Does luxury jewelry rental have a future?
Here and there, we are seeing the emergence of startups specializing in luxury jewelry rentals . Just as it is more or less common to rent an evening gown, it is now possible to acquire a necklace from a prestigious fashion house for a short period. Does this niche of jewelry nevertheless have a future? This is the question that this article from Vogue Business explores .
Rent jewelry for a wedding
In preparation for her elegant 2017 wedding at the Plaza Hotel in New York City, Blake Geffen had hoped to rent a few luxury accessories to enhance her bridal look. The only problem was that it wasn't really possible at the time. While low-end rental options were plentiful online, she identified a gap in the fragmented luxury jewelry rental market.
Sensing a great opportunity, Geffen, who had worked in fashion PR, and her husband Wayne, who studied finance, spent their honeymoon writing a business plan. They founded Vivrelle, a luxury accessories service that rents designer jewelry and handbags .
Luxury jewelry: growing demand
As shoppers abandon their social distancing habits and weddings, parties, and other special events resume, demand for luxury jewelry is on the rise. Antoine Belge, an analyst at investment firm Exane, predicts the fine jewelry market will grow by 10 to 12 percent annually over the next five years. A new generation of younger customers expects to be able to rent as well as buy.
However, unlike other rental products, jewelry faces insurance issues , higher logistics costs related to repeated shipments and costly returns, consumer habits that focus on one-off events, and high expectations for customer service.
How much does it cost?
Margins are also likely to be low. It's difficult to generalize about rental prices. However, Hurr, another London-based rental company, says jewelry rental prices average 8 to 10 percent of the recommended retail price . For example, a pair of Chanel Susan Caplan earrings can be rented for between £83 and £227, while the retail price is £1,075. Verstolo, a New York jeweler that offers some pieces for rental, says its fees are between 2 and 5 percent of the purchase price. Rental prices tend to range from $275 to $625 per item. Viverelle has developed a subscription -style model with varying levels of access. It also spreads risk by renting luxury handbags as well.
Luxury jewelry rentals are being shunned by major fashion houses
Major jewelers are reluctant to offer rentals, partly for fear of overshadowing their own sales. However, luxury watch brands are breaking this taboo, with major players such as Breitling taking small steps towards lending luxury watches . The lack of competition from the big houses has encouraged the emergence of a whole host of jewelry rental startups. Even long-established jeweler Hancocks London has begun renting out gem-studded tiaras to brides enamored with period TV series such as Bridgerton and Downton Abbey.
Jewelry Rental Outlook: Mixed Reviews Due to Emotional Nature of Product
Despite the enthusiasm of the younger generation, the sustainability of the jewelry rental and subscription model remains uncertain . Wedding and gift purchases, which are important in many countries, tend to be highly emotional. Jewelry has long-term meaning and emotional value.
“ To replace self-treat purchases, jewelry rental and subscription models may be the way to reach a customer who might be looking for variety but isn’t able or willing to absorb the cost, ” says Bain & Company partner Naiara De Leon. However, she says weddings and gifting alone account for more than 60% of the U.S. jewelry market.
“ In the fine jewelry sector, these models are nascent, so we see growth prospects, but given the emotional nature of this purchasing category for the majority of consumers, it will be difficult to see it capture a large share of the pie. ”
Vivrelle's founders disagree. Launched in September 2018, the company, emerging from the pandemic, claims to have experienced triple-digit growth, with a growing waiting list of people eager to borrow bling for a monthly fee. Will they eventually hit a wall? It's possible. With a price around 10% of the rented jewelry's new value, this means that after 5 or 6 rentals, you can permanently acquire a pre-owned luxury piece for the same price .
