Everything Old is Nuuly Again: Kim Gallagher on Re-Commerce

Nuuly Rent, a subscription clothing rental business under the URBN umbrella, had only been in existence for eight months when the COVID pandemic hit.

“It was probably the biggest challenge I will ever deal with—I hope!—for Nuuly,” said Kim Gallagher, Nuuly’s Director of Marketing & Customer Success. Gallagher, who has been a major player in the company’s founding, spoke at a recent Baker Executive Speaker Series event.

Gallagher explained that during the pandemic, as work-from-home became the norm and events and parties were cancelled, many customers realized they wouldn’t need as varied a wardrobe and paused their Nuuly Rent accounts.

“We had to shift everything to think about, first, [which customers] can we keep onboard and how do we change our messaging to resonate with them? And second, what do we do with this whole team that we just built up? And if this pandemic stretches on, what are we going to have our engineers work on?”

The solution was to pull up back-pocket plans to launch a resale platform, said Gallagher. “We immediately pivoted all our engineering and product resources to focus on that, and that’s how we were able to get Nuuly Thrift live this year.” Fortunately, the rental side of the business has picked up again too (“People are coming back like crazy,” Gallagher said), so Nuuly now spans both types of re-commerce.

Rent, Resell, Repeat

With Nuuly Rent, customers can rent any six items every month for a flat fee of $88. Shipping and returns are free, and customers aren’t responsible for laundry or repairs. They also have the option to buy any of the clothing they rent.

Nuuly Thrift is a community resale platform for all types of clothing. Customers who sell on Nuuly Thrift can either get paid to their bank account or in Nuuly Cash, which is worth 10% more on Nuuly Thrift itself and for other URBN brands.

Asked about the competitive landscape in the rental market, Gallagher’s response was, “Honestly, in rental, there isn’t a ton of competition right now. It’s still a newer market.” She mentioned Rent the Runway but said their target audience is somewhat different. She also highlighted some of Nuuly’s strengths: “a fun and engaging brand voice,” and “a compelling value proposition at six items for $88.”

Moreover, Nuuly benefits greatly from being part of the URBN group, she said. “We design a lot of clothes ourselves, so we have clothes from Anthropologie, Free People, and Urban Outfitters as part of our assortment. We also buy from hundreds of other brands, but those brands being anchors… that we can get at cost, is a pretty big advantage.”

It’s well established that rental and resale businesses like Nuuly help the environment, keeping garments in circulation and out of landfills longer. The $2.5 trillion fashion industry is one of the biggest polluters, according to CNBC. But beyond Nuuly’s business model, Gallagher is proud of the additional efforts her firm makes toward sustainability. For example, instead of polybags for shipping, the company uses recycled plastic containers that can be reused multiple times and are sanitized between customers. Moreover, Nuuly donates 1% of its revenue to Stripe Climate, which is focused on removing carbon from the atmosphere.

From Virtual to Live?

Gallagher was asked if she foresaw Nuuly having brick-and-mortar stores someday. She said she hoped so and noted that URBN excels at creating successful stores. But she drew a sharp distinction between the rental and thrift businesses: for the rental side, she believes that establishing physical pickup/dropoff locations rather than shopping experiences might be the best approach. Her reasoning was, “The breadth of assortment is what is so compelling about Nuuly [online], and I don’t know that you can replicate that in stores.”

But thrift is a different story. “People love in-store thrift experiences,” she said. “I did the customer research before we launched this platform and that is [true]—even more so with younger customers. So I actually think it’s a great opportunity.”

Nuuly Thrift could perhaps emerge as stand-alone stores, or as a pop-up inside an Urban Outfitters or an Anthropologie, Gallagher said. “We have a lot to work through on the store side. But it’s definitely on the table.”