Which luxury brands have entered the metaverse?

The lux­u­ry sec­tor is deter­mined not to make the same mis­take again. It gen­er­al­ly regard­ed the inter­net with sus­pi­cion when the ecom­merce rev­o­lu­tion start­ed in the late 1990s. Most lux­u­ry brands took sev­er­al years to under­stand its poten­tial before rush­ing to catch up with the rest of the retail world. 

Reg­u­lar glob­al stud­ies of the per­son­al lux­u­ry goods seg­ment by Bain & Com­pa­ny have chart­ed the increas­ing impor­tance of ecom­merce. Its research indi­cates that the pro­por­tion of online sales more than tripled from 7% in 2017 to near­ly 22% in a pan­dem­ic-boost­ed 2021.

Hav­ing learnt from expe­ri­ence, most lux­u­ry brands are deter­mined not to be left behind by the lat­est online devel­op­ments, despite the chal­lenges that tech­nolo­gies such as cryp­tocur­ren­cy, NFTs and the meta­verse present to a sec­tor that’s par­tic­u­lar­ly focused on pre­serv­ing its her­itage and pro­tect­ing its image. 

Cryptocurrency meets couture

In Sep­tem­ber 2021, for instance, Philipp Plein became the first glob­al high-end fash­ion brand to accept cryp­to as pay­ment both online and in its stores. It has part­nered with Coini­fy, a pay­ments plat­form owned by Voy­ager Dig­i­tal, enabling it to han­dle 24 cryp­tocur­ren­cies, includ­ing bit­coin and ether.

In the same year, cryp­to pay­ment proces­sor Bit­Pay saw a 31% annu­al growth in the vol­ume of trans­ac­tions involv­ing lux­u­ry goods such as yachts, cars and jew­ellery. More recent­ly, cryp­to exchange FTX announced that it would be tar­get­ing lux­u­ry brands to help them to ben­e­fit from this fast-mov­ing trend.  

For many high-end brands, cryp­to is in essence a way to enter the meta­verse and reap the ben­e­fits offered by the grow­ing inter­est in assets such as non-fun­gi­ble tokens (NFTs). 

Rosh Singh, MD of Unit9, a mul­ti­dis­ci­pli­nary pro­duc­tion com­pa­ny that works on films and games, notes that lux­u­ry brands have become some of the most notable ear­ly play­ers in the meta­verse. 

“The sector’s inter­est in gen Z is one of the key fac­tors dri­ving this behav­iour. The meta­verse is a new vir­tu­al play­ground with seri­ous longevi­ty for this group, as well as tomorrow’s con­sumers,” he pre­dicts. “Exper­i­ment­ing with meta­verse and cryp­to acti­va­tions gives brands rel­e­vance and enables them to tap into new audi­ences.”

Exploring the metaverse

Guc­ci has been par­tic­u­lar­ly active in the meta­verse, most recent­ly with the release of a set of NFTs called Guc­ci Grail. Mint­ed on the ethereum blockchain, this is the result of a col­lab­o­ra­tion between the brand’s cre­ative direc­tor, Alessan­dro Michele, and fic­tion­al “famed dig­i­tal crafts­man” Wag­mi-san.  

Sel­f­ridges has announced that it will sell NFTs and dig­i­tal fash­ion in its store on Oxford Street, Lon­don, with prices rang­ing from £2,000 to more than £100,000. The inau­gur­al Meta­verse Fash­ion Week was held at the end of March in Decen­tra­land, a brows­er-based vir­tu­al real­i­ty plat­form that uses a cryp­tocur­ren­cy called Mana.

Burber­ry has announced a part­ner­ship with Myth­i­cal Games to cre­ate an NFT col­lec­tion inside the latter’s flag­ship prod­uct, Blankos Block Par­ty, an open-world mul­ti-play­er game. Burberry’s lim­it­ed-edi­tion Blanko (char­ac­ter), Sharky B, is an NFT that can be bought, upgrad­ed and sold with­in the game’s mar­ket­place. Along­side this, the brand is launch­ing its own in-game NFT acces­sories, includ­ing a jet­pack, arm­bands and pool shoes, which play­ers can apply to any Blanko they own. 

