Does luxury jewelry rental have a future?
Here and there, we see the birth of start-ups specializing in the rental of luxury jewelry . Just as it is more or less common to rent an evening dress, it is now possible to acquire for a short period a necklace from a prestigious house. Does this niche of jewelry nevertheless have a future? This is the question that this article from Vogue Business looked at .
Renting jewelry for a wedding
In preparation for her elegant 2017 wedding at New York City’s Plaza Hotel, Blake Geffen had hoped to rent a few luxury accessories to elevate 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 recognized a gap in the fragmented market for luxury jewelry rentals.
Sensing an opportunity, Geffen, who had worked in fashion PR, and her husband Wayne, who studied finance, spent their honeymoon writing a business plan and founded Vivrelle, a luxury accessories service that rents designer jewelry and handbags .
Luxury jewelry: increasing demand
As shoppers abandon 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, expects the fine jewelry market to grow 10% to 12% annually over the next five years. A new generation of younger customers expects to be able to rent as well as buy.
- Antique quilted Chanel ring
However, unlike other rental products, jewelry faces insurance issues , higher logistics costs associated with repeated shipments and costly returns, spending 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 hard to generalize about rental prices. However, Hurr, another London-based rental company, says that jewelry rentals cost an average of 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 rent, 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 different levels of access. It also spreads out risk by renting luxury handbags as well.
Luxury jewelry rentals are being shunned by major fashion houses
Major jewellers are reluctant to offer rentals, partly for fear of overshadowing their own sales. Luxury watch brands, however, are breaking that taboo, with major players such as Breitling making small steps towards lending luxury watches . The lack of competition from the big houses has encouraged a whole host of start-ups specialising in jewellery rentals. Even long-established jeweller Hancocks London has started renting out gemstone tiaras to brides who are fans of 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 very emotional. A piece of jewelry has long-term meaning and emotional value.
“ To replace self-indulgence purchases, jewelry rental and subscription models can be a way to reach a customer who may be looking for variety but isn’t able or willing to absorb the cost, ” says Bain & Company’s partner Naiara De Leon. But 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 don’t share that view. Launched in September 2018, the company, which is 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 new value of the rented jewel, this means that after 5 or 6 rentals, you can permanently acquire a second-hand luxury jewel for the same price .
