Nuuly: Green or Greenwashing

Is it green or greenwashing? This series looks at the sustainability practices of reader-nominated brands. For more details on the project and a bit about my background, the project page is here. This piece focuses on clothing rental. For most “Green or Greenwashing” pieces, this is where I’d go through my 5 tenets of sustainability and discuss a brand. But rental’s a different ball game.

The rental market is insanely broad. There are newer, national rental programs like Rent the Runway and Nuuly. But there’s also an old school, hyper-local approach to rental, like your neighborhood bowling alley, local skating rink, and guide outfitters who rent whatever mountaineering gear, dry suits, or life vests you need for a given adventure. The old school approach to rental was insanely sustainable. Most people need these items sparingly, maybe a few days per year or only once in their lifetime. Pooling their demand into a rental fleet minimizes the number of units needed. Pieces were fairly durable in both a physical and stylistic sense and could last many seasons as part of a rental fleet – especially because customer expectations weren’t very high. They expected fraying on the shoelaces, creasing on the leather, fading on pieces that spent hours in the sun. They also had low standards from a styling perspective and essentially operated outside any sort of trend cycle. Units were staged close to customers and/or the intended activity, so the impacts of transportation were negligible.

But then Rent the Runway formalwear ushered in a new wave of rentals. They were centralized operations with ecommerce sites. Inventory crisscrossed the country, largely relying on air freight. Garments would make pit stops between events at their Seacaucus warehouse for cleaning and inspection. Rent the Runway started with occasion-wear, so customers had much higher standards for wear and tear compared to older rental models, so items were dry cleaned and sealed into polybags during storage and transit. And unlike your local rentals for a climbing harness or roller skates, customers needed variety. In other words, if every customer pooled their demand into a single, classic little black dress, RTR could get away with far fewer units to serve demand. But as you add variance into a dataset, you widen standard deviation. Then RTR needs more units to service demand with more style options in their assortment. (If you ever did the high school stats problem about TJMaxx style, single checkout lines vs grocery store style multi-lines, same rules apply here). It’s not as green as “rental 1.0,” but formalwear wasn’t particularly sustainable in the first place. Occasion wear is worn occasionally. No amount of creative outfitting helps you get more wear out of an evening gown in your day-to-day life.

But capitalism demands growth. Growing customer count is very expensive. Growing established customer spend is much cheaper. Rent the Runway (and now Nuuly) can’t influence the number of weddings or proms or galas you attend in a given year, so they convince you that you need to do the transcontinental shuffle for smaller events and even day-to-day wear.

For this piece, I’m going to focus on Nuuly because they’ve had the greatest penetration into everyday wardrobes. Rent the Runway still leans into occasion-wear and offers something to one-time renters, their ultimate goal is to get a consistent monthly payment from you in exchange for cheap everyday clothing.

Nuuly’s Fabric Content

Sustainable, ethical clothing tends to be more expensive than cheap fast fashion. Natural fibers tend to cost more than synthetics. Organic fibers raise costs to cover lower agriculture yields and intense supply chain tracking measures. Even recycled fibers carry a slight upcharge over virgin materials. So theoretically, for a company marketing sustainability, Nuuly would help make sustainable pieces more accessible through rental, right? They’re not.

Nuuly has 19,455 items in current catalog. Take a moment and guess what percentage of those pieces have any recycled fibers in their fabric. For context, on REI’s site, 45% of garments are at least partly recycled. On the fast fashion side, H&M hits 34%, Target 25%, and Old Navy 7.7%. So, what about for Nuuly, where the average MSRP for an item sits around $140?

It’s 0.09%. 17 items have recycled content. And when you search a list of natural / sustainable / luxury fiber types, the results aren’t much better. Less than 15% of garments contain any of these premium fiber types. And from the other side of the coin, there are some fiber types that are just plain bad. They’re not durable, they’re terrible for the environment, they cause severe health issues for garment workers and surrounding communities. People give virgin polyester a hard time. These fibers are even worse. And roughly 40% of their pieces use these fibers.

(This chart tallies all garments with a given fiber type. Therefore, blends are counted multiple times. Not all fiber contents are included. It’s not supposed to sum to 100%)

Did they follow marketing regulations on how to market that handful of sustainable garments?

No! If an item is not 100% recycled, the brand needs to make “qualified” claims in their marketing where it’s clear to the customer that the item is only partially recycled. They also need to list the exact percentages of recycled content somewhere on the product page.

For example, Nuuly carries a “90s Recycled Leather Pant.” The FTC reasons that this title, without any sort of qualification, leads the customer to assume 100% of the pant is made from recycled leather. It’s not. And then the 2^nd issue, percentages for recycled content are required by the FTC Green Guides. Nuuly doesn’t believe in disclosing full fabric content. For non-organic and non-recycled materials, that’s okay. Fiber content just needs to be listed in order by weight. But for organics and recycled materials, the percentage has to be disclosed.

