How Fashion’s Biggest Brands Are Preparing For A Crypto Revolution
The pace of the luxury industry is rapidly accelerating due to a tremendous increase in consumer demand— that has been ever changing. Even though the general consumer market seems to be more complex than ever before, it pales in comparison when compared to the complexity of luxury goods market. The reason being is two-fold. Firstly, when it comes to personal tastes, the luxury market segmentation can be hard to please. Furthermore, when it comes to staying on top of the latest trends— with respect to pop-culture and technology, the luxury market is willing to listen and learn.
In the recent past, luxury brands have embraced virtual experiences, infusing technology into their product design and even collaborations with tech-brands for more crossover appeal. Just last week, I met with the USDA and the American Cotton Farmers to discuss the future of maintaining the comparative advantage of one of the finest cottons on the global market today; Supima cotton. I was shocking surprised to learn how the American luxury cotton brand had adopted the use of virtual reality as an integral part of their marketing strategy. There’s no denying it, technology and luxury fashion have united and will continue to move forward together.
Take AURA for example; it is a consortium blockchain pioneered by the LVMH Group to track and trace luxury goods— from raw materials to the point of sale — in order to assure consumers of product history and proof of authenticity. Now, the question remains whether or not forthright luxury brands will move forward with crypto-currency. And rightly so. In the last decade alone, cryptocurrency has become one of the most disruptive technologies on the planet— securing global acceptance in abundant numbers. In fact, these days, companies such as Time Warner and WeWork are accepting bitcoin as a trusted payment standard. But the question is; will luxury brands be next to lean-in to a crypto future.?
Let’s face it, when it comes to the luxury sector, isolated living (due to the COVID-19 pandemic) has been nothing short of intriguing for the luxury business. During the pandemic, a growing number of people turned to fintech solutions as well as cryptocurrency— to hedge their bets amidst plummeting stocks. More to my point, the end of the 2020 brought about a bitcoin rally that was nothing short of historical. Truth be told, that rally ignited the flame for a tremendous increase in cryptocurrency overall. But the pivotal moment was when the data proved that the luxury market were a big part of the push in crypto. In short, it is necessary to understand that younger millennials and Gen Z feel most positive towards the use of cryptocurrency.
Having discussed this topic with the fashion luxury department chair and data specialist professors at NY’s Fashion Institute of Technology, we unanimously agreed that for business to survive and prosper the challenges of the modern business world, they will be required to understand the new way of doing business such as making developing a cryptocurrency strategy to fit your respective needs.
Clearly, a few of them have already gotten the message, with several luxury brands announcing pro-crypto moves in the last few years. In 2018, luxury watchmaker Hublot announced a new watch under its Big Bang line that was all about bitcoin. The watch, called the Meca-10 P2P, was created the mark the 10-year anniversary of bitcoin and could only be paid for with bitcoin to be transferred using a code engraved at the edge of the watch, which cost approximately $25,000.
In 2021, Swiss watchmaker Hublot announced plans to begin accepting cryptocurrency as payment, joining the leagues of fellow watchmakers such as Frank Muller and Norquin— who both made similar announcements in 2021 and 2020 respectively.
And when it comes to luxury, crypto interest had not been limited to watchmakers. For instance, take TJB Super Yachts, announced that they would begin accepting cryptocurrency for the leasing and buying of their superyachts. As per the official announcement, the major tokens including bitcoin and litecoin.
On a separate note, when it comes to art, Sotheby’s Auction house sold a painting by iconic artist Banksy titled “Love is in the Air” in May 2021 for $12.9 million—marking the first time that a physical piece of art was sold by a major auction house for cryptocurrency. Given the fact that other major auction houses like Christie’s have auction NFTs (which are based on the same technology as cryptocurrency), this is likely to continue. Performer Chris Brown created an NFT with athletic sportswear brand NIKE that generated millions in NFT sales. Cryptocurrencies influence within the luxury sector is not limited only to physical items but seems to be cutting across experiences as well. Luxury travel agent, Travala.com, for example, allows its clients to pay for flights, hotel stays, and travel experiences using a wide selection of cryptocurrencies, including its own native AVA token.
By using blockchain, fashion brands can digitize, track, and trace the entire lifecycle of an item. With blockchain, brands can create an immutable record of all steps in the supply chain, capture specific data points, such as sustainability certifications and claims, and provide open access to this data publicly. Take Scallop, a decentralized bank that allows users to open GBP/IBAN accounts within minutes and make use of cryptocurrency for everyday purchases. Whether with a personal or business account, Scallop users can spend both fiat currency and cryptocurrency simultaneously through the combination of a bank account, a crypto wallet, and a virtual debit card. To spend cryptocurrency for luxury purchases, Scallop users do not have to manually withdraw funds or transfer to the retailers but simply select the currency they wish to spend and make a payment as they would a traditional debit card.
Then there is Cirus, which allows people to earn cryptocurrency with more ease. Cirus believes that in the future, more people worldwide will begin earning cryptocurrency through simple means like monetizing their web data. Cirus essentially acts as a web monetization tool through its router which opens the gateway to mass adoption and increases demand for crypto newbies to purchase tangible assets like luxury clothing. By creating an avenue for more income generation, more spending in the luxury sector can be stimulated. Cryptocurrency is also not the only way that blockchain technology is finding its way into the luxury sector as non-fungible tokens (NFTs) are also making a splash.
When it comes to fashion brands, blockchain technology can significantly reduce operating costs in retail fashion by providing better data management tools, enhancing supply chain management, and reducing the risk of counterfeit markets. —Advancements in data management prompt cost savings and improve trust in outsourcing from everything from overseas suppliers to shipping. In short, blockchain provides an easy way to integrate data reconciliation across service lines and operations.
Luxury brands are starting to bridge physical and digital worlds through posh art expos that feature NFTs and other collectibles. Dubai recently hosted NFT BAZL, which put on display $4 million worth of diamonds, presented by Icecap, in addition to artwork by a cohort of award-winning artists and Floyd Mayweather’s memorabilia.
Attendees and auction bidders had an option to purchase these items using cryptocurrency. The first NFT BAZL was launched earlier this year by a digital investment platform Elitium and a Canadian digital assets firm GDA Capital. The event attracted some crypto billionaires as well as local art aficionados curious about the new tech.
While the logistics of accepting cryptocurrency as a means of payment, especially given how volatile some of them can be, is tricky, services have also sprung up to help luxury brands manage their backend. One of the biggest barriers for those who want to buy luxury brands is the high price of many of the items sold. While there is the option of instalment payments and credit cards, these are nowhere are convenient as commodity staking, a new purchase option offered by MinePlex, a CrossFi platform and marketplace.
Commodity staking only requires the user to pay a part of the cost of an item in the form of crypto and that amount is staked to earn interest. Once the interest is accrued, it is paid to the merchant and the consumer can receive the item. It offers a new, more affordable way to buy luxury items and a way that doesn’t affect users’ credit scores. This feature allows for saving up to 40% costs paid for credit cards and loan services. Considering how popular luxury items are among young people with limited earning power, this will probably prove popular.
The luxury sector, like many other sectors, will take time before cryptocurrency and blockchain technology as a whole is embedded into it. The process of accepting cryptocurrency and infusing blockchain into the industry has already started and from all indications, will not stop anytime soon.Source