The realistic new trend in luxury fashion and the role NFT might play
The Covid-19 pandemic has brought a lot of changes to the luxury fashion industry. How a few luxury brands were able to switch from a brick-and-mortar sales channel to an online one is so remarkable.
After more than a year of staying close to home and the global efforts made with vaccination, visiting some of the well-known luxury brands may rank high on your to-do list.
I believe once herd immunity is achieved, we can go back to the pre-Covid19 era because nothing beats an in-person luxury experience where you are treated like a monarch. But we need no soothsayer to tell us that luxury brands are not likely to discard the online marketplace post-Covid19.
Although it took a long time for some of the major luxury brands to embrace the online marketplace, at least it’s better than not joining the party at all. When a new technology is introduced, it’s usually better to be one of the early adopters or innovators to stay relevant in your industry. I’m sure we all know what happened to Blackberry and Nokia.
At the moment, NFT (non-fungible token) seems to be the new craze in town that luxury brands have to study carefully before deciding on how to enter the market without missing out on a probable goldmine.
In the last few weeks, NFT has been one of the most talked-about terms. Jack Dorsey (founder of Twitter and Square) sold his first tweet — ‘just setting up my twttr’ — for the equivalent of $2.9million, and it was bought by a Malaysian-based businessman in March 2021. The growing interest in NFT is quite similar to what we’ve been experiencing with cryptocurrency which is powered by blockchain technology.
What is an NFT?
An NFT is a unit of data that is stored on a blockchain (digital ledger) and each stored data represents a non-interchangeable unique digital item. The NFTs can be bought on an NFT auction market (OpenSea, KnownOrigin, Rarible, Decentraland, SuperRare, CryptoKitties, CryptoPunks, Sorare, Nifty Gateway, etc.), and types of NFTs are art, videos, audio, etc. Based on the data from the website of NonFungible, the combined sales value of items sold in the last 7 days (April 4 — April 10) was more than $30million and approximately 30,000 items. This means that during the last 7 days, and NFT was sold at an average price of $1,000.
Art is the expression of the creative skill and imagination of humans that often elicit emotions when viewed by others. If you’ve ever appreciated and bought any works of art (painting, sculpture, etc.) at any of the famous auction houses such as Christie’s London or Sotheby’s — London, then you’re more than likely to have no problems with buying NFTs.
As stated earlier, NFTs are non-fungible which means it’s not mutually interchangeable like other cryptographic tokens such as Bitcoin. Once you upload your file (e.g. artwork) on an NFT auction market, an NFT is created and it can be bought with either cryptocurrency or cash (neuno powered by Flow Blockchain for trading digital fashion collectibles from some of the biggest luxury fashion brands — coming soon!). A creator of an NFT can make multiple copies of the same work and retain its copyright.
Also, there are no requirements that say that the owner of the work has to be informed before someone else creates the NFT. All I see is a future litigation issue that could be avoided with the implementation of rules to guide against such a crime as ‘intellectual property theft/plagiarism’.
The Similarity of Luxury Fashion and NFT
The fashion world has seen many Creative or Artistic Designers come and gone but their works speak volume from their graves. The ‘Birkin’ from the house of Hermès is still regarded as one of the most coveted bags ever created and most ladies wouldn’t mind owning 100 collections of a Birkin despite being pricey. Jean-Louis Dumas is one of such great minds to have walked on the ‘green lawn’ of the luxury fashion industry, and Virgil Abloh hasn’t ceased to amaze the fashion industry.
At the moment, Virgil Abloh’s impact on the luxury fashion industry cannot be overlooked as his creativity seems to blow our minds whenever he’s involved in the creation of an item. If you really doubt Virgil’s talent, then you need to check out the aeroplane bag which he designed as part of the Louis Vuitton fall/winter 2021 collection, and it will cost you $39,000.
With the way some ladies cherish a Birkin, it’s easy to understand that people don’t just buy the Birkin because of its functionality but because of the non-visible value. Despite being a tangible item, I still consider the Birkin as an intangible valuable asset which ladies are satisfied to keep in a bag closet without using it. This is quite similar to an NFT, just that NFTs are in digital form.
As for me, a unique Birkin bag and its NFT (a digital form of the same Birkin) can be sold together at an auction at an unbelievable price. The NFT could even be the images of the steps taken during the production of the Birkin.
In the fashion industry, buying a ‘Men’s Gucci Tennis 1977 — High Top Sneaker' doesn’t mean Gucci has lost the copyright to that particular Sneaker. It’s possible to find other Sneakerheads wearing a similar copy of your shoe, and this happens in the NFT market as well.
Luxury fashion is often said to thrive on creativity, exclusivity and scarcity. All these stated drivers of luxury fashion can also be seen in Arts. For example, a popular artist (e.g. Banksy) can decide to create probably a limited edition of a particular NFT — only 10 copies were created or 5 copies created every year. This artificial scarcity created by a well sought-after creator like Banksy or a brand like Louis Vuitton will surely drive the demand higher.
It’s almost impossible to separate luxury fashion products from their high price tag and good resale value. With the NFTs, luxury fashion brands can achieve the same result. The first digital artwork listed at Christie’s London was ‘Everydays: The First 5000 Days’ and it sold for $69.3million on March 11, 2021. The work was created by American digital artist, Beeple.
We have heard a lot about how fast fashion has been condemned as being one of the main contributors to environmental pollution. As a result, a few of the top luxury brands have been promoting sustainable fashion to reduce their Carbon Footprint. Environmental Activists are not fully in support of the widespread use of NFTs, and that’s because of the large electricity consumption and the eventual release of a heavy amount of greenhouse gas.
The emission is often associated with a concept referred to as Proof-of-work (required for verification and regulation of blockchain transactions). A new or different type of validation process that wouldn’t require so much energy might be the way forward, and Flow Blockchain seems to be the one currently being endorsed. Also, some NFT marketplaces allow buyers of NFTs to contribute towards offsetting the carbon emission associated with their purchase. I guess this will be more appealing to luxury fashion brands that are promoting sustainable fashion.
According to information on Statista, the market capitalization of transactions globally involving NFT in 2018, 2019, and 2020 were 40.96million, 141.56million and 338.04million respectively. Also, based on information obtained on Bitcoin.com, it was stated that the total value of the NFT market tripled in size to more than $250million. Irrespective of the source of information, we can all agree to an extent that the NFT market value is more than $100million and less than $2billion. It means this market is still at its infancy stage and this is the right time to venture into it in order not to miss out on a great idea/investment.
As usual, the Dartemuv team just want to say thank you for reading this article and we hope to bring you more…
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