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Last week we talked about NFTs as a tool for creating new experiences and possibilities in retail.

And speaking of retail, there’s a segment that can hugely benefit from NFTs and Web3 in general: Luxury. More specifically, luxury brands.

Fashion, automotive, jewelry, and many other industries are already exploring the possibilities Web3 helps create.

So today we’ll dive into some of those initiatives while discussing potential ways for you to leverage your business (or ideas) in this exclusive sector.

The Digital Renaissance:
Luxury and Web3

The luxury market dates back from many, MANY centuries ago. Some of the most famous brands around the world today, like Louis Vuitton, Hermès, and Prada have built generational loyalty through their long-standing history and commitment to excellence. Hermès, for instance, is nearly 200 years old.

And of course, this goes way beyond “just” fashion: Think a Rolls-Royce Boat Tail, a Patek Philippe watch, or a new Wally yacht. There’s always “the next level” when it comes to luxury items – and price tags.

Traditionally, those companies/brands leverage scarcity, heritage, and artisanal expertise to create an aura of exclusivity, catering to specific niches (and pockets 💰️).

However, the emergence of global economies and, more recently, digital platforms has dramatically broadened the reach and definition of luxury – and that’s what will discuss later on.

Exclusive, yes. But still a HUGE market

Even though the very nature of these brands is about catering to a fraction of the population, we are still talking about big numbers.

According to Statista, the Luxury Goods market is projected to generate a revenue of US$368.90bn this year – and almost a third of that is expected to come from fashion.

Sauce: Statista Market Insights

And if we expand this conversation to the whole global luxury sector we are talking about a 1.5 TRILLION market. Yes, one and a half trillion US dollars 🤯 .
(Sauce: PRNewswire)

And just to conclude this throwing-numbers-at-you segment, here are the world’s most valuable luxury brands (2023):

“But, Diego, why would luxury brands consider stepping into Web3?”

Well, the short answer is:

1) Many are not just “considering” – they have already been exploring Web3 for years. Just in the image above, more than half of the brands have already done something.

2) If people are moving to a new environment, brands must be there to interact with them.

But that’s too easy 😄. Let’s go deeper into this luxurious rabbit hole.

Gen Z, Gen Alpha… Sure.
But that’s just the tip of the iceberg

In our previous edition, while talking about how NFTs can be leveraged to create new experiences for retail customers (and brands), I mentioned that “future shoppers (…) expect interactivity, usually has shorter attention spans, and hey, they tend to value authenticity. This means we need to amp up our game”.

I didn’t change my mind about that, but when it comes to the luxury market, we must pay special attention to the current/older generations. After all, that’s where the money currently is.

So you – a marketer, a business owner, or an entrepreneur – reading this can explore opportunities to cater to the digital-native younger generations, or for the current luxury consumers. Or both. And everything in between.

In the past two years, nearly half of Interbrand’s Best Global Brands have created some Web3 initiatives.

With different levels of success, brands like Gucci, Louis Vuitton, Porsche, Prada, and Ferrari have stepped into this new environment.

Obviously, each company has its own objectives when doing so, but broadly speaking, these are the main factors that luxury brands and consumers can benefit from when exploring Web3:

Authenticity

Verifiable scarcity/limited supply

True ownership

There are many other items I could have listed – but we have covered those in previous editions (especially in #24). But today, I want us to focus on the 3 above, as they add insane value to the luxury industry – and as a consequence, open up many opportunities for professionals who understand them and build solutions on top of those concepts.

→ Authenticity:

Powered by a blockchain, NFTs provide a secure, transparent method for verifying the authenticity and ownership history of items, from creation to current ownership, effectively combating counterfeiting.

In simpler words, Web3 prevents “fake replicas” or doubts about who created specific items and collections.

And we can’t deny that in the luxury industry, being able to say with 100% certainty that a given item is the real one has immense value.

Example: Back in August, adidas auctioned Access Passes for its “Originals x BAPE ‘Fresh Forum’” collection. Back then, holders of a specific NFT (linked to adidas) would receive special benefits.

The 100 holders of said passes were allowed to freely redeem one pair of physical sneakers and a digital twin. Each physical pair is equipped with an NFC chip, placed in the left tongue, which provides the owner with access to the Digital Certificate of Authenticity.

→ Verifiable scarcity/limited supply:

I have mentioned “Verifiable scarcity” in many previous editions of The Wild West of Web3, and also on my LinkedIn and during public events.

But that’s by far one of my favorite things about Web3 – especially when talking about the luxury industry.

We know that many items have their price attached to their scarcity (be it real or controlled). And in that sense, Web3 is the perfect answer for transparency.

