The luxury sector is determined not to make the same mistake again. He generally viewed the internet with suspicion when the e-commerce revolution began in the late 1990s. Most luxury brands took several years to understand its potential before rushing to catch up with the rest of the retail world. .
Regular global studies of the personal luxury goods segment by Bain & Company have highlighted the growing importance of e-commerce. His research indicates that the proportion of online sales has more than tripled, from 7% in 2017 to nearly 22% in 2021, boosted by the pandemic.
Having learned from experience, most luxury brands are determined not to be left behind by the latest online developments, despite the challenges that technologies such as cryptocurrency, NFTs and the metaverse present to an industry. particularly concerned with preserving its heritage and protecting its image.
Cryptocurrency meets couture
In September 2021, for example, Philipp Plein became the first global high-end fashion brand to accept crypto as payment online and in its stores. It has partnered with Coinify, a payment platform owned by Voyager Digital, allowing it to manage 24 cryptocurrencies, including bitcoin and ether.
In the same year, crypto-payment processor BitPay recorded a 31% annual growth in transaction volume involving luxury goods such as yachts, cars and jewelry. More recently, crypto exchange FTX announced that it would target luxury brands to help them benefit from this fast-evolving trend.
For many high-end brands, crypto is essentially a way to enter the metaverse and take advantage of the benefits offered by the growing interest in assets such as non-fungible tokens (NFTs).
Rosh Singh, MD of Unit9, a multidisciplinary production company that works on movies and games, notes that luxury brands have become some of the most notable early players in the metaverse.
“The industry’s interest in Gen Z is a major driver of this behavior. The metaverse is a new virtual playground with great longevity for this group, as well as the consumers of tomorrow,” he predicts. “Experimenting with metaverse and crypto activations gives brands relevance and access to new audiences.”
Explore the Metaverse
Gucci has been particularly active in the metaverse, most recently releasing an NFT set called Gucci Grail. Minted on the Ethereum blockchain, it is the result of a collaboration between the brand’s creative director, Alessandro Michele, and the fictional “famous digital craftsman” Wagmi-san.
Selfridges has announced it will be selling NFTs and digital fashion at its store in Oxford Street, London, with prices ranging from £2,000 to over £100,000. The first Metaverse Fashion Week was held in late March at Decentraland, a browser-based virtual reality platform that uses a cryptocurrency called Mana.
Burberry has announced a partnership with Mythical Games to create an NFT collection inside the latter’s flagship, Blankos Block Party, an open-world multiplayer game. Burberry’s limited-edition Blanko (character), Sharky B, is an NFT that can be bought, upgraded, and sold in the in-game market. Meanwhile, the brand is releasing its own in-game NFT accessories, including a jetpack, armbands and pool shoes, which players can apply to any Blanko they own.
“When it comes to the fashion industry, NFTs can be the digital versions of physical garments or a unique digital design. It can range from a complete outfit to a pair of digital shoes, a handbag or even earrings,” explains James Gaubert, founder and creative director of République, which describes itself as a fashion house “ready for the metaverse”.
Put aside rivalries on the blockchain
Luxury brands benefit from blockchain technology in less glamorous but equally important ways. LVMH, for example, has teamed up with the Prada group and Cartier – a subsidiary of its great rival, Richemont – to develop the Aura Blockchain consortium. The world’s first global luxury blockchain, this unprecedented collaboration of competitors represents what its creators call “a unique and innovative solution to the shared challenges of communicating authenticity, responsible sourcing and sustainability information in one format. secure digital”.
A key challenge for luxury brands is to recreate the same thrill in the virtual world that customers would feel when entering a store in Mayfair or Knightsbridge.
“Owning a virtual fashion NFT brings the same feeling as owning an exclusive and unique designer garment,” says Gaubert. “NFT is simply the digital equivalent. The perceived value associated with fashion NFTs is also another opportunity for these major fashion houses. Some collectors treat their NFT purchases as investments.
But the metaverse presents luxury brands with threats as well as opportunities. The younger customers they’ve started targeting tend to be more concerned about sustainability issues, for example. A series of transactions from a single NFT, such as auction, sale and transfer of ownership, can consume 340 kWh of energy, more than is needed to power an average refrigerator for two months.
The war on digital piracy
And luxury houses are in a constant battle against counterfeits, notes Abigail Dews, trademark lawyer at intellectual property specialist Marks & Clerk.
“Like physical counterfeit products, virtual copycat products sold for thousands of dollars in various NFT marketplaces have the potential to dilute or tarnish a brand in the physical world. This is a particular problem for luxury fashion brands. , where unauthorized NFTs are significantly cheaper than their real-world counterparts,” she says, adding that the issue has yet to be resolved by UK courts. “Luxury brands will want to ensure that protection they enjoy in the physical world is also enjoyed in the metaverse.”
The metaverse certainly offers luxury brands the opportunity to reach new market segments and showcase their creativity and craftsmanship in different ways. The challenge for them will be to do so while maintaining their core values of quality, exclusivity and the highest standards of customer service.