Traditionally, the luxury fashion business has been associated with an upper-echelon status. Predicting a return to pre-pandemic status with competitive price-points driven by limited distribution and celebrity endorsements. Overall, the luxury apparel and accessories market segmentation has seemingly carved out a niche for itself by focusing on a consumer who leans towards luxury product and developing a market segmentation around it.
According to Statista, In 2021, the luxury global fashion industry is currently estimated to be about $107.9 billion dollars. This robust market segmentation has achieved these promising numbers during the year of the pandemic. More importantly, the market segmentation has an expected annual growth of 4.8% (CAGR 2021-2025).
Although this all sounds promising, major policy challenges face the luxury fashion industry. Among the most important is counterfeiting. An abundant number of brands within the portfolios of multinational corporations specialized in luxury goods such as French-based LVMH and Kering; who aim to maintain both accessibility and exclusivity within the highly competitive marketplace. In 2020, Kering’s President and CEO Francois-Henri Pinault reported the groups revenue to have reached 13.1 billion euros- roughly $15.49 billion in US dollars.
Let’s face it, major brands go to great lengths to preserve exclusivity and fight counterfeiting including burning products worth billions of dollars. However, burning excess products to maintain exclusivity does not sit well with consumers. And there’s no letup. Case in point; a consumer boycott campaign against luxury fashion house Burberry, headquartered in London, England- after the news of the burning practice had been made public knowledge. In short, it is a business world of caution. And rightly so. Nowadays, the interconnectivity between brands and customers have given rise to the voice of the people. In a word, the boycott forced Burberry to end the practice of burning its excess products, but sadly, the damage had already been done with respect to consumer distaste at that time.
Along with the uprooting of so many long standing traditions in the period following the pandemic, an increasing number of fashion brands began abandoning the standard business practices stimulated by the awakened awareness of the benefits of blockchain technology. I recently attended a remote forum run by experts with respect to the opportunities for luxury fashion and beauty brands at New York’s Fashion Institute of Technology. At this time around, the winning brands are delivering an inside track on this forthright technology as well as pinpointing a defined market strategy triggering a call to arms.
Employing blockchain technology is NFT’s Brian Foote—founder and CEO of HUMBL—alongside a new product line called Origin Assurance™, is targeting some of the challenges that may hinder the projected growth of the global fashion industry.
HUMBL Marketplace recently teamed up with Hollywood celebrity photographer Smallz + Raskind to tokenize and catalog exclusive prints on the blockchain, ensuring that customers receive a certificate of authenticity and a digital signature QR code for tracking the lifecycle of any product.
These days, it is more and more important to retailers and consumers alike -to ensure accessibility in luxury fashion through blockchain. When it comes to millennials and Gen Z, they often feel left out of the luxury shopping experience. At this point, most market groups are well-aware that this age group has always favored experience over acquiring goods. I guess I am lecturing now, but technology is the proven way to capture this burgeoning market sector.
“Tokenizing luxury-fashion on blockchain will create exciting opportunities for the high-end fashion industry and attract the young market,” Brian said. “The HUMBL Studios is where the tokenization of the luxury fashion items, NFT”s, physical and esoteric assets will occur on the blockchain.
It’s essential that luxury fashion customers find what they’re looking for under one roof, and a marketplace that makes the shopping experience seamless is key.
“In fashion, accessibility is essential for luxury brands to remain relevant. Smart luxury brands will leverage the web 3 that’s supported by blockchain to become accessible on both primary and secondary resale markets, particularly in luxury brands where there is a longer life-cycle of collection.” says Foote.
Unlike in the past, consumers of high-end luxury fashion are no longer restricted to in-store shopping experience, as technology now brings the experience most busy high net worth individuals crave right to their homes and offices, and even on their palms. VR technology captures the right fitness and measurement, while blockchain keeps a record for repeat shopping experience.
This is even more common today as physical stores remain shuttered due to the pandemic. Max Krupyshev, CEO at CoinsPaid, crypto payment processing gateway also echoes the same views. His company has seen increased integration from luxury brands since the start of the pandemic. “With blockchain technology and acceptance of crypto as a mean of payment, more luxury brands can reach a wider circle of customers and especially millennials, who are the biggest fans of digital assets,” Krupyshev said.
According to a report on Harvard Business Review, the total global counterfeiting trade costs manufacturers $4.5 trillion, with the luxury goods market accounting for 60% to 70% of that figure. Another report by World Trademark Review placed the losses caused by counterfeit luxury goods in 18 States in the US at $12 billion annually.
When questioned about the importance of implementing Blockchain technology in today’s luxury sector Luca Spano Director at IFG Men’s Fashion had this to say. “This is a very important part for many businesses already and it’s a must for us all to implement rather sooner than later, Covid has moved our industry 10 years ahead and made us understand what technology can do to keep the economy moving and be strong. Marketing must think ahead and definitely make blockchain implementation one of their top priorities”
Tokenizing on Blockchain allows valuable luxury products such as bags, sneakers or luxury watches to be assigned a unique identity that is immutable. The identity of the product is recorded in the blockchain ledger and is trackable right up until it reaches the end consumer. More to the point, consumers have a growing concern to live the culture of a brand by knowing its production path from start to finish. This uses technology to eliminate the need for a wasteful and environmentally harmful procedure at curbing counterfeiting in high-end fashion.
Rafael Papismedov, Managing Partner and Strategy Director at HB Antwerp:“Innovative blockchain technology enables HB Antwerp to track and trace the entire process from mine to finger. This is crucial for today’s luxury consumers who are much younger on average than they were only five years ago, and are more often female. Millennials and certainly Gen Z are typically more self-confident and informed about the world than prior generations. They demand answers to their questions and attach importance to fair trade. They want to know under what circumstances products were made, what the ecological impact was, the working conditions in which they were produced, and they want to know this about all consumer goods … whether it’s chocolate or diamonds.
We use blockchain technology and data visualisation techniques to monitor and map all steps in the process from mine to jewel. We have created an ecosystem called Signum, in which the participating partners exchange information with each other, both on the side of the mines and on the side of the jewellers. Thanks to this Signum ecosystem, jewellers working together with HB Antwerp are today the only ones who are able to tell their consumers exactly where their Signum-diamond comes from, how it was mined, when it was found.”
At this time, I think that luxury fashion should not be restricted to the traditional ideals that it started with. By maintaining exclusivity and ensuring anti-counterfeiting, technology is still the best bet at solving most of luxury fashion’s current challenges.