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NFTs have seen explosive growth over the last couple of years and their sheer ubiquitous appearances make it easy to forget that the first NFT was only created in 2014. In less than a decade, NFTs have now acquired 16 to 20% of the art market. NFTs are no longer reserved for the circles of crypto-bros and digital creators. Instead, they are quickly becoming luxury brands’ favourite marketing tool and there are no signs of this slowing down.
In 2022, household luxury names are getting involved too. Luxury brands are jumping on the NFTs bandwagon. From exclusive drops to digital fashion, the blockchain is rapidly transforming the fashion world. Still not convinced? then look at the numbers put out by the consumer research firm Gartner which has thoroughly researched the metaverse and NFT industries and came up with the following results:
– By 2026, at least 25% of the world’s population will have exposure to NFTs and metaverse
– 30% of organizations will have their products/services on digital platforms
Hype between brands and web3
NFTs have actually been making a splash in the fashion world for a while. RTFKT, a virtual fashion brand, sold a virtual jacket for upwards of $125,000 during the initial NFT “gold rush”. Recently, we have seen Balmain’s creation of an NFT-backed ecosystem, followed a day later by Prada announcing that it was also diving into the NFT game. In this booming metaverse world and the hype for NFTs, crypto payment options, marketing through NFTs, and digital stores are quickly becoming part of the luxury playbook.
Applications in Fashion and Luxury Segments
While the market potential for metaverse and NFTs is huge, these technologies are particularly disrupting the fashion and luxury segments. The trends of digital fashion have started to unfold and as people split their time between the virtual and the physical worlds, the demand for virtual luxury goods is also picking up considerably. The traditional proximity between luxury and art, creating culturally relevant objects and services of desire, have made NFTs and luxury a logical fit.
Consequently, a plethora of brands have started working on NFT projects, many of them are also combining physical products and services with its digital twin. Another point of connection is in the fantasy nature of fashion—couture designs that are impossible to build with fabric, can be made real in digital spaces, or even layered onto real-life with augmented reality. It’s one of the dimensions in which the metaverse takes shape and starts influencing the total luxury brand experience.
Metaverse Fashion Weeks
Witnessing the huge impact that metaverse and NFTs are having on the fashion world, it is quite natural to see their progression onto metaverse platforms. In fact, such collaborations have resulted in the fruition of “Metaverse Fashion Week”. Many people may be surprised to learn that the fashion sector makes substantial use of Web3. During this Fashion Week, sitting in the front row, the bloggers had a brief bout of existential dread.
At the Vogue Business and eBay Technology Forum late last month, many attendees saw that luxury companies’ opinions on the importance of digital innovation have altered, and they now place a high value on Web3.
The event, put on by Condé Nast’s fashion industry publication, selected Web3 as its theme. Txampi Diz, who has steered Balmain’s forays into NFTs, sees digital assets as a way brands can produce additional content to serve the brand’s devotees.
Balmain’s NFT strategy with CMO Txampi Diz
Balmain has been an early adopter of metaverse and Web3 technologies introducing multiple NFT projects within a short period of time. This new frontier is equally vital to Txampi Diz, the organization’s chief marketing officer. ” To us, Web3 is like social media 10 years ago or e-commerce 20 years ago,” he said. “We need to build our own space in Web3, and we need to test which experiments make sense for us as a luxury house. This has to be part of the global marketing strategy for every brand.”
“We like to say we have an audience and not only customers,” he said. “We believe that luxury brands have also become media, and for us, NFTs are an interesting and powerful tool”Txampi Diz
Yang raised one of the drawbacks of the physical model, which is the disconnect between how fast digital items arrive in customers’ wallets, and how long the physical equivalent takes to get into their hands. This is something that the fashion industry has already been moving to address in recent years.
There are creative and technical challenges (e.g. interoperability) associated with these emerging categories but these issues can be easily solved with the help of a collaborative approach. Experts in the industry suggest that the future of the luxury and fashion segments lies in metaverse and NFTs, brands should explore new ways to engage with customers and finally, NFTs seems to be a great marketing vehicles that luxury brands fall for.