When it comes to disruptive trends, it’s safe to say that luxury and fashion industry usually takes a more conservative approach against what might put its steady growth at risk. However, with all the changes seen over the past year with online transformation in the industry due the global COVID-19 pandemic, brands are finally beginning to accelerate their plans and embrace the world of digital and virtual activities.
Indeed, barely a month passes by without a company or brand announcing the use of new digital tools like blockchain, or unveiling plans for a virtual world or presence on a gaming platform. And the latest craze of the year so far has become: the non-fungible token.
Excitement about non-fungible tokens (or NFTs as they are more commonly referred to) reached a fever pitch earlier this year in March, when a JPG file entitled “Everydays — The First 5000 Days,” sold for $69.3 million, a record price for an artwork by the artist Mike Winklemann, also known as Beeple. A report from Reuters found that last month, the market for NFTs climbed to new levels in the second quarter, with a reported $2.5 billion in sales so far this year.
Investment in NFTs make sense, particularly if the audience you want to appeal to is on the younger side. Virtual products are not only status symbols for those who buy them, but they also can be collected and shown off through social media: a very nice mix of bold flaunting of branded products and the lifestyle spread by the most appealing social media.
And after a slow and hesitant start, fashion and luxury brands are diving in. Dolce & Gabbana announced it would launch an NFT collection entitled Genesi, and Gucci was one of the first luxury brands to develop digital clothing, and recently auctioned a four-minute NFT video for $25,000. British jewellery Asprey is planning to launch NFTs, and many other brands are following suit.
But before they all rush in, it’s important to ask why brands are becoming fascinated by the world of NFTs? It is because of the buzz surrounding it? Is it because brands want to show off their edginess and cool factor? Or it is another frenzy fuelled by the curiosity and the fear of being outdated that is pushing the fashion and luxury brands to explore this dark side of the web?
It’s my belief that NFTs represent a risky investment for brands as their value is defined solely by what a buyer is willing to pay for them. While in most cases, virtually precious items are sold at auction by the most (and the least as well) established houses, the fashion and luxury industry is developing a more traditional way to sell NFTs, and the one that they are trying to implement in order to make the business not only profitable, but also repeatable.
But fashion and luxury brands are not selling unique pieces or special items, they are just selling branded products in GIF format, 3D pieces and the evolution of the avatar skins at very low price; the example of the $12 Gucci sneakers is a very clear indication of this.
And the risk becomes that companies may dilute and trivialise their brand values. Unless the industry changes its mindset and its global vision on the matter, the result will be a sort of virtual reality dollhouse meets Barbie and Ken, a paradise for wannabes who cannot afford to buy the real items, in physical stores.
The dream that art and other industries are creating around the NFTs is exactly the opposite of what luxury and fashion have communicated and breathed so far in their messaging: real textures, smells, rich details, uniqueness.
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Fashion and luxury brands should “think differently” when referring to NFTs and go back to creativity and innovation without flattening the experience of the actual five senses that become enhanced by all its physical products.
Why a customer should buy a fashionable NFT collectible if it’s not possible to show it off in the community of fashionistas? Why buy a high-end jewellery NFT when you can buy a real one and be able to easily define its price in case one wants to re-sell it?
If NFTs will be embraced as just another trendy wave to surf, brands will seriously risk to losing their appeal and value in real life. That is of course, unless the whole world goes back to Second Life.
If only the industry sought to understand the deep meaning of the crypto world and aimed to develop it into a new set of values and concepts, that focused on an authentic evolution of the existing fashion and luxury offering. If only it sought to change its point of view and strategic valuable assets, and worked to invent something completely new, then NFTs in fashion and luxury will begin to make sense and will further enrich the growth of the business.
The way forward is the one that will continue to allow customers to dream and find a purpose in what they buy. While on one side there is a strong push towards sustainability, how authentic can be the creation of virtual products with little value that can be easily forgotten?
The risk is to just fuel the NFT fashion frenzy like another hype concept to post on social media. Without meaning and purpose, this frenzy will just put at risk the strong foundations of the industry.
The unbearable lightness of being only a virtual commodity.