“When it comes to the fash­ion indus­try, NFTs can be the dig­i­tal ver­sions of phys­i­cal pieces of cloth­ing or a one-off dig­i­tal-only design. This can be any­thing from a whole out­fit to a pair of dig­i­tal shoes, a hand­bag or even ear­rings,” says James Gaubert, founder and cre­ative direc­tor of Republique, which describes itself as a “meta­verse-ready” fash­ion house.  

Putting rivalries aside on blockchain

Lux­u­ry brands are ben­e­fit­ing from blockchain tech in ways that are less glam­orous but every bit as impor­tant. LVMH, for instance, has joined forces with Pra­da Group and Carti­er – a sub­sidiary of its arch-rival, Richemont – to devel­op the Aura Blockchain Con­sor­tium. The world’s first glob­al lux­u­ry blockchain, this unprece­dent­ed col­lab­o­ra­tion of com­peti­tors rep­re­sents what its cre­ators call “a sin­gle, inno­v­a­tive solu­tion to shared chal­lenges of com­mu­ni­cat­ing infor­ma­tion on authen­tic­i­ty, respon­si­ble sourc­ing and sus­tain­abil­i­ty in a secure dig­i­tal for­mat”.

A key chal­lenge for lux­u­ry labels is to recre­ate the same thrill in the vir­tu­al world as cus­tomers would expe­ri­ence when they walk into a store in May­fair or Knights­bridge.  

“Own­ing a vir­tu­al fash­ion NFT brings with it the same feel­ing as own­ing an exclu­sive, one-off piece of design­er cloth­ing,” Gaubert says. “The NFT is sim­ply the dig­i­tal equiv­a­lent. The per­ceived val­ue asso­ci­at­ed with fash­ion NFTs is also anoth­er oppor­tu­ni­ty for these big fash­ion hous­es. Some col­lec­tors are treat­ing their NFT pur­chas­es as invest­ments.”

But the meta­verse presents lux­u­ry brands with threats as well as oppor­tu­ni­ties. The younger cus­tomers they have start­ed to tar­get tend to be more con­cerned about sus­tain­abil­i­ty issues, for instance. A series of trans­ac­tions ema­nat­ing from a sin­gle NFT, such as bid­ding, sell­ing and trans­fer­ring own­er­ship can con­sume 340kWh of ener­gy – more than is need­ed to pow­er the aver­age fridge for two months. 

The war on digital piracy

And lux­u­ry hous­es are wag­ing a con­stant bat­tle against fakes, as Abi­gail Dews, trade­mark attor­ney at intel­lec­tu­al prop­er­ty spe­cial­ist Marks & Clerk, notes. 

“Just like phys­i­cal coun­ter­feit goods, vir­tu­al copy­cat prod­ucts being sold for thou­sands of dol­lars on var­i­ous NFT mar­kets have the poten­tial to dilute or tar­nish a brand in the phys­i­cal world. This is a par­tic­u­lar issue for lux­u­ry fash­ion brands, where unau­tho­rised NFTs are sig­nif­i­cant­ly cheap­er than their real-world coun­ter­parts,” she says, adding that the prob­lem has yet to be addressed in the UK courts. “Lux­u­ry brands will want to ensure that the legal pro­tec­tion they have in the phys­i­cal world is also enjoyed with­in the meta­verse.”

The meta­verse cer­tain­ly offers lux­u­ry brands an oppor­tu­ni­ty to reach new mar­ket seg­ments and to show­case their cre­ativ­i­ty and crafts­man­ship in dif­fer­ent ways. The chal­lenge for them will be to do this while retain­ing their core val­ues of qual­i­ty, exclu­siv­i­ty and the high­est stan­dards of cus­tomer ser­vice.