To the average consumer, this might feel really nitpicky. But for me, if you’re going to go hard in your marketing for sustainability, you need to know more than me. My background is in product development, marketing, and merchandising. I have no professional experience as a sustainability expert. But if I can poke holes in super basic sustainability regulations, it tells me you’ve got marketers making shit up and there’s no one in the room who knows their ass from their elbow when it comes to fashion’s influence on climate change.  

But Nuuly’s main sustainability message is more about the rental model, not the fabrics. Surely it’s green when you consider that we’re sharing from a communal closet.

It’s not. Let’s do some math.

Nuuly has 200,000 subscribers. Each subscriber gets 6 garments per month. They get 12 monthly deliveries per year. If they have full utilization – every last garment leaves the warehouse and goes to a customer each month and there’s 0 stock left on hand – they need 6 garments per subscriber and 1.2 million garments total.

But they get far from 100% utilization each month. Out of the 19,455 styles on site, 13,775 styles have units available on site for immediate rental. That’s 71% of styles that have units hanging out in the warehouse. They need a lot of extra units to entice new subscribers. No one wants to pay $98 per month for a box of leftover dregs. They need extra units because clothing is seasonal. About 45% of their assortment is considered “year-round.” The other 55% is warm or cold weather seasonal. They also need extra units to account for variance. They’re not going to forecast rental demand perfectly. They’re not going to forecast size curves perfectly. But in order to keep subscribers active, they need to consistently have their favorite items in their size available. They also carry extra units to sell extra item add-ons for existing subscribers. The need extra units because they encourage customers to purchase and keep their favorite rentals. They need way more than 6 units per customer to service each account.

Now, this is where things get a little questionable with assumptions. We can’t see their exact inventory utilization. We can only see style utilization. So for example, pretend Nuuly only offers 2 dresses. Dress #1 is completely rented out and dispatched 200 units. Dress #2 is fully instock, but they only hold 5 units. 97.5% of their units would be utilized. Half of their styles are utilized, half are not. Inventory utilization and style utilization are not the same thing. But it’s the only publicly available datapoint that can serve as a directional proxy for percentage of garments in use in a given month vs. hanging in a warehouse. If 71% of styles have stock, 29% do not. Your 6 units come from the 29%. 6/.29 comes out to 20.5. So my best guess is that Nuuly has to stock somewhere in the realm of 20 units per customer to service accounts.

Now, the Hot or Cold Institute recommended 5 garments per person, per year in order to meet the fashion industry goals listed in the Paris Agreement. Nuuly may have to stock around 20 units per customer, but if they keep inventory in their rental fleet for a long time, it can meet those sustainability goals. Assuming a customer isn’t buying clothing anywhere else, 20 units turning over every 4 years would hit that 5 pieces per year goal. But they don’t keep inventory active that long. Their median style is roughly 1.5 years old. The styles that launched in 2019 are all mostly down to a single available size. The rest of their units have been purchased, sold through their “Nuuly Thrift” storefront, or damaged out. And they have styles that retire much faster than that. For example, the Callahan Gigi Knit Cardigan has reviews dating back to September 2022. It’s been on Nuuly’s site for around 18 months. They only have rental units left in an XS or 3X. A lot of the reviews speak about issues with pilling. It’s an acrylic sweater; they’re notorious for pilling and wear. Nuuly waxes poetic a lot about how they repair damage and keep clothes in circulation, but damage like pilling, shrinkage, or fabric skew aren’t reversable. They’re not repairable. Do we really think all those missing units went to a buyer, especially one that will wear it regularly? In a similar vein, browsing reviews, customers aren’t thrilled with product conditions. Either they have high expectations surrounding used garments looking used, or many products don’t hold up to repeat wears. But either way, this creates pressure for Nuuly to retire pieces even earlier in order to meet the customer bar and reduce churn.

But to look at these questions in a less math-y kind of way, the average US woman spends $63 on clothes per month. Nuuly costs $98 per month. Do we think that this increase in spending is going to correlate with a decrease in consumption? Further, Nuuly is owned by Urban Outfitters. Urban is a publicly traded company whose mission is to increase profits through fashion consumption. Do we really think they would invest heavily in a business model that would meaningfully decrease clothing sales? And for Christ’s sake, the name of the company is literally “Nuuly.” Do we think this is about maximizing the clothes lifespan or assuaging consumer guilt about overconsuming new clothes? Especially when they encourage subscribers to buy their rental pieces with incentives and discounts. It’s essentially Stitch Fix, but they’ll let you wear it while you’re in the consideration window.

How does this compare to Rent the Runway?

