The luxury fashion industry has faced various new challenges because of recent changes in consumer culture. The COVID-19 outbreak has accelerated the digitalization of the fashion business, particularly in the luxury sector, which has traditionally been hesitant to accept digital trends. There are various digital trends that the luxury business has begun to adopt in modern times, such as TikTok and metaverse fashion in order to avoid digital disruption, but also, to thrive.
Ph.: Courtesy of Jimmy Choo
A growing millennial and Gen Z population is driving up luxury sales, which is pressuring brands to adapt to their audience. With their new spending habits, and, more significantly, digital-first attitude, these younger customers are driving a digital transformation in the luxury market.
The COVID-19 pandemic has advanced the digitization of the fashion sector, particularly in the luxury category, which has generally been more reluctant to accept virtual trends than other industries. However, luxury fashion brands can harness the power of NFTs to create unique digital assets and experiences, stimulating interactions with Gen Z and millennials, increasing brand recognition, and eventually driving increased sales. “The pandemic has helped accelerate the growth of virtual fashion. NFTs open a new world of consumers to brands, and may change the way we look at fashion by giving access to consumers to retain lifetime ownership of traceable, authenticated assets, and a secondary market for creators and consumers, uncommon in the luxury and fashion industry,” says menswear designer Raghavendra Rathore.
Non-fungible tokens (NFT) have dominated the crypto market and have already earned $10.7B as of 2021. The sales and marketing potential of NFTs provide unprecedented financial and exposure benefits for artists, designers, and businesses. Brands such as Jimmy Choo and Dolce & Gabbana have already developed and showcased their own NFT collections during Fashion Week.
Non-fungible tokens open a world of possibilities for the luxury industry and might be a lifeline for traditional luxury houses trying to keep up with the current generations. Many customers purchase high-priced luxury items not solely for their material purpose, but because they want to be a part of the culture, heritage, and distinct brand story that is also available virtually.
Because these crypto-assets are non-fungible, they have a similar appeal to one-of-a-kind designer products, which is why they may both be sold for a large premium. The classic Hermès Birkin bag, for example, may be compared to some of the best-selling NFTs, including the ‘Baby Birkin’ NFT that sold for $23,500 last year. Both are valued in society as they are highly esteemed and, moreover, hard to get your hands on.
The introduction of “fashion curating” has given more value to fashion as a form of art; it’s common to see fashion garments at art galleries and museums, and the incorporation of artwork in fashion, like in the example of Louis Vuitton x Takashi Murakami and more. Luxury fashion houses are transforming digital designs or whole collections into precious, exclusive, and one-of-a-kind collector items. Displaying luxury products on virtual platforms is a trend that is already noticeable and is very likely to become the mainstream way of showcasing luxury fashion on new platforms too.
‘Supergucci’, courtesy of Superplastic
One of the most significant benefits of NFTs for the luxury fashion industry is their capacity to revitalise the brand image of traditional luxury enterprises while also meeting evolving client requirements. Self-expression through fashion was formerly almost entirely tangible, but it is now fast blending with the virtual. As a result, fashion NFT may prove to be an effective means of introducing well-known luxury fashion brands to new, modern consumers.
The use of NFTs in the fashion industry provides various unexplored possibilities and, in the future, augmented reality will almost probably play a big role. Customers are already able to generate virtual versions of themselves wearing 3D apparel using NFTs and then publish them on social media channels. This capacity to develop more dynamic and multi-sensory storytelling, as well as share brand stories electronically, enables the creation of brand communities around fashion houses. This phenomenon is already occurring, with people acquiring virtual goods to reveal their fashion self to the metaverse world.
Many luxury buyers indulge in high-end products to be a part of the luxury culture, a certain community, as well as the legacy and distinctive story that a brand has built. NFTs, like traditional high fashion products, are social assets that provide the consumer with a certain prestige and a seat at the desired table of the specific brand. For an industry founded on crafting fascinating stories, this opens countless new opportunities to tell its brand narrative in unique, engaging ways.
NFTs may improve a brand’s community-building component, which can be anything from invites to member-only events, early access to real or virtual limited-edition collections, and so on. This allows brands to broaden their offers beyond the physical world and tap into online communities, such as through virtual community activities, live streaming fashion shows, and the opportunity to promote brands on one’s social media platforms.
Due to recent significant changes in consumer culture, the luxury fashion sector has faced many new obstacles. NFTs and their exclusivity connect with luxury fashion and have become a strategy to win over new consumers. “We’ll see an evolution of volumetric video and NFTs that will not only unlock unique access and experiences, but also take ownership of digital assets to new levels. We’re just scratching the surface of what NFTs will be able to unlock for fashion,” says Cathy Hackl, CEO of the Futures Intelligence Group, to Glossy.
Most brands today may still be unaware of the power of wearable digital fashion and NFTs and the full spectrum of other features that it may bring. However, the digitisation of the fashion world is only advancing, and we are still only witnessing the start of what NFTs will be able to do for this industry.