Luxury doesn’t have to be always wasteful or expensive. As yet niche, the lease and pre-owned luxury movement are popularising the idea that luxury clothing, accessories, even cars can be rented instead of owned. And, if it has to be owned, it could be secondhand, a thought still considered a sacrilege by top-notch consumers of luxury.
The movement, however, seems to be putting down roots in India, powered largely by Indians who, even before the economic slowdown caused by COVID-induced lockdowns, were looking at the pre-owned and lease luxury for two reasons. “You need new clothes, particularly if you go out often, like to flaunt labels and are big on social media,” says 24-year-old media planner, Rushi Grover, a Bangalore resident.
She stumbled upon the luxury lease concept while surfing for a gown and coming across an online venture that offered two choices: rent or buy a pre-owned Prada. “There is no way I would have been able to afford a Prada.” Since then, she has rented at least twice a month, dishing out anything between Rs 3,000 to Rs 6,000 on clothing, bags and even accessories.
“I ensure no one knows that I am wearing something that is rented or pre-owned,” she says. “Image is important.”
Then there is the other factor: sustainability. Delhi’s Anju Modi, who refuses to spend huge amounts on a wardrobe but has to dress up for her job as an event manager, says, “It is wasteful to buy expensive garments because you are going to wear a dress once in a while, and it would just keep lying around. But flaunting labels do add gravitas to your image. Renting seems to be a sensible idea.” She came across a small company that was leasing out second-hand couture for a fraction of cost on Facebook last year and has since been hooked.
The movement towards rental or pre-owned, though, is driven by the love for luxury brands and the lack of money to spend on them, and has less to do with sustainability.
The movement, also, isn’t new, or limited, to India. We have borrowed liberally from the west. United Kingdom’s Triad shops, which retail pre-owned luxury, showed a 40% rise in sales in the period between February 2019 and February 2020. According to McKinsey’s State of Fashion report in 2019, millennials and Gen Z, the people between 18 and 35 of age, were looking at pre-owned or lease luxury for the love of brands and the desire to be more sustainable in their consumption habits, at least globally. More than half of fast-fashion is thrown away in less than a year, states the report.
Boston Consulting Group estimated that the luxury secondhand market is worth US$36 billion and predicts it will grow four times faster than the primary luxury market, at 12% per year versus 3# worldwide.
Online resellers and renters are driving the growth of the pre-owned market well beyond what brick and mortar stores ever did before. Internationally several online and a few brick and mortar stores have driven the trend: Vestiaire Collective, Reebonz, Cocoon Refresh, Depop, Hewi London, Edit Second Hand, and such.
Indian entrepreneurs in the rental luxury space
Over the past few years, several ventures, many of them e-ventures, have been powering the lease luxury space. Interestingly, one of the first off the ground, pretty much a pioneer, is The Clothing Rental.
In 2005, stylist Shilpa Bhatia launched her venture of renting out luxury clothing and accessories as a means to cater to the entertainment industry. “I was styling shows and movies where they wanted, say, a professional corporate look, and I needed that kind of clothes, the suits, the shoes, the works. You end up wasting money if you custom make it for each project. So, more than a decade ago, I decided to invest some borrowed money to invest in a stock that I could leverage.”
The individual renters have slowly been trickling in since 2010. “The early renters were largely people from the entertainment industry, who needed to rent brands for parties, networking, even red carpet events. But now, we have customers who are from ages 16 to 60 years. If a 16-year-old wants to rent a gown for say, a big party in college or an event, a young boy will come in to rent a branded suit for a job interview, and an older woman may want to rent a saree or lehenga for a wedding she is attending.”
Ashri Jaiswal and Varun Ramani co-founded the bootstrapped venture, Ziniosa, a luxury rental business focusing on handbags, after they moved back from the US in 2016. “Back in the US, I had used a luxury rental service when I was strapped for cash. I spoke to Varun, who was also keen to return home, if a venture like this will work in India,” says Jaiswal. In 2017, they were incubated by IIM Bangalore’s Entrepreneurship Cell, after which they participated in several luxury pop-up events, the first one of which was in JW Marriott Juhu, Mumbai.
A lot of young people approached their stall and got details, but hesitated to book. “They called later to say they were with friends and were apprehensive of letting them know they were renting. Now, that too is slowly changing. The younger generation is far open to saying something is rented or pre-owned,” says Jaiswal.
