"Expensive Luxury Goods, Used Daily with Frequent Changes"… Growing Luxury Rental Market Driven by MZ Generation Consumption

Luxury Rental Market Growing Bigger
Gaining Attention as a New Consumption Trend
'Experience-Oriented' MZ Generation as Main Customers
Service Launches Continue... Companies Also Interested

[Asia Economy Reporter Song Seung-yoon] "Who buys luxury goods these days?"

Office worker Jo Narae (29, pseudonym) has recently become deeply immersed in luxury rentals. It is a service where you pay around 80,000 KRW per month and can exchange and use desired products unlimitedly. Until last year, she would make a big decision once a year to purchase bags or shoes, but after using the rental service, she no longer feels the need to buy. Jo said, "When you buy luxury goods, most of the time you can't get the full price when selling out-of-fashion products, but with rentals, there's no such worry," adding, "I like that I can try the products first and don't have to worry about coordinating outfits on important days."

The luxury rental market is emerging as a new form of luxury consumption. The consumption characteristics of the MZ generation (Millennials + Generation Z), who are sensitive to appearances and value experiences, are gaining new attention in conjunction with the trend of luxury preference.

The domestic luxury market is gradually growing in size. According to market research firm Euromonitor on the 16th, last year the domestic luxury market size was 14.9964 trillion KRW, a 22% increase compared to 12.21 trillion KRW in 2015. It is expected to exceed 15 trillion KRW this year. Although the exact size of the luxury rental market is not yet known, the luxury rental and secondhand luxury markets are also expected to grow along with the expansion of the luxury market.

Luxury rentals are broadly divided into acquisition-type, where you sign a long-term contract and pay the rental fee in full to own the item; subscription-type, where you can rent products in a regular subscription format; and short-term rentals. Except for the acquisition type, most are secondhand products. The main demand group for the luxury rental market is undoubtedly the MZ generation. They often focus on experience-based consumption, trying expensive products before purchasing, and rather than buying for collection, they use them briefly on special occasions focusing on utility.

LF Raum Watch Premium Rental Club. Photo by LF

The best-known player in the luxury rental market is the luxury-specialized platform Rebornzi’s luxury rental service 'Rentit.' Rentit offers services to rent luxury bags, clothing, accessories, etc., on a daily or subscription basis. Since its launch in 2016, Rentit has grown about twofold annually over the past three years and is expected to surpass 10 billion KRW in cumulative sales this year. In addition, several companies such as the first-generation luxury trading platform Philway, secondhand luxury platforms 'Mivent' and 'MarketinU,' and Bag, which operates the luxury rental service ‘Series Eight,’ are entering the luxury rental market and operating rental services.

Fashion companies are also paying attention to the rental market. Lifestyle culture company LF introduced the country’s first luxury watch multi-edit shop Raum Watch and launched the luxury watch subscription service ‘Premium Rental Club.’ It is a service that allows customers to experience and purchase high-end watches in advance. They have about 15,000 premium watches, including high-end brands like Rolex, Patek Philippe, and Audemars Piguet. Customers can set the rental period from a minimum of six months as they wish, paying a deposit ranging from tens of millions to hundreds of millions of KRW and rental fees ranging from around 1 million KRW to several tens of millions of KRW.

An industry insider said, "As the concept of ownership shifts to experience and subscription, rental services are expanding across all fields, and especially in luxury goods, the growth potential is higher," adding, "Although there is still some skepticism about whether luxury goods, perceived as luxury items, should be rented, it will gradually become a common consumption pattern."