Coming out of a chaotic few years in which the kinds of events people rent clothes for were all canceled, fashion rental companies are bracing for a potential economic crisis. Over the last month, major fashion rental companies have instituted a number of new changes to keep up with the changing landscape, from altering membership plans to increasing prices.
Nuuly, the casual rental service owned by Urban Outfitters’ parent company URBN, told subscribers on Monday that it would be raising prices from $88 for six items per month to $98. Subscribers will see the price change in effect beginning on April 26.
In an email to subscribers, Nuuly wrote: “Since our launch in 2019, the costs of bringing you best-of-the-best brands, styles and service have increased. To continue delivering the full Nuuly experience, we’ll be changing our subscription price for the first time in 4 years.”
Nuuly said subscribers can pause their membership for as long as they want without fees so they can determine whether to keep subscribing. URBN expects Nuuly to post its first profitable quarter this year and reach 200,000 in subscribers. For comparison, Rent the Runway is ten years older and has 140,000 subscribers while Nuuly already had more than 150,000. URBN also announced a $60 million into a second Nuuly fulfillment center this year.
“Over the past four years, Nuuly has grown from offering over 100 brands to more than 400 and expanded our inventory range to include more petite, inclusive sizing up to 5X, maternity and more to ensure we’re able to address everyone’s shopping needs,” said Kim Gallagher, executive director of marketing at Nuuly. “We continue to see substantial growth from new subscribers every quarter, and we want to continue to offer the best brands and service to both our new and existing customers.”
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Nuuly is far from the only company raising prices right now. Rising shipping costs are making even giants like Amazon reconsider the potential profit drain of frequent free shipping, something that the rental sector relies on.
Rent the Runway has found a way to keep shipping costs roughly the same while adding more value for customers. Starting in March, RTR began adding an extra item to every membership tier at no extra cost, as part of a campaign it’s calling the “Era of Extra.” RTR’s most popular plan formerly allowed customers eight items a month. Now, they get 10.
This is a permanent change, the company said. Previous short-term tests centered on giving members extra items led to higher retention and referral rates, according to Rent the Runway CEO Jennifer Hyman. She said, historically, loyalty and retention have always been tied to how many items a customer rents each month. The new model will give customers more clothing for the same price.
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“This pricing is meant to go head-to-head with fast fashion,” Hyman said on the company’s fourth-quarter earnings call on April 14. “But of course, we believe Rent the Runway beats fast fashion by offering the quality of real designer fashion, more variety with our hundreds of brands and constantly rotating styles, and, of course, a more sustainable way to get dressed.”
While adding more value for the same price may seem counterintuitive at a time when most companies are trying to cut back on spending, Hyman said Rent the Runway expects the efficiency of shipping more items together will keep shipping costs roughly the same.
Despite the storm clouds for much of the retail and fashion industry, demand for rental has been high. As of April 6, Rent the Runway had more than 140,000 subscribers, the most it’s ever had. The Black Tux, another rental company, has similarly grown to see revenues 35% higher than pre-pandemic levels. Andrew Blackmon, CEO of The Black Tux, told Glossy that the low times of the pandemic helped teach rental companies to be more efficient with their logistics.
“We had a lot of problems during Covid about handling our inventory, but that allowed us to refine our operational pathways,” Blackmon said. “We got really good at making sure our facilities can handle the amount of inventory we need. We didn’t have much inventory in 2020, so we used that opportunity to make the [customer] experience really good, and that’s translated to high customer satisfaction now that we can get inventory again.”
