In the new world of digital luxury, the revolution will be symbolized

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Innovators are emerging, enabled by the convergence of the worlds of gaming, fashion and cryptography, to create a new state of mind as well as an ecosystem around the consumption of collectibles of digital art, fashion and luxury.

Whether this will exist in parallel, be encompassed in, or ultimately assert its dominance over the dominant branding and retail paradigm, is the big question facing the luxury industry.

Consider the following

In 2019, Dutch fashion start-up The Manufacturer sold the world’s first digital-only Iridescence dress on the blockchain for $ 9,500. The article exists only online and is fully traceable and exchangeable. Brand founder Kerry Murphy has publicly said his company will be the first billion-dollar digital fashion company.

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In May 2021, Italian luxury house Gucci, as part of its centennial celebrations, made a foray into the Roblox gaming platform to create an immersive and virtual Gucci Garden experience in the metaverse, which then led to on resale of a Queen Bee Dionysus digital collection. handbag priced at $ 4,115 versus $ 3,400 for the actual version.

On June 12, British digital couture brand Auroboros kicked off its first London Fashion Week ready-to-wear show with the 14-piece digital-only collection to be shown as a film, worn by a physical model.

The more it changes

Change in the luxury industry, to paraphrase Hemingway, tends to happen gradually, then suddenly.

From its origins to quieter times, as luggage makers or jewelers to royalty and the well-to-do, the luxury world has more recently had to face multiple revolutions.

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The consultancy firm Bain calls it the exit of the temple from the mid-1990s with personal luxury brands largely leaving behind their rarefied atmosphere to appeal to a wider audience, consolidated with the “democratization” or the accessibility phase larger from the early 2000s.

This was followed by the emergence of the Chinese middle class as a major consumer from the early 2010s until the e-commerce revolution, which went from pleasant to have to a new religion as a result of the Covid-19 crisis.

It’s not what your parents knew to be luxury

There is a palpable feeling that it is the current transformation that may turn out to be the most revolutionary of all – that of a virtual land or metaverse (a more immersive, augmented and shared virtual space) in which luxury brands are ‘root.

This would not only involve brands marketing or selling their products, but communicating their brand identity, engaging with communities and creators, and fostering trust and brand loyalty through participation. to blockchain – the imperative being digitally driven (Generation Z) and digitally biased consumers (millennials), who could account for two-thirds of global luxury spending by 2025.

The revolution will be symbolized

According to a Deloitte digital media trends survey, 87% of Gen Z consumers report playing video games on their smartphones, game consoles or computers at least once a week. In addition, this generation is estimated to prefer playing video games compared to consuming video entertainment by a multiple of more than twice.

The resulting blurring of the lines between the physical selves of young consumers and gamified virtual avatars ideally lends itself to tokenization – a unit of data stored on a digital ledger, or blockchain, that facilitates exchange and ownership (among a myriad of use cases) supply – limited luxury collectibles, whether paired with a physical purchase or online only.

Digital sneaker brand RTFKT Studios and the art of non-fungible tokens (NFT) by artist FEWOCiOUS generated sales of $ 3.1 million in just seven minutes at the NFT Nifty Gateway Marketplace.

Every digital sneaker is paired with a physical version – the opportunity for brands to optimize their supply chains by selling a digital version of the coveted product while the consumer waits for the physical version is a game-changer.

Brave new world

Some occasionally say that we tend to let the hype dominate, and therefore overestimate the magnitude and speed of the changes that can occur in the short term, while dramatically underestimating the magnitude of the transformation that can occur in the short term. can potentially occur in the long term.

Far beyond the current frenetic interest in NFTs, the direction of the journey towards a hybrid “phygital” future for the luxury industry is emerging, with a wide variety of brands in place timidly tilting their toes. even as native digital start-ups are going full speed ahead.

A collaborative approach, such as the design of the world’s first global luxury blockchain by LVMH, Prada and the Richemont-owned Cartier brand, could pave the way for future industry-wide initiatives.

At the same time, we may be less than a decade from the world’s first digital-only luxury conglomerate.

What is clear is that this revolution is happening.

Swetha Ramachandran is an investment manager at GAM Investments

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