Rapaport Magazine

The lend trend

Luxury rental businesses have been popping up over the last few years and gaining popularity among younger consumers, but established jewelers are also hopping aboard this high-speed train.

By Leah Meirovich

A young generation of digitally savvy and sustainability-minded consumers has entered the jewelry arena, ushering in a new era of memo. No longer simply a borrowing game for diamantaires and big companies, loan-to-own options are increasingly geared toward customers.

For a minimal price, discerning shoppers seeking luxury accessories without the corresponding price tag can rent a Cartier Love bracelet, a Bulgari brooch or a Rolex wristwatch. When they’re ready, they simply send the item back and move on to the next piece, or, if they become attached, they can buy the item at a discounted price.

The result is a simple solution to multiple problems: how to address the growing demand for sustainability among eco-conscious consumers, how to create new revenue streams without a large financial investment, and how to reach clients who desire luxury jewelry but don’t have the means to buy it.

Ripe for disruption

That the jewelry industry lags behind on innovation is no secret. The jewels themselves might have changed, but the way companies sell them hasn’t. It took Covid-19 for many jewelers to take the leap to e-commerce.

“The inspiration for Switch actually came from my mom, who’s a jewelry designer,” says the online rental site’s cofounder and CEO, Adriel Darvish. “Through her, we learned that the jewelry space is super antiquated, and very much ripe for disruption. And jewelry is really the perfect product for the rental model, because it’s so durable and also because it’s expensive, so it’s not something that most people can enjoy frequently. They don’t really get the joy of a new piece of jewelry as often as they’d like.”

That sentiment also resonated with Meaghan Rose, founder of rental platform Rocksbox. She left her job as a consultant, taught herself basic programming and Adobe Photoshop, and began to rent her own jewelry out of her garage.

“I’ve always loved jewelry,” she says. “It’s the most fun part of getting dressed. Even though I loved it, I always found the shopping experience to be overwhelming, and it was hard to find pieces that I loved. I had a junk drawer of jewelry that I bought and ended up never wearing. My girlfriends and I used to go to each other’s apartments to borrow jewelry from one another, and that’s how I would try new trends and discover new brands. I wanted to create a shopping experience that felt like that — where people could experiment and discover new pieces in a fun and low-risk way.”

Rose’s business caught the attention of Signet Jewelers, which bought Rocksbox this past April, aiming to expand its services and reach younger customers.

“Rocksbox has revolutionized the jewelry-rental subscription marketplace by delivering personalized, online and data-driven customer experiences for jewelry lovers who prioritize fashion, online convenience and sustainability,” Signet CEO Virginia Drosos said at the time of the announcement.

A natural progression

While Switch and Rocksbox are dedicated online-only businesses, established jewelry stores with physical locations have an advantage when moving to rental. There is no need to acquire and maintain a revolving assortment of goods off-premises, since the loaning segment can operate as an extension of an existing store, and there’s a product base already in play.

Rental site Haute Vault, for instance, is the brainchild of fifth-generation jeweler Jonathan King. King Jewelers, the store he owns together with his family, has branches in Tennessee and Florida. Meanwhile, Guy Verstolo, owner of high-end boutique Verstolo Fine Jewelry in New York, has carved out a niche in short-term rentals of bridal pieces.

“We saw big demand for high-quality jewelry for weddings, and there was no solution,” Verstolo explains. “You want it to look good on your wedding day because you’re going to see it in all your pictures forever.”

He rents to “a couple of dozen” people each month, of whom approximately 10% come back to make future purchases, accounting for 10% of total revenue.

Blake and Wayne Geffen came up with the idea for their jewelry-borrowing service, Vivrelle, while on their honeymoon, noting that there was no place to rent expensive items that would likely be used only once. The company launched in 2018 and has a showroom in New York.

Since opening, Vivrelle has grown substantially each month and tripled its business in the last half-year despite the pandemic, reports senior brand manager Rachel Nimeroff. “Demand has been incredible, and we are just trying to meet that demand,” she relates. “It’s not just the borrowing business, but we have a very high percentage of clients that buy the pieces they rent.”

