What: Urban Outfitters' clothing rental service, Nuuly, is surpassing Rent the Runway in subscribers and is on track to profitability, capitalizing on the demand for casual wear and a broad size range.

Why it is important: Urban Outfitters Inc. has spent at least USD 100 million on Nuuly, making a bet that an affordable, more laid back option in rental will bring in younger, less-affluent customers. With the backing of a billion-dollar parent company and an emphasis on everyday dressing, Nuuly has been well poised for success in a post-pandemic world.

Urban Outfitters has invested over USD 100 million in Nuuly, its own clothing rental service, which is proving to be a strong competitor to Rent the Runway by focusing on casual, everyday wear. With over 190,000 subscribers, Nuuly is outpacing Rent the Runway's user base and is expected to become profitable soon.

Nuuly's success is attributed to its single, affordable membership option, a wide selection of casual and dressier options from Urban's brands and other contemporary labels, and larger inventory purchases that keep popular items in stock. Nuuly also caters to a broader range of sizes, including plus sizes, which has been well-received by customers.

Despite the challenges of the rental market, such as customer turnover and rental fatigue, Nuuly's growth indicates a strong potential for the rental model in the fashion industry, with Urban Outfitters aiming to make it their next billion-dollar brand.

Urban Outfitters invests in rental service