See Aura Blockchain Consortium for instance: in their own words, “a collaborative initiative aimed at advancing the adoption of blockchain solutions worldwide for the luxury industry. (…) offering enhanced transparency, traceability, and utility to consumers”.

In other words, luxury brands have multiple options to transport their unique features – including limited-supply collections – into this new era, creating new ways to engage with their customers.

→ True ownership:

Web3 – as we have discussed a lot – reshapes the concept of ownership, offering true, verifiable ownership of digital assets.

And since the item is owned by that customer, we are also talking about enhancing interoperability across platforms and fostering a user-centric experience.

Want a quick example?

You own a super limited-edition Prada handbag or a rare pair of Jordan’s. Instead of just showing them off on Instagram or having them stuck in your closet, you could use them as collateral for a loan.

Web3-based solutions allow different items – including luxury goods – to access a world of possibilities, including being transformed into financial instruments, all verified on the blockchain.

So for the builders out there: if you are aiming for the luxury sector, make sure to double-check if the sense of exclusivity of your brand/client is being reflected in the Web3 strategy you are crafting.

Next up we’ll see a great example of how to do that.

Spotlight:
Louis Vuitton VIA Treasure Trunks

Back in June 2023, Louis Vuitton ventured into the NFT space, unveiling the VIA Treasure Trunks.

Much more than digital art or a collectible, these items were keys to owning a piece of LV’s history. The trunks were not merely digitized – they brought with them their physical twins, blending the tangible and the virtual in a great way.

Imagine the excitement – a limited release, with each piece carrying the weight of 160 years of legacy. The VIA Treasure Trunk was a gateway into an exclusive club.

Buyers were taken on a journey, from waitlist to acquisition, culminating in a journey filled with unseen collectibles and unique experiences, all unveiled in a fashion show that featured Pharrell Williams.

But here’s where it got better – the VIA Treasure Trunk was soul-bound, which means that the ownership of this digital masterpiece was non-transferable, ensuring that those who held it were true patrons, not just investors looking for a flip.

If you ask me, I think this move was pretty clever → a statement of luxury, exclusivity, and commitment to maintaining the brand’s aspirational status.

Another interesting decision was to do something relatively small for this activation. They of course could have released a larger collection and/or offered a range of different physical products. However, since they are exploring a new avenue for the brand, I believe the right call was made.

“Cool, but what about the price tag?”

Well, the whole “fair price” discussion is extra complex when it comes to luxury brands. But this specific collection had a €39,000 price tag per item.

Expensive? Cheap? Reasonable? Hard to tell, but considering how the brand is positioned and, more than that, how it’s perceived by the market, I think it fits.

The lesson here? Stay true to your brand’s vision, and its values. Can you imagine Louis Vuitton launching a cheap, bland collection without its world-famous pattern?

I know, I know… I always say that Web3 is the perfect area for exploration and creativity…

But when it comes to luxury brands – a universe where tradition, long-standing history, and “character” are high-valued features – this creativity may bring better results if used to transport the brand into a new era and not necessarily change everything that made it so desired in the first place.

“Ok, Mr. Borgo. However, what about a non-fashion luxury brand?”

This segment is only available for BorgoAcademy members.

Gaming x Getaways:

Earning Hilton rewards on Roblox

Last year, Hilton (yes, the Hotels & Resorts global brand) and Paris Hilton (yes, this one) got together and stepped into Roblox through “Slivingland”.

This venture allowed players to rack up real Hilton Honors points by simply having fun in the game. It’s a brilliant blend of virtual adventure and tangible rewards, engaging the Gen Z audience in an industry that usually doesn’t aim at this demographic.

If you want to learn more about BorgoAcademy, hit the button below.

WALKING THE TALK

Walking the Talk” is the section in the Wild West of Web3 I dedicate to projects I am directly involved with.

I’ll share with you what I’m seeing in the Web3 trenches, what I’m discussing with the suits in meetings with Fortune 500 brands, and where I invest my money and time.

No bullsh*t, no sugar coating. Real talk.

Powered by 9dcc:
Physical products with proven and engaging digital experiences

Click here to learn more about Powered by 9dcc

First things first: gmoney (founder of 9dcc) and I have been good friends since my time at adidas.

And I truly believe in “putting my money where my mouth is”, and that’s why I’m an angel investor on 9dcc.

Last year, the fashion and Web3 spaces witnessed a groundbreaking evolution with 9dcc’s launch of Networked Products™, a brilliant fusion where digital innovation meets luxury fashion.

This initiative heralded a new era for brands, creators, and organizations, offering them a platform to co-create physical products enriched with digital experiences, all under the pioneering spirit of the company: a crypto-native luxury fashion and lifestyle brand built for the avant-garde.