Because jewelry was one of the few items people could use to express themselves on Zoom, having access to a constantly rotating line of accessories on a shoestring budget was appealing, Nimeroff says.

Switch’s Darvish believes it’s also the emotional pull of jewelry that keeps people coming back, and even buying. “Jewelry is just something that makes people feel good, and it was a difficult year, so having that feel-good piece arrive at your door is probably a motivating factor,” he comments. The sentimental draw of a bracelet or necklace that one has worn for a special event such as a wedding, honeymoon, graduation or party is hard to beat, he adds.

In 2019, Switch quadrupled its revenue, and it grew again by a significant margin in 2020, Darvish says, stating that the company now boasts “several thousand members.”

How it works

Most jewelry-rental businesses operate in similar ways: They have several tiers of membership plans that allow clients to borrow a certain number of pieces at a time. Some specify how long customers may keep the jewelry and how many times they can return and re-rent per month. While most require borrowers to sign up for memberships, some also rent on a one-time basis for a higher fee.

Although the borrowing business generates significant revenue, most of these companies aim to produce additional income through the sale of their goods. To encourage members to buy the items they’ve rented, Vivrelle offers a discount on the purchase price for each month a client keeps a piece on loan.

“You can hold on to your items for as long as you want, and actually, the longer you hold on to it, the cheaper it will be to eventually purchase it. We also provide a member discount on each item bought,” elaborates Nimeroff.

One way companies strive to distinguish themselves is through personalized services, such as having stylists put together curated boxes based on members’ preferences. In some cases, customers can #wishlist items they like on Instagram, and the pieces are automatically added to the client’s next box.

Switch is even considering letting members do trade-ins of their own jewelry for items on the site.

“We have begun testing it with some folks, given that we have the infrastructure in place to authenticate goods,” says Darvish. “It’s something we definitely see in our future.”

Bumps in the road

While business is booming now, most jewelry-rental companies have overcome hurdles on the way and learned valuable lessons from the experience.

“We were a pure rental site in the beginning,” recounts Rocksbox’s Rose. “It wasn’t until people started asking if they could buy the items they were renting that we realized we should offer that option.” Now, more than half of all rental shipments convert to a purchase, she says.

Another thing she learned was how beneficial rental statistics were to the business itself. By reviewing which pieces and styles were being borrowed the most and what members were searching for, Rose was able to tweak her offerings to suit those trends, even creating seven in-house brands that reflect the company’s most popular items.

Darvish made the mistake of assuming that most Switch users would be people attending special events such as weddings or fancy parties, and geared the site toward that. He was surprised by the number of people logging on just to upgrade their everyday wardrobes. The site now carries more than 4,000 styles, ranging from basic fashion and costume jewelry to high-end luxury pieces.

“Our customers recognize the cost-benefit of membership versus spending hundreds or even thousands of dollars on a piece of jewelry that they get sick of in a matter of months, or even weeks or days,” he says.

Appealing to the next generation

Jewelry rental is still a relatively new category, but the healthy growth it’s seen over the past few years means it has the potential to reach even greater heights.

“The new generations — millennials and Generation Z — consider the fact of renting things versus owning them in general as normal,” says Federica Levato, a partner at consultancy Bain & Company. “They do it for cars, houses and other purchases, so why not for personal luxury goods?”

And for a demographic that buys into experiences rather than consumerism, wearing hundreds of beautiful goods from a virtual jewelry box for the same price as the one piece sitting in your drawer is an attractive proposition.

“You still get to wear this beautiful piece of jewelry,” says Verstolo, “and if you end up buying it at a discount later for sentimental reasons...well, then, we both win.”

Hancocks: Crowning gloryYou might say UK-based fine jeweler Hancocks London started a trend, but no one knew about it. The company has been quietly renting out tiaras to its top clients since the turn of the century, says Guy Burton, its bespoke-jewelry director. However, Hancocks has finally let the cat out of the bag, publicly launching a tiara-rental service in May.

