Non-fungible tokens are all the rage, but for luxury fashion brands they pose questions — in abundance. Will the crypto-wealthy, who are mostly young and male, be interested in luxury fashion NFTs? What would they look like and would buyers get any utility from them? Would they be brand dilutive? And will the complexity of setting up cryptocurrency wallets be too much of a bother for luxury consumers?
While each new day brings another breathless story on a new non-fungible token (NFT) record sale, the luxury fashion world has remained relatively quiet. But that’s about to change. Fashion brands have been studying the wild, wacky world of blockchain and all its creative and business possibilities. Now they are poised to jump in.
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Gucci recently confirmed to Vogue Business that it’s “only a matter of time” before a brand like Gucci will release an NFT. In addition, Vogue Business has confirmed with multiple industry sources that a number of luxury fashion houses are close to releasing NFTs. “The question is just who will pull the trigger first,” says Marjorie Hernandez, founder of Lukso, a blockchain platform that works with fashion brands. “Luxury brands were behind on the e-commerce trend, so there’s now more of a willingness to experiment with new technologies like blockchain.”
In recent months, says Hernandez, “every single fashion person I’ve ever talked to” has asked about what they can do in the NFT space. Anything digital, from art to music to fashion can be turned into a unique NFT with its ownership recorded on a digital ledger, or blockchain. Proponents say that NFTs are the next evolution of digital fashion skins, which have already been embraced by luxury fashion brands. They claim that NFTs’s scarcity and ability to accrue value can bring digital fashion closer to real fashion.
The race to create the Net-a-Porter of NFTs
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NFT use cases are currently in their infancy, especially for fashion. “Right now, fashion being sold via NFT is fashion as art, and not necessarily fashion as a utility,” says Cathy Hackl, CEO of the Futures Intelligence Group, a company that advises brands about how to approach new technologies and virtual goods. “We’re eventually going to get to the point where there’s more utility, but we’re not there yet.”
That means that brands can currently sell NFTs that are, say, GIFs of clothing pieces, but buyers can’t actually do much with them besides admire the GIFs. And the current fashion NFT user experience lacks the polish expected by luxury fashion buyers. The fashion NFTs on a virtual game called Decentraland are a world away from luxury. Players inhabit avatars and can buy fashion NFTs on the Decentraland wearables market. A recent scroll through the marketplace reveals an odd mix of sneakers, hoodies and Santa Claus gag costumes, branded with Atari or the names of popular cryptocurrency exchanges like Kraken and Binance. The outfits are cartoonish and pixelated, while the game itself is a jarring user experience. What’s more, the hassle of setting up a browser-based Ethereum wallet is unlikely to appeal to luxury fashion brand shoppers.