Originally published on CityAM
With Gucci, Dolce & Gabbana, Ralph Lauren, Balenciaga and Adidas (to name just the biggest) racing to launch their own digital collections – most notably Nike buying virtual studio RTFKT – we can safely say that the future of brands is in the metaverse, the online universe that is forming the habitat of the younger generation.
Vogue Singapore NFT Covers
The rebrand to Meta (Facebook’s best-ever PR campaign), carries the conviction that our future will be spent increasingly in virtual realities where our avatars – digital version of ourselves controlled via VR headsets – will be able to socialise, work and shop as never before.
In the metaverse, brands can sell new products and immersive, even surreal, experiences that transcend the limits of physical space. In this realm of infinite opportunities, companies can shape new, community-based customer relationships.
NFTs are the building blocks of the metaverse: digital assets on the blockchain with multiple use cases.
Amid the hype, NFTs have become smart marketing tools that definitely grab media attention, but let’s not ignore their real value.
As NFTs are the gatekeepers of digital communities, embracing them is a MUST to engage with GenZ. They also represent lucrative opportunity. Morgan Stanley strategists have said that the metaverse would generate $50 billion of revenue in the luxury sector over the next ten years.
Digital Fashion powered by blockchain technology, and the concept of NFT as digital ownership might be the future, but it is still unchartered territory where experimentation is driving adoption and excitement.
So, how can brands enter the metaverse and capitalise on the value NFTs offer?
As many brands are experimenting, but may not yet have clear strategies around NFTs, let’s clarify things by going through the main relevant use cases.
NFTs as digital certificate of ownership
The big one is digital ownership. This is a huge deal for luxury brands, offering a way to fight counterfeiting while also controlling the resale market. How does it work? For physical items, authentication is done via a QR code, and the product goes on the blockchain while minting an NFT for the owner, which then acts as a product ID, certifying its authenticity and provenance.
Cardano’s technology arm Input Output Global is a pioneer in digital ID, with its product authentication Atala Scan first built and deployed for athletic wear manufacturer New Balance as NB Realchain in 2018. In September last year, IOG announced a deal with Strait Brands, an Australian luxury spirits company, to deploy Atala Scan for its supply chain management and to support its international expansion, with the objective of delivering four million bottles before the end of 2022.
Atala Scan is part of IOG Atala suite solutions, which is already being used in a revolutionary blockchain partnership with the Ethiopian Government and Education Department to provide five million students with verifiable digital identities to authenticate their grades, monitor school performance, and boost education and employment.
Product ID is not just about authentication vs fake replicas; it taps into the huge opportunity within the resale market. The second-hand luxury market, worth 28 billion euros in 2020, has high levels of inefficiency (including considerable resources spent on manual authentication) and fragmentation. NFTs can disrupt this market, allowing brands to control the lifecycle of products and receive royalties from reselling.
As digital assets, NFTs can also function as digital wearables for avatars in metaverses and gaming applications. Play-to-earn becomes wear-to-earn in games, but not only that, as dressing your avatar becomes as important as your real-life outfits.
Dematerialised, a web 3 marketspace powered by the LUKSO blockchain, has regular drops of unique digital designer garments and accessories (like Rebecca Minkoff’s spring capsule collection), to be worn on social media and in the metaverse.
Major fashion brands are already in. For its 200-year anniversary, Louis Vuitton launched a new game in which players can collect NFTs; Balenciaga has sealed a strategic partnership with Fortnite; and Burberry has released its NFT accessories for Blankos Block Party.
Adidas is gearing up to launch its 2022 digital wearables in The Sandbox, where it has acquired a plot of virtual land to fill with exclusive content and experiences in partnership with Coinbase.
The main challenges here are interoperability and the portability of these wearables across different platforms. Exactly as in real life where we can wear our favourite trainers on different occasions, our avatars should be able to wear our digital assets in different spaces and situations.
Collectibles with special powers
Some digital wearable NFTs are collectibles: limited edition pieces which can allow a customised physical product to be redeemed. Coach has recently launched its collection of NFTs featuring eight unique animals from its recently launched holiday digital game Snow City. Each Coach NFT holder receives one complimentary made-to-order Rogue bag. They sold out at lightning speed – I tried myself to get one, sadly without success (this time).
Dolce & Gabbana’s Genesis collection, revealed at the end of August 2021, featured nine stunning NFT garments and jewellery personally designed by Domenica Dolce and Stefano Gabbana. Together with the digital version, which also included a custom digital recreation of Dress from a Dream in one open metaverse of the holder’s choice, the NFT includes a custom-fitted physical version of Dress, and the original sketch of Dress personally signed by Domenico Dolce and Stefano Gabbana.
The NFT owner also has some experiential benefits, such as two-year access to Dolce & Gabbana Alta Moda, Alta Sartoria, and Alta Gioielleria couture events in Italy.
New experiences with the community are a key aspect of the brand engagement evolution. This is where more utilities for NFTs can be unlocked, bringing special rewards to holders, like loyalty bonuses, gold access card NFT, premium membership, early and priority access to new drops, and VIP passes to virtual catwalks & events.
Community empowerment: DAOs NFTs and co-creation
Finally, one of the most interesting aspects of NFTs is community empowerment, a new field for brands to experiment in, especially when looking at social projects. DAOs structures can be created for brands’ communities to make changes and impact decisions.
Charity support is just one example – fundraising through direct donations to special projects, giving the brand’s followers (NFT holders) some governance. Brand ambassadors could also be elected, revolutionising the concept of fashion influencing which has dominated the past decades.
Co-creation is part of a new level of empowerment for the designers that brands decide to work with. Brands can promote their culture and spirit through the artistic creations of multiple designers, who can be independently recognised by the value of their contributions. This is the millennial opportunity for fashion to go beyond its physical limits and fully embrace society and humanity as self-representation and expression. In the end, fashion is art, communication and a social movement for humanity to represent itself.
New technologies have equipped the fashion industry with new tools for rebirth.
It’s not just about monetisation, but also new creativity, experiences and opportunities that can make fashion more accessible, innovative and more sustainable.
NFTs as digital assets can offer endless use cases which are outside the scope of this article.
The sky is indeed the limit – all made possible by the smart contract code of NFTs.
This is why I am so excited about the future of fashion!