9dcc’s ethos is rooted deeply in the Web3 spirit, a testament to innovation and disruption in the luxury sector. The brand’s unique approach, blending NFC technology with high fashion, allows for the creation of garments that not only carry the legacy of luxury but also a digital identity, opening doors to exclusive digital content and experiences.

This symbiotic relationship between the tangible and the digital exemplifies how luxury fashion can embrace technology to create deeper, more meaningful connections with its audience.

From on-chain Certificates of Authenticity to personalized digital collectibles and gamified engagement, every aspect is crafted to enhance the bond between brands and their communities.

This goes beyond just selling products → it’s about inviting the community to be part of an ongoing narrative, where each product serves as a portal to new worlds and experiences.

By enabling brands to embed their products with a layer of digital interaction, 9dcc is setting a new standard for what it means to engage with luxury fashion in the digital age. It’s a testament to the brand’s vision of a future where fashion goes beyond the physical, creating a network of shared experiences and stories.

And one thing that many marketers – myself included – say all the time is that the most powerful brands are usually the ones that can tell great stories.

For a deeper dive into 9dcc, you may want to check editions #7 and #12.

BorgoAcademy Community

You help me build this, so I want to give you back.

In this section, I’ll answer questions and discuss ideas sent by you, my fellow Web3 partners.

“More than just discounts and points”

100% agree, Michael!

And especially within the luxury environment, discounts are not a top priority for customers. Therefore, offering immersive, engaging experiences becomes more and more important.

As we saw with the LV example and the event with Pharrell Williams, offering an exclusive experience creates a whole new level for the customer-brand relationship.

“Fashion and culture act as early indicators”

1) I love that analogy 😄 

2) That’s something I have been saying for a while: fashion is one of the best indicators when it comes to general cultural trends and shifts. And that applies, as a consequence, also to luxury fashion brands.

I opened edition #12 by saying “Fashion isn’t just about what’s hanging in your closet; it’s a language, a statement, and even a form of currency”. And I still believe that’s the case.

“Digital luxury > Physical luxury”

For context, the quote that Roman is referring to is from an interview I published last summer on my LinkedIn.

To that, I’ll add another quote:

 

OPEN DISCUSSION

“Open discussion” is the section I’ll use to share ideas, views I have about stuff being developed, and how I envision the different areas within the Web3 environment.

Future trends for Luxury Brands in Web3

This movement of luxury brands entering Web3 promises not only to redefine the sense of exclusivity and even the “online bragging”, but also to embed sustainability and personalization at the core of luxury experiences.

For enthusiasts and brands alike, the horizon is filled with opportunities. And no, I’m not trying to predict the future here.

However, based on everything I have been seeing and learning in recent years, I’d like to share 3 trends I believe can affect the luxury industry in Web3 soon (and suggestions so you can get ahead in this space):

→ Digital Craftsmanship & Sustainability:

In an era where (digital) assets become intertwined with eco-consciousness, luxury brands are set to leverage blockchain for more than just hype.

It’s about crafting stories of sustainability, where every digital piece has a traceable journey, reducing waste without compromising on the exclusivity luxury consumers crave.

💡 Build a platform that helps brands and/or customers trace the whole history of ingredients/materials/products. There are already some options out there, but you may work on something focused on a certain industry;

💡 If you are a marketer, use this (verifiable) “certificate of origin/authenticity” that the blockchain brings to create compelling storytelling for the products/brands you work with;

💡 As an artist, create pieces that can be used by/with luxury brands to showcase their products. Or start your own label and become a brand yourself.

→ The Resale Revolution:

The digital resale market is already big but can grow exponentially with secure, authenticated platforms for the resale of luxury goods. This opens up a new avenue for consumers to engage with luxury brands, ensuring authenticity while fostering a circular economy.

💡 If you can build stuff, imagine a blockchain-backed platform, that certifies that each item being traded there is 100% legit;

💡 If you are a small luxury brand/artist, having a verifiable resale system can become, a way to both reach new audiences and help current ones discover new products from your portfolio.

→ Phygital Experiences:

(I know that many people hate the word “Phygital” 😆, but let’s focus on the concept here)

The fusion of physical and digital is reshaping the luxury space. Brands are creating immersive experiences that blur the lines between the two realms, offering consumers the best of both worlds.

💡 Investing in technologies that enhance these phygital experiences, from AR try-ons to virtual showrooms, can set a brand apart in the crowded luxury market.

💡 As a luxury brand (jewelry, clothing, sneakers, hospitality, and many others) you can create digital experiences with real-life benefits (as we’ve seen in the “Hilton’s spotlight”) or vice-versa. Or even something in between.

See you soon.

#LFGrow
Diego Borgo

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