Urban Outfitters stores will now accept Nuuly returns

Nuuly operates as a subscription service. For $98 a month, members can rent six items from more than 500 brands, including Urban Outfitters. The new returns program aims to better integrate Nuuly and Urban Outfitters, simplify the shopping experience and appeal to young consumers, the companies said.

Shea Jensen, the president of Urban Outfitters North America, called the returns program “another step in blending our digital and in-store experiences.”

“We are excited to have an opportunity to welcome more customers into our store, to potentially meet some new customers and, ultimately, just to make the [returns] experience easier,” she told Modern Retail. Speaking to the program’s launch during the holidays, she said, “We know customers are getting ready to attend a lot of parties and potentially have a lot of stress in their lives. And if we can do something to make their lives easier, we’re thrilled to be able to do that.”

Nuuly’s president, David Hayne, said in a statement, “We’ve been excited to see the enthusiasm behind Nuuly and are so pleased to bring this in-store program to life with Urban Outfitters to give our community more return options.” He added, “We’re always looking for fresh ways to engage our Gen Z consumers and streamline the shopping experience.”

Both Urban Outfitters and Nuuly have large percentages of Gen-Z shoppers, and although Gen Z is digitally-minded, many value shopping in person. This year, Urban Outfitters has pulled multiple levers to gain ground with Gen Z. These have included redesigning stores, partnering with brands like Nike and boosting its assortment of home decor.

Partnering across brands

Nuuly’s partnership with Urban Outfitters comes at a time of growth for both companies. Nuuly grew its subscribers by 53% to total more than 300,000 people during its last fiscal year ending Jan. 31. In August, Nuuly reported $138.9 million in second-quarter revenue, up 53% from $90.7 million a year before.

Urban Outfitters, meanwhile, is in the midst of a larger turnaround. As of August, it was making “significant progress on returning the brand to growth and improving profitability,” Urban Outfitters, Inc. COO Frank Conforti said on an earnings call. The company reported $333.2 million in second-quarter revenue, up 5.2% from $316.7 million a year before.

David Swartz, a senior equity analyst who covers Urban Outfitters, Inc. for Morningstar Research Services, sees the new returns program as a “pretty obvious move” that benefits multiple players.

“It’s convenient for the [Nuuly] customers who don’t want to deal with shipping items back [at UPS],” he told Modern Retail. “It allows people to send merchandise back quicker, which is good for Nuuly. And then, as far as generating sales at Urban Outfitters [goes], this is one way to get more people in stores.” Swartz added that a 15% off discount code incentivizes customers to “at least try [drop-off] once.”

Urban Outfitters previously tested the Nuuly returns integration at 25 stores, particularly in college areas, Jensen said. “We saw an immediate reaction from customers, so we very quickly decided to expand it to all of our stores,” she shared. Urban Outfitters has about 180 stores located on college campuses, in malls and on shopping streets.

Swartz said it would behoove Urban Outfitters, Inc. to extend the Nuuly returns program and introductory discount to Anthropologie and Free People, as well. When asked about this by Modern Retail, Jensen said she couldn’t speak for the parent company. However, she said that Urban Outfitters is “really excited about what we’re seeing, and excited to see how the customer continues to respond.”

Drop in to drop off

Rental is a logistically challenging business, involving more than simply shipping products out to customers. Rental companies have to develop systems capable of managing a high volume of returns, cleaning every single item and ensuring they have enough inventory in stock so renters aren’t consistently disappointed if the pieces they want aren’t available.

At times, rental services like Nuuly and Rent the Runway have struggled to keep pace with demand. In 2022, Rent the Runway gave customers refunds and $200 in credit after its new inventory system delayed orders. In 2021, Nuuly saw subscriptions slow due to “low availability of inventory in certain categories,” Conforti said on an earnings call.

With returns, in particular, the fate of rental companies lies in the hands of carriers, who are responsible for properly scanning every item that comes in and ensuring that it makes its way back to the fulfillment center. Every rental service has instances of customers taking to social media to voice complaints about package delays, lost packages or poor customer service — some of which can be the result of customer or carrier errors.

Drop-off partnerships, then, present one way to simplify the returns process. But, rental platforms have seen mixed results from these initiatives. For years, Rent the Runway had a drop-off network with West Elm, WeWork, Nordstrom Local and hotels. However, in early 2020, it pulled out of some WeWork locations in New York City. Currently, Rent the Runway lists UPS as the only return option on its website.

Still, by having customers bring items to Urban Outfitters stores, Nuuly stands to have more oversight over the returns experience. Even so, Nuuly customers can continue to drop off their totes at UPS and UPS Access Points. “We’ve expanded return options to make the process even more convenient and flexible for customers,” a Nuuly spokesperson told Modern Retail via email.

The program could benefit another contingent, too: so-called “Nuuly husbands” camping out at UPS stores to return their wives’ bags. This phenomenon has been documented on social media; one January TikTok video with the caption “POV I guess I’m not the only one that has my significant other bring my Nuuly to UPS 😂” has racked up 1.8 million views. Nuuly later reshared the video on its TikTok account, garnering 2.1 million views.

“As a husband who faithfully returns his wife’s Nuuly… I thought I was alone in this, I feel so validated,” one user commented.