Prada and Bulgari Make an Appearance at Web3 Event – But Why?
At the “NFT Paris” Web3 event held in February this year, a unique group of participants made waves. Luxury conglomerate LVMH, fashion brands Prada and Christian Louboutin, jewelry brand Bulgari, and even the century-old fashion magazine Harper’s Bazaar all sent representatives to the forums at NFT Paris to explore the integration of fashion and blockchain technology.
Why did these fashion brands collectively participate in a Web3 event? The key question here is not just why, but what exactly did they do, and why do these high-end fashion brands need to keep up with the trends of Web3?
Three main reasons why fashion brands are diving into the online world:
According to a report released by market research platform Market.us, the global Web3 market is projected to exceed $6.63 billion by 2024 and could reach a valuation of $177.58 billion by 2033.
The “Web3 market” referred to by Market.us includes cryptocurrency, NFTs (non-fungible tokens), DeFi (decentralized finance) applications, DAOs (decentralized autonomous organizations), metaverses that integrate digital assets, gaming platforms, and the infrastructure that supports these platforms.
The collaboration between Web3 tech companies and traditional industries or the integration of Web2 and Web3 is seen by Market.us as a key opportunity for market growth, and fashion brands are naturally among them.
Fashion brands are entering the Web3 space through the integration of NFTs and presence in metaverses. Apart from capturing consumers’ attention in novel ways, there are three deeper reasons behind this push for fashion brands to explore blockchain technology.
Reason 1: Preparing for the EU’s Digital Product Passport (DPP) regulations
The authenticity of luxury products, often worth hundreds of thousands or even millions of dollars, is crucial. In addition to authenticity, customers are also concerned about the origin of materials and the production process.
The “Digital Product Passport” allows consumers to easily access information about the product’s origin, material composition, supply chain, sustainability, and recyclability.
The EU has included the Digital Product Passport as part of its strategy for sustainable and circular textiles, and it has called for mandatory use of the Digital Product Passport for textile products sold in Europe by 2030.
Using blockchain and NFTs as digital identity cards for products can help brands comply with regulations and address consumers’ concerns about the authenticity of luxury goods.
Daniel Duan, CTO of virtual-real integration technology company Legitimate, pointed out that verifying authenticity has always been a challenge for fashion brands, as many clothing and accessory items are sold through third-party platforms. Previously, it was necessary to rely on complex elements such as stitching and logo placement to determine product authenticity. However, the combination of chips and blockchain technology can lower the threshold for counterfeiting and greatly improve the accuracy of authenticity verification.
Reason 2: Sustainable development goals
The fashion industry is the second-largest polluting industry globally, second only to the oil industry. However, achieving net-zero emissions by 2050 is a critical goal globally, and fashion brands must strive to keep up.
Eliana Kuo, co-founder of Italian fashion tech group Lablaco, observed that many fashion brands’ Web2 systems cannot trace the status of products after they are sold and are not fully connected to Web3 systems. Due to the lack of information flow between design, retail, and the client side, designers may continue to produce blindly, resulting in waste.
Digitalization is a top priority. Kuo believes that through virtual-real integration, all data related to clothing production and transactions can be recorded on the blockchain. Brands can also use the “sell NFTs before producing clothes” model to reduce blind production. By analyzing the data recorded on the blockchain, brands can make more precise adjustments in terms of production or design based on public preferences.
Reason 3: Catering to the younger Z generation
According to payment company NMI, half of Generation Z, known as “digital natives,” are already in or about to enter the workforce. In the United States, the average income growth rate of Generation Z (usually referring to those born in the late 1990s to the early 2010s) is nearly twice the national growth rate. By 2030, their after-tax income could reach $2 trillion, and their collective purchasing power is rapidly growing.
Square’s “Retail Future Report 2024” also shows that 43% of marketers agree that brands need strategies tailored to Generation Z to successfully attract them. Fashion brands entering the gaming space and collaborating with NFT-native IPs are also aiming to establish a presence among Generation Z.
According to the “Digital Expression, Fashion & Beauty Trends Report” released by metaverse platform Roblox in 2023, based on a survey of over 1,500 Generation Z users in the UK and US, as many as 56% of respondents stated that “creating their own virtual characters is more important than dressing up in the real world!”
Fashion brands entering Web3! Four main approaches:
When fashion brands have reasons and motivations to enter the Web3 field, the challenge lies in their creative implementation. LVMH, Prada, and Gucci, behind the Kering Group, each have their own unique perspectives and approaches.
Approach 1: Virtual-real integration of products
Bags, clothing, and other products are the foundation and most attractive aspects of fashion brands. Many brands use a combination of virtual and physical goods to gently guide consumers into the world of Web3.
