Is luxury jewellery rental a serious business?
Young consumers want the flexibility and accessibility of renting luxury jewellery, but the size of the potential market remains open to question.
By Sharon Goldman
Mekina Saylor/courtesy of Verstolo
"Preparing for her elegant 2017 wedding at New York’s Plaza Hotel, Blake Geffen had hoped to rent a few luxury accessories to complete her bridal look. Except, she couldn’t. While lower-end rental options were abundant online, she discovered a gap in a fragmented market for high-end luxury loaners.
Sensing a sparkling opportunity, Geffen, who had worked in fashion PR, and her husband Wayne, who had a background in finance, spent their honeymoon putting pen to paper on a business plan. From this, they founded Vivrelle, a luxury accessories service that rents out designer jewellery and handbags.
As shoppers shed their social distancing habits and get back into the swing of weddings, parties and other special events, demand for luxury jewellery is trending upward. Antoine Belge, analyst at investment company Exane, expects a growth rate for the fine jewellery market of 10-12 per cent per annum over the next five years. A new generation of younger customers expect to be able to rent as well as buy.
However, unlike other rental products, jewellery faces insurance challenges, higher logistics costs from repeat shipping and returns of expensive items, a purchase rate aligned to one-off events and high expectations for top customer service.
Margins are likely to be low too. It’s hard to generalise about rental prices, but Hurr, another rental company, based in London, states that its rental fees for jewellery average around 8-10 per cent of the recommended retail price – for example, a pair of Susan Caplan Chanel earrings can be rented for £83-£227, while the retail price is £1,075. Verstolo, a fine jeweller in New York that offers some pieces for rent, says its fees are between 2-5 per cent of the retail price: rentals tend to be $275-$625 per item, with brides typically spending around $1,000 in total on jewellery rental. Vivrelle uses a membership model with different tiers of access. It also spreads the risk by renting out handbags too.
Brett Matthews/courtesy of Verstolo
Major high-end jewellers are reluctant to offer rental, for fear of competing with their own full-priced sales. (In contrast, luxury watch brands are breaking that mould with top players such as Breitling taking baby steps into luxury loaner options.) The lack of competition from leading jewellers has encouraged a mix of jewellery-only rental start-ups to emerge over the past few years, including Flont, Switch, HauteVault and BeekmanNYC. Even Hancocks London, a long-established historic jewellers, has begun renting bejeweled tiaras to brides enamoured with period TV series such as Bridgerton and Downton Abbey.
Rental prospects: mixed views
Despite the enthusiasm of a younger generation, the potential of rental and subscription models for jewellery remains open to question. Bridal and gifting purchases, which are important in many countries, tend to be highly emotional – the piece holding long-term meaning and personal value.
“For self-purchase occasions, rental and subscription models can serve as a way to reach a customer that might be looking for the variety, but are not able or willing to absorb the cost,” says Naiara De Leon, a partner in Bain & Company’s retail practice based in Dallas, who says that bridal and gifting represents more than 60 per cent of the US market alone. “In the fine jewellery space, these models are nascent so we see growth, but given the emotional nature of this category for a significant part of the market, it will be hard to see it become a big piece of the pie.”
Hagop Kalaidjian/Vivrelle
The founders of Vivrelle beg to differ. Launched in September 2018, the company is emerging from the pandemic, and says it has seen triple-digit growth with an expanding waiting list of those eager to borrow bling for a monthly membership fee. The three tiers range from $99-$279, with products available including $4,000 Stephanie Gottlieb diamond earrings and a $1,790 Cartier bracelet. The company says it has been profitable since its sixth month of operation, and in April this year, Vivrelle raised $26 million in series A funding led by Origin Ventures, with participation from Chapford Capital Group.
Previously, there was a negative connotation around luxury rental, says Wayne Geffen. He describes Vivrelle’s membership offer as “Bergdorf meets Soho House” and points out that the company avoids the word “rent” in its marketing and social media. “We decided to create a real elevated opulence in a market that has already shifted towards younger consumers who want an on-demand experience, where they aren’t tied down,” he says.
Hard luxury and the search for value
The rental market could see long-term momentum. Important post-pandemic trends include greater concern about sustainability and a search for value, says Sarah Willersdorf, global head of luxury at Boston Consulting Group. “This has prompted consumers to think more about access versus ownership and given rise to new business models,” she says.
Boston Consulting Group’s last edition of its annual survey, True-Luxury Global Consumer Insights, found that even during the pandemic, 21 per cent of Gen Z and millennials rented products. “From a category perspective, hard luxury (watches and jewellery) will drive growth for the rental market, as the high-ticket price lends itself to the sharing economy,” Willersdorf says.
The rental market for jewellery and accessories at all price points has been heating up for months. At the lower end, Signet, which owns Zales and Kay Jewellers, acquired jewellery subscription platform Rocksbox in April. Rental pioneer Rent the Runway, an e-commerce platform launched in 2009, which was valued at $1 billion in March 2019, raised more funding on the back of a $750 million valuation during the first wave of the pandemic in May 2020. After cutting costs, redundancies and closing physical stores, in May 2021 the company reported a comeback, with active subscribers up by 92 per cent and an eye on a future IPO (it has raised an estimated $400 million in funding overall).
Hurr
A new generation is ready to rent, says Victoria Prew, CEO and co-founder of London-based Hurr Collective, an e-commerce platform that provides a two-pronged luxury accessories rental marketplace, including pieces managed in-house by jewellery designers such as Alighieri and Alessandra Rich and a service that allows individual lenders to rent out their own luxury pieces, everything from a Dior necklace to a Chanel bracelet. “As a millennial, I’m of a generation that doesn’t question shared ownership,” says Prew, who notes that Hurr has enjoyed huge year-on-year growth in registered users and web traffic, as of this May, the latter up by ... "
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