“This is the first we’ve ever promoted such a thing,” Burton explains. “Beforehand, it was just, if you came in and bought something and mentioned you wished you had a tiara for your wedding but couldn’t afford to buy one, we would say, ‘Well, why don’t you borrow one of ours?’ And that’s how it’s always been done. Now, we’ve sort of looked at that and thought, ‘Well, actually, maybe we should be offering full rental for them moving forward.’ So it’s a new take on an old premise.”

In the month or so since Hancocks revealed its secret, there’s been quite a bit of interest, with nearly 10 inquiries for tiara rentals. The company has driven some of that by showcasing its wares at tea-party fashion shows, but Burton says Netflix has also contributed to popularizing the dazzling headpieces with its period dramas.

“Downton Abbey definitely created a demand for traditional ‘heirloom’-style Victorian and Edwardian pieces, and more recently, the Bridgerton effect has done something similar,” he comments. In fact, web searches for “tiaras” in the UK have risen by 50% over the last year, according to Google data.

Hancocks currently has seven tiaras in its stash, ranging from GBP 19,500 ($27,054) to GBP 75,000 ($104,054). Those include the Spencer-Churchill tiara, which belonged to the duke of Marlborough, and the Anglesey tiara from the collection of the marchioness of Anglesey. To rent one, clients pay 1% of the piece’s retail price per day, plus value-added tax (VAT). They must also take out supplementary insurance and give Hancocks a refundable deposit of the full purchase amount. That means renters pay about GBP 700 ($971) to GBP 2,500 ($3,469) to be a princess for a day.

But as popular as the tiara-rental business is, Burton shies away from moving into the jewelry-rental realm. “Tiaras are vintage pieces, which people expect to have been worn. It just doesn’t feel right to have a pair of diamond earrings [that] we’ve made, which are brand new, and they’ve been rented out a dozen times, and then we try to sell them. But also, in our opinion, highlighting tiaras just feels more focused and more special for the wedding day.”

Borrowing benefitsWhile jewelry sellers may see rental companies as rivals, the business of borrowing can, in fact, be a symbiotic and transformative path for jewelers.

“Our main business is still to sell jewelry, and rental complements it,” says Guy Verstolo of Verstolo Fine Jewelry. “It’s a great way to meet new people and bring in new clients.”

Federica Levato, part of Bain & Company’s leadership team for fashion and luxury, agrees that rental “can add another revenue stream for a business. It can also enlarge their customer base or help them sell more to the same customer base.”

In addition, it gives retailers data on what clients like.

“We had a lot of design issues in the beginning,” admits Verstolo, who first trialed to local customers a few years ago after several longtime clients asked to borrow jewelry. “There were a lot of pieces we made, thinking they would work beautifully and everyone would love them. We spent so much money on them, but nobody rented them.”

Through the rental service, he was able to see what items proved most popular, and he tweaked his offerings to reflect that. He’s since seen sales boom. “A lot of our renters become our clients once they see the craftsmanship of the pieces they rent,” he relates. “Then most people will come back and buy something else.”

So far, about 10% of renters have become loyal clients, and over the past few years, the rental side business has grown from 2% or 3% of revenue to about 10%, he reports.

However, while most store owners prefer to dip their toes in slowly rather than dive headfirst into a new venture, Verstolo says the pandemic forced him to innovate — and it was the best thing that could have happened to his business. “When we started, we only rented locally. We were afraid to rent online because our pieces are very expensive. But Covid-19 opened up the world for us.

We had to rent over Zoom, and once we started...and everything worked well, we realized we could expand the business nationally online. Now, over 50% of our clients are from outside New York.”

The jewelry-rental market will only continue to expand as we usher in a digitally native and sustainability-driven generation, Levato predicts. “Millennials and Gen Z are much more into rental versus really owning products. It’s a whole different kind of consumption.”

Article from the Rapaport Magazine - August 2021. To subscribe click here.

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