Luxury Brands’ Bear Hug To NFTs

By Ruchi Sharma

When blockchain technology emerged, the luxury sector welcomed the new opportunities it offered right away. Non-fungible Tokens (NFTs) are being used to provide provenance into unique products as well as new modes of participation. Numerous luxury brands, like Gucci, Dolce & Gabbana, Tiffany & Co., Moncler, and Burberry, have already jumped into the NFT race.

Metaverse fashion is just as popular in 2023 as real-world fashion. Luxury apparel companies realized this possibility after the 2021 NFT surge and seized the opportunity. 

Nowadays, shows like Decentraland’s Metaverse Fashion Week feature spectacular runways with current season collections. Luxury brands increase their sales while also enhancing their reputation and popularity.

Here are two additional primary justifications for why so many premium brands entered the NFT industry.

• Metaverse Stores boost brand awareness and NFT sales. For instance, Gucci’s Gucci Vault store in The Sandbox displays the brand’s most valuable vintage Gucci clothing.. 
• For a valid reason, many high end fashion companies have introduced Phygital NFTs, which are digital replicas of their most recent physical clothing. For instance, the Collezione Genesi NFT collection by Dolce & Gabbana sold for a staggering $5.7 million at auction.
• With so many metaverse benefits, it’s understandable why dozens of well known real world clothing companies have already created Web3 presence.
• Let’s examine how NFTs help the luxury industry and why demand for these digital assets is still high.

Brand Awareness: Luxury businesses may create a lot of buzz and raise brand recognition by collaborating with prominent artists or influencers or organizing high profile NFT auctions. This can be a fantastic method to connect with new audiences and establish a reputation as a progressive, cutting edge business.

Increased Engagement: Digital assets that are exclusive and one of a kind can help brands entice customers to interact with them more deeply. Increased brand loyalty and a closer relationship with customers may result from this.

Drive Revenue: Brands may capitalize on the excitement of collectors who are eager to pay a premium for one of a kind, limited edition things by developing limited edition digital products. Future luxury firms may experiment with a variety of NFTs, including digital clothes, virtual accessories, and more.

Targeting new consumers: Finding efficient ways to connect with and appeal to a new generation of consumers is vital for high end shops. By developing NFTs, businesses may reach out to younger, tech savvy consumers who are interested in concepts like blockchain and the metaverse.

One of the first brands to successfully target Gen Z audiences with NFTs was Hugo Boss. The company introduced a TikTok challenge in 2021 that “broke” the internet, with 3.1 million #BOSSMoves videos and more than 12.5 billion views. 

Innovation: Luxury brands are constantly looking for new ways to differentiate themselves from the competition. Brands may establish themselves as industry leaders and demonstrate to customers that they are at the forefront of technology and culture by embracing NFTs.

Loyalty Programs: Luxury brands can encourage clients to interact with their brand in novel ways by developing NFT based rewards programmes. Two businesses that have very well developed blockchain based loyalty programmes are Starbucks and Reddit. 

Counterfeiting: Brands can use NFTs to confirm the authenticity and place of origin of their items, which helps to address one of the biggest issues faced by the luxury industry i.e counterfeiting. A physical object with an accompanying NFT can help a brand avoid being copied while simultaneously maintaining or even raising the value of the commodity on the luxury secondary market.

Anyone may quickly and easily determine if a purchase is a real luxury item or a false replica using this certificate. Similar to that, the authenticity of expensive products purchased on the secondary market can be promptly confirmed. 

Sustainability: NFTs may also be a more environmentally friendly approach to produce limited edition goods. Luxury firms can lessen their environmental effect and develop a more sustainable business model by producing digital assets rather than physical things.

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