If You Can’t Buy It, Rent It

In an economic slump, will luxury shoppers turn to services that lease diamonds and It bags?

Luxury retailers may be on the ropes, their once-avid shoppers heading for the exits. But the economic malaise gripping the country could have a silver lining for a small but growing section of the luxury market, one that rents to women what they can’t afford to buy—or, possibly, keep.

Over the past several years, a handful of businesses that rent high-end accessories has sprung up. They are the descendants of the shops that rented designer formal wear for special occasions, cousins of rental and fractional-ownership businesses offering everything from destination vacations to yachts, jets, and collectible cars. Industry watchers believe such luxury rental businesses may benefit from the pain retailers are beginning to feel as gyrations in the stock and housing market cause even well-heeled customers to pull back on spending.

The economic downturn “will focus the minds of people on what the alternatives are to full ownership and help accelerate the growth of the industry,” says Milton Pedraza, chief executive of the Luxury Institute, a New York-based research firm. “I think long-term, people will realize that instead of owning an asset you can just buy the experience.”

Michele Krause, founder of Bling Yourself, says her customer base has grown between 20 and 40 percent a month since she launched her jewelry-rental business last July, and that the economic slowdown has had “no impact” on the number of new customers or rentals. Another such enterprise, From Bags to Riches, which rents and sells handbags, is even expanding, preparing to launch spinoffs in Canada, South Africa, and the United Kingdom within the next three months.

“We think our business will increase fairly dramatically this year because it is a value-driven proposition,” says Sam Mangiere, co-founder of From Bags to Riches. Top-line sales growth for his three-year-old company was up 57 percent so far this year, compared with the same period in 2007. Mangiere says about 50 percent of the growth has come from rentals.


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