Rent the Runway is chasing that same subscription customer for everyday apparel. But unlike Nuuly, they also play in the one-time rental space, especially for occasion pieces, which is a little less problematic. First, they keep inventory in the rental process for a surprisingly long time. I rented 4 dresses from them in 2017 and 2018. Two are still a part of their assortment 6-7 years later. They also buy into higher end fibers than Nuuly that tend to correlate with better sustainability and durability. 28% of garments had those “premium” fibers at RTR compared to 15% at Nuuly. And on the other side of the spectrum, 17% of RTR contained the most problematic, harmful fibers compared to 41% of Nuuly’s.

But RTR also allows for shorter term, one-off rentals. Up to 4 customers can wear a given garment with Rent the Runway, while a garment with Nuuly will sit with a single customer for a month, where it likely won’t be worn many times.

Customer satisfaction is also less precarious for one-time rental. With Nuuly, if you aren’t seeing items you like available for rent, you’ll likely cancel your subscription. Nuuly would lose out on a consistent monthly revenue stream from you. Subscription businesses measure those cancellations in their “churn rate.” Lower churn rates are generally more profitable. Nuuly needs to carry a lot more units than they rent out to meet customer expectations. Meanwhile, customer participation is a lot less black-and-white with one-time rentals. I’m notoriously and consistently behind schedule. Some of the times I’ve tried to rent a last-minute occasion dress from RTR, I get to the site and the pickings are slim. In those cases, I’ve raided a friend’s closet or resorted to my basic LBD, but I always make a mental note to reserve a dress earlier. That’s not churn. I had plans to consider RTR for my next event, so they didn’t need to spend money reacquiring me as a customer or replacing me with a new one. There’s not the same pressure to have top-notch selection available to all customers, at all times.

And occasion-wear addresses a true problem with sustainability. Formal pieces don’t get worn very often. For women, styling is also highly seasonal. It’s rare to wear occasion pieces as much as the average garment (7 times before being discarded), much less wear it out. But the clothes you wear to work, school, out to dinner, or at the club can be worn routinely. Instead, in order to sell subscriptions, Nuuly has to convince customers that their wardrobe needs a steady stream of novelty. That brings me to my next point…

The fashion industry’s climate crisis is the consequence of ever-accelerating trend cycles.

Recycled fibers, natural materials, and buying used are all part of the solution, but they’re not enough to offset rampant overconsumption. And one of the strongest correlates to heavy fashion consumption is time spent on social media. Our social apps make us feel self-conscious for outfit repeating. Fashion accounts will post content on “outdated” trends, making us feel apprehensive about existing pieces in our wardrobe. And then there’s the costume-ization and theme-ficiation of every last event. You can’t wear a top and some jeans to a concert; you need an outfit. Or you need a pair of cowboy boots for your friend’s “One Last Rodeo” themed bachelorette.

When you look at the broader goals of sustainability, are “green” brands do they contradict those pressures? For example, having a stronger allegiance to their own brand ethos than market trends; opting for designs and colors with style durability. Or do these “green” brands buy into trend accelerants? Do they allow customers to maintain that steady drip of new clothing in a way that assuages guilt? If they’re leaning into the forces causing overconsumption, they’ll never clean up the planet. They’ll only clean up your conscience as marginalized communities bear the brunt of climate change.

But Nuuly’s still greener than buying 6 new garments per month, right? Does this model make sense for anyone?

I think rental is a great option for people who experience big sizing fluctuations. Me and my IUD could totally relate. I did not enjoy rebuying the same pieces in larger sizes, only to repeat the process a year later. Big body changes inherently require consumption. And while secondhand pieces are more sustainable than rental, rental can be a clutch tool for folks limited on time or experiencing a lot of distress with body changes. (Like it’d be insane to expect a post-partum parent to thrift a solid wardrobe for their 4^th trimester).

I also think rental’s a great tool for short term needs, like vacation or working in an office while training and then going full time remote.

But fast fashion and Nuuly’s business both run on wardrobe dissatisfaction. They run on customers who are still searching for the silhouettes, fit, and personal style ethos that they love to wear. They run on customers who want connection and feel like fitting in with trendy pieces is a prerequisite. They run on people struggling with the social & economic shitshow from the past few years, looking for positive feelings from a dopamine hit. But these coping mechanisms have real implications for marginalized communities.

Overall, I think we as consumers like a quick & simple answer to sustainability. If a brand makes recycled or organic fabric, our consumption is sustainable. If a product’s used, our consumption is sustainable. If we rent clothing from a communal closet, our consumption is sustainable. But the truth is more complex than that. When we do our part of signing up to share clothing, we feel like that’s enough, but don’t hold the company accountable for their part in environmental conservation. When you subscribe to Nuuly, we’re essentially buying shares in a joint closet, where we don’t have any say in how the pieces are sourced and managed. From the outside, Nuuly seems wholly content with their entire sustainability story consisting of their rental business model. I just don’t think it’s enough.

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