Merrick, NY—When does something cross over from an outlier to a trend? Conventional wisdom says three times makes a trend.
And there are so many trends in the retail market, who can keep up? Digital this and online that. Sustainability. Synthetic diamonds. The sharing economy. Secondhand luxury. And on and on.
Two of the biggest trends happening in luxury are access over ownership, and resale. Both are way beyond three times, so clearly they’re trends. (Left: Tulerie, a new apparel rental website, functions like an AirBnB for clothing.)
Personally, I think the resale market is due for a correction. Millennials love secondhand goods as an affordable entrée into luxury brands they might not otherwise be able to own. But now that prices of secondhand luxury goods are often barely 20% less than a new version of the product, that’s essentially a used bubble that's not sustainable. My bet is that one of two things will happen: either the bubble will burst and prices will come back down to a more realistic level, or manufacturers of the original products will jack those prices into the stratosphere to a point where that’s not sustainable either. Millennials and Gen-Z are frugal, and it would be better for all to heed the lesson of Tiffany’s formerly bestselling heart bracelet.
So, that leaves the access vs. ownership trend, of which rental is a part. The backlash against consumerism may be a long term trend, but it doesn’t mean people want to live like monks. Things like wine and liquor tasting events are another manifestation of access over ownership: forking over $50 for a glass of rare whisky is pricey, but a lot cheaper than buying a $500 or $1,000 bottle of the stuff. For luxury jewelers, I think rental is worth considering. If you have more inventory and less cash than you’d like (and who doesn’t?), your options traditionally have been limited. But the rental economy is booming and with it there is untapped opportunity for jewelers.
Designer rental sites like Rent The Runway and Bag, Borrow, or Steal have been around for a while offering the chance to swan around wearing a high-end red carpet gown or luxury handbag, but when rental starts going mainstream, you know it’s got legs. And if trays of stuff are sitting in your safe doing nothing but collecting dust and taking up space, why not at least try to monetize them? Especially now that some of the big, bold '80s style pieces are coming back and looking fresh again, you could have a gold mine in potential rentals, no pun intended.
A 2019 commercial for Citi Financial Services shows a young Millennial-age woman wearing layered gold necklaces. Piled on in layers, these 1980s-style staples look entirely fresh again.
URBN, a very middle-market retailer—albeit a trendsetting one—is getting into the game with a subscription service called Nuuly. For $88 per month, customers can rent up to six pieces at a time, across any of the three URBN group brands (Free People, Anthropologie, or Urban Outfitters), along with a selection of goods from more than 100 third-party brands. It’s like having more than $800 worth of trendy new clothes for one-tenth the price, and you don’t have to worry about their Instagram shelf life. And now a new invitation-only site called Tulerie is becoming the AirBnB of apparel: real women are turning their closets into moneymakers by lending clothes they own to fellow members, for a fee.
There already are some jewelry and watch rental sites in the space, but those are digital, not local. If you’ve got a safe full of goods doing nothing, put them to work. Do a little restyling if necessary and launch a rental service aimed at a different subset of customers than your regular customer base. The benefits: you can make money on each piece over and over, and you get new people into wearing fine jewelry. Eventually, if they enjoy renting it, they’re going to want to own some and hopefully become regular customers. Keep it limited to a subset of your merchandise and you could even charge a base subscription or membership fee in addition to the rental fees. You’d have to work out something with your insurance, or perhaps put a hold on customer credit cards for, say, half the retail value of the piece, but that doesn’t seem like an insurmountable obstacle.
Will it cannibalize your good customers? Admittedly, it’s a risk but my guess is probably not a huge one. If someone is inclined to buy or gift luxury jewelry, they clearly like to own it so it’s not terribly likely they’d stop unless they have a major financial setback or other life crisis, and they’ve probably also got a collection far nicer than your older stuff anyway. Just think of having more cash to find special unique pieces just for them.