Renting bags gains traction

Jun 14

Most women want to buy luxury bags, but there’s also the option to rent them for short periods. While this might look like bad news for bag brands since it means fewer are sold, it actually expands the market for bags designed for special occasions, times when a new purchase can’t quite be justified for the majority of consumers. A new service called Laxus even offers unlimited bag rentals all for a flat monthly subscription fee of ¥6,800 for those who prefer never to buy at all.

Japan has several bag rental services. One of the first was Orb which launched in 2007 just in time to benefit from the financial crisis, while another, Cariru , started a year later and has now expanded to include party dresses and jewellery. Both have proved reasonably popular, particularly for parties and weddings where the preferred choice of bag is something not suited to daily use, and therefore hard to justify buying outright. By renting, women can opt for different bags for different occasions, as well as try out a bag before buying it.

At launch both services required customers to pay a monthly fee, but both are accepting new members for free. Customers pay each time they rent a bag for 3 day, weekly or monthly periods. Most bags rent for around 5-10% of the retail price – some Chanel and Louis Vuitton bags will set you back ¥9,000 for three days on Cariru. Customers can also opt to buy the bag at the end of the rental period at a discount. Cariru says most of its customers are housewives and career women looking to rent a special bag for formal occasions such as parties and weddings.

Both Orb and Cariru are web-based rental services but the newest entrant to the sector is all about mobile. Called Laxus, the app has been developed by ES Corporation, a Hiroshima-based company. Laxus offers over 1,000 styles of bags across 11 brands such as Hermes, Chanel, Prada, Coach and Louis Vuitton – it guarantees they are the genuine product by working with Japan’s Anti-Counterfeit Association (AACD).

What is also unique about Laxus is that rather than renting bags lot by lot, Laxus requires a monthly subscription of ¥6,800 that includes the rental of one bag for as long as the customer wants. The customer can stick with one bag for two years if she wants, or swap it for another, and even replace it for the same bag if the one they have is looking a little tired.

The advantage of this for ES Corp is that it guarantees its income through subscription fees. Although the hurdle to join up is higher given the requirement to subscribe, the monthly fee is not so significant compared to the amortised cost of a luxury bag over one to two years. ES says its service is simpler to use than competitors because the entire transaction can be done through a phone, and customers can choose any bag for the same flat fee. ES is targeting 400,000 members in five years.