as well as other brands including Fila, Champion, Reebok, Levi’s, Wrangler, Chufy and Naadam. Urban Outfitters plans to add more than 100 styles a week and triple the number of available products by the end of the year. It also plans to develop an apparel brand specifically for Nuuly, says Mike Sparks, manager, supply chain systems, information technology, at Urban Outfitters.

The retailer is opening a new a dedicated fulfillment center in Bristol, Pennsylvania to handle the rental service operation, Sparks says. Workers at the 310,000-square-foot center, which will open this summer, will wash the garments shoppers return, inspect the garments before and after washing and then ship them to consumers.

“This a growing area,” he says. “There are customers that want to try new styles but may be limited by cost. This service gives those shoppers an opportunity to wear those items.”

The global online clothing rental market could be valued at $1.9 billion by the end of 2023, according to estimates from Research Nester.

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Urban Outfitters hopes that Nuuly will attract new shoppers to Urban Outfitters, and it could become a recurring revenue stream. The retailer doesn’t believe Nuuly will cannibalize sales from existing customers, Sparks says. “We think that renting is an opportunity to have her expand her assortment, and we think if she rents something that she wouldn’t have otherwise bought, that’s an extra sale,” he says. 

Urban Outfitters will give shoppers the option to purchase the rented clothes at a discount. This price will vary based on the type of garment, the number of times the garment is worn and how close it is to the end of its usable life, Sparks says.

To ensure it had control over Nuuly, Urban Outfitters built the operations and logistics in-house, rather than use a fulfillment and logistics vendor such as CaaStle. CaaStle is used by several other apparel retailers such as Ann Taylor, Express Inc. and New York and Co. Inc. that are now offering this rental model. 

Rental clothing also appeals to millennial shoppers, who care about sustainability, says Brian Horton, global supply chain, senior manager, international. To further appeal to the sustainable mindset, Nuuly will ship the garments in a reusable bag, Sparks says.

However, there is a downside to the approach as clothing rental services require consumers to ship items back and forth to fulfillment centers, which is not very sustainable, says Forrester Research Inc. analyst Sucharita Kodali, who doesn’t think the apparel rental trend will last.

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“It seems like too much work on the part of the customer,” Kodali says. “Was the retailer’s selection really better than what I have in my closet? I don’t see it beyond formalwear, where you have a one-time wear situation.”

Urban Outfitters, however, is confident the program will be a success and already has a road map in place for opening more fulfillment facilities, Horton says.

Shoppers can join a wait list at Nuuly.com to be notified of the summer launch date.

Urban Outfitters is No. 46 in the Internet Retailer 2019 Top 1000. Express is No. 101. New York & Co. is No. 198.

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