For example, Italian classic fashion brand Prada has been releasing limited-time and limited-edition Timecapsule collections since 2019. Buyers of these collections receive both clothing and NFTs linked to the collection. By 2024, Prada had already released 50 waves of Timecapsule collections.
Louis Vuitton, a century-old brand, launched the virtual-real integration NFT series “Treasure Trunks” in 2023. This series brings the brand’s iconic trunk craftsmanship into the metaverse and each NFT costs €39,000 (approximately NT$1.28 million). Treasure Trunks NFT holders gain participation rights to future LV products and experiences, and they also have the opportunity to purchase “digital keys” to unlock the purchase rights of future virtual-real integration NFT series.
Approach 2: Venturing into metaverses
Italian fashion brand Gucci is the best representative of storytelling in the metaverse. In 2022, Gucci built a virtual brand world called Gucci Vault within the metaverse platform Sandbox, allowing users to delve into the brand’s history through games.
Gucci’s actions in the metaverse are closely tied to the brand’s fashion concepts or exhibitions. For example, the first fashion show under the creative direction of Sabato de Sarno, called “Gucci Ancora,” and the Gucci Cosmos touring exhibition have been replicated in metaverse platforms like Roblox or The Sandbox. These virtual experiences have become a focal point of Gucci’s operations.
LVMH Group announced a partnership with gaming giant Epic Games at the end of 2023, allowing LVMH and its brands to utilize Epic Games’ powerful 3D creation tools to create virtual fitting rooms, fashion shows, 360-degree product showcases, augmented reality experiences, and more. This deepens interaction with customers through immersive digital experiences.
Approach 3: Blockchain solutions
In 2021, LVMH, Prada, and Richemont Group established the Aura Blockchain Consortium, aiming to create transparent blockchain-based data solutions for production, sales, and customer information.
The LV Diamonds collection, set to launch in Asia in late 2023 to early 2024, utilizes Aura blockchain technology to create diamond certificates, tracking the entire process from mining to the creation of the finished jewelry. Information such as the mining location, gem classification, polishing, and gem setting are permanently recorded.
Italian luxury brand Tod’s followed suit at the end of 2023 and used Aura blockchain to embed NFC chips in their customized Di Bag, allowing customers to scan for production information using their smartphones.
American fashion brand Ralph Lauren partnered with BitPay in 2023, enabling customers to purchase goods in their new Miami store using Bitcoin (BTC), Ethereum (ETH), and Polygon’s native token, MATIC.
Approach 4: Cross-industry collaborations with Web3-native IPs
As long as an NFT’s IP is strong, it can attract collaborations in both virtual and real worlds.
Tiffany & Co. previously offered limited edition “NFTiff” pendants for CryptoPunks NFT holders. Each physical pendant was made with over 30 gemstones or diamonds and featured the CryptoPunks NFT number on the back. Buyers also received the corresponding NFT linked to the pendant.
At that time, 250 virtual-real integration NFTs sold out in 20 minutes, raising a total of $12.5 million.
In 2023, Gucci announced a partnership with Otherside, an metaverse linked to the popular NFT project Bored Ape Yacht Club (BAYC). This collaboration will bring Gucci’s luxury products into the world of Otherside.
Fashion supply chain digitalization: Why is it an inevitable trend?
Simon Lee, COO of BrandLab360, which specializes in creating immersive virtual reality showrooms and retail spaces, stated in an interview with California Apparel News that Web3 and the metaverse allow brands to showcase their stories digitally in unprecedented ways, enhancing the dissemination of brand value and DNA. This has the potential to completely change the fashion and retail industries.
Galina Sobolev, CMO of virtual fitting developer StyleScan, believes that blockchain technology could have a huge impact on the fashion industry’s currently fragmented supply chain.
There are currently many data trust issues in the industry, but the immutability of blockchain can serve as proof of purchase, ethical production, and compliance with sustainability standards, enhancing brand image and consumer loyalty.
“Web3 does have tremendous potential. The technology is fundamentally changing the way consumers interact with and purchase products. Fashion brands are also competing with each other, and the key to success is to understand the technology and its impact and then formulate strategies,” said Zarin Akhtar, Marketing Director of fashion tech company WFX.
She added that whether brands want to explore “virtual fashion” is a personal choice, but it is certain that digitalizing the fashion supply chain through blockchain is a necessary measure.
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Sources:
Forbes, European Commission, NMI, Fortune, Market.us, DappRadar
Edited by: Gao Jingyuan, Chen Junyi