Most ventures in the lease luxury space stock both global and Indian brands, so a designer saree or lehenga or bandhgala is as much up for grabs. While The Clothing Rental owns every one of the 5,000 garments and accessories it rents out, many such as Ziniosa, works with designers, brands and individual owners who may want to rent out their luxury wardrobe to earn some dosh.
Stage3 offers over 2,000 pieces from top designers in the country, including Abhinav Mishra, Arpita Mehta, Abu Jani & Sandeep Khosla, besides accessories and bags from designers such as Sabyasachi, Outhouse, Amrapali and Aanchal Sayal. Sanchit Baweja, co-founder and chief business officer, says that men rent differently from women. “They are more style-and-fit-conscious instead of designer labels.”
While this isn’t a challenge, there is always that one question the promoters face: why is a garment or shoe rented out for so many thousands of rupees for two to three days, or why do they have to put a deposit down. Bhatia says, “I have spent a lot of time educating people. The clothing we are renting out is worth a few lakhs and we charge 10 percent of the garment cost, besides a deposit just in case there is some damage or loss. I have had cases where women have spilt wine or stepped on expensive gowns and then refused to pay up. In a few cases, they have just not returned the garment.”
According to Jaiswal, they do a background check and get KYC papers from renters, though they haven’t had too many bad experiences. “If there is any damage, it is inadvertent, and people are ready to compensate for it.”
What drives the business?
A circular economy fuelled by a younger generation and their desire for more labels. Add to it the popularity of limited capsule collections, which are scarce to come by. “As people realise that celebrities, too, wear rented clothes, they are more open to it. Many see value in either renting or buying pre-owned for both, the cost factor and the sustainability reasons,” says Bhatia.
Ziniosa had seen a 70% increase in rentals between October 2019 till February 2020 just before the lockdown. “Like all businesses, we have been shut, though a few people have rented for, say, an important Zoom meeting or presentation. But as we open, we are likely to see more orders coming in.”
Interestingly, the rental business is no longer limited to fashion or fashion accessories. Globally, high-end cars, superbikes, yachts, private jets and experiences such as a stay at a palace or a heritage bungalow, a lot is available on lease.
The car business
Besides fashion, in India, the big rental or pre-owned category is of luxury cars. According to Vinod Kothari, founder of Vinod Kothari Consultants that offers financial consultancy to brands and companies, “Brands such as Volvo and Daimler now allow leasing for three to four years and then agree to take back the asset, charging only about 60-65% of the asset cost over the lease term. In essence, the customer has the exclusive possession and use of the asset for those years, while paying only for a part of the asset cost. If the car is used for business, the rentals are tax-deductible.”
Mercedes runs a STAR Lease programme, which offers rentals inclusive of maintenance and insurance and easy upgrades, whenever the customer requires one. The standard warranty applies for the first three years. For rental lease tenures of more than three years, customers may choose to include extended warranty. The rental for CLA starts at Rs 98,000 as per the on-road price. With insurance and maintenance, the rental is around Rs 1.23 lakh. Under the program, the customer has to return the car at the end of the lease tenure.
South Korean auto major Hyundai is offering the base version of the SUV Creta at a monthly rental of Rs 17,642, inclusive of road and goods and services tax (GST), for five years. Buying the same version would entail a down payment of Rs 2.73 lakh besides equated monthly instalments (EMIs) of Rs18, 901 for five years.
One of the oldest ventures in the car rental business, KTC India is 75-years-old and was set up in pre-independence Karachi. Owned by Delhi-based Gurudev Ahluwalia, whose father bought the business in 1943 and moved it to Delhi after independence, even the stalwarts of India’s political landscaped leased cars from KTC during the time the Constitution was being written, to travel from their homes to the Parliament. Since then, the company has rented cars out to global politicians and heads of state on a visit to India, down to the recent US President Donald Trump’s visit to India.
While corporates form a majority of their customer base, besides participants of big conferences and events, Ahluwalia says often individuals rent out cars to ferry their relatives visiting from abroad, or people they are doing business with. “We get about five to seven individual requests a day. Sometimes, a family may want to travel on a mini-vacation and book our cars for the vacation. Back in the 70s and 80s, stars like Sunil Dutt and Amitabh Bachchan rented Mercedes. Now, we get requests for a Rolls Royce. We ensure that they hire the car and the driver since the self-driving infrastructure is not great in India and our drivers are well trained,” he adds.
Kothari believes as India opens up and people get back to jobs, we will be facing financial crunch and many may want to avoid expenditure on purchase of a costly asset. “The rental option may be the right thing to do.”
Deepali Nandwani is a journalist who keeps a close watch on the world of luxury.