TIME Magazine

Luxe for Lease

Posted Friday, Oct. 07, 2005Susan McSweeney, mayor pro tem of Westlake Village, Calif. (median home price: $1 million), likes to carry a stylish handbag. But for her to invest $300 to $400 for a new Cole Haan, she figures she should carry it every day for a year. "I get tired of the same purse," she says. "I like flexibility." Instead she rents from Bag Borrow or Steal (bagborroworsteal.com). Just over a year ago, Lloyd Lapidus co-founded the company, which lets online shoppers borrow designer purses, from Baby Phat to Versace, for a monthly fee. He hatched the idea with brother-in-law Greg Pippo after watching his mother, wife and sister Stacey prospect for handbag loans in one another's closets.

Do you too want to look like Uma Thurman, the new face for Louis Vuitton, but just can't afford those accessories? No problem. Now that the middle class is scrambling for brand-name luxuries, borrowing has become the next-best way to look rich. A cadre of Internet-based vendors have started lending high-status gear. Five other handbag-loan entrepreneurs ventured out this past year, and jewelry will soon be added to the mix. If that's not prestigious enough, some new clubs offer a rotating selection of vintage cars or the latest extravagant ones. "I believe this is a game-changing business model," says Adam Dell, brother of computer magnate Michael and a venture capitalist who in June invested an undisclosed amount in Bag Borrow or Steal. "Ownership is something that consumers are beginning to recognize as a fleeting thing."

In July, Bag Borrow or Steal hired as CEO heavy hitter Michael Smith, a former president of Nordstrom.com and CEO of Lands' End--another sign that the borrowing business is gaining credibility. Smith is encouraged by his site's returning-member visits, whose number is growing more than 30% a month. "One of the beautiful things about this model is it takes a lot of the risk out of fashion," namely losses from returned merchandise and unpopular stock.

The model is simple, whether it's handbags or luxury cars. Membership fees at Bag Borrow or Steal depend on the priceyness of the products: from $20 a month to $100, for "Diva" status. For fall, Diva members can lease, for example, the Botkier Holster tote--$665 if bought new--and totes by company creative director Stacey Lapidus. The "steal" in the firm's name? You can buy a "like new" bag at a discount from the Hollywood, Fla., website. Another new business, From Bags to Riches (frombagstoriches.com) uses a slightly different model. You don't have to become a member, but those who do pay lower borrowing and shipping fees. That company also offers spa products and men's bags.

While From Bags to Riches plans a British expansion by year's end, it might not be easy to break in: pouch-for-hire sites have already opened across the Atlantic. Be a Fashionista (be-a-fashionista.co.uk), an upscale site based in London; Secret-Boutique (secret-boutique.com) and Bag Steal and Borrow (www.bagstealandborrow.co.uk)--yes, the name is uncannily familiar--have all been launched in the past year. Dutch bag fans can borrow from Bag Habits (baghabits.com). When it comes to handbags, the status trap, it seems, is a global phenomenon.