Cripto, second hand. Maisons are investing in unusual activities for the high-end. And the public is willing to spend even just to own an image file, i.e. an NFT. The paradigm is changing: the creation of value goes through new channels
Kering investing to take over 5% of Vestiaire Collective, a digital platform for the second hand market. Kering invested in Cocoon, a digital service for the rental of leather goods. Gucci cashed in $4,115 from the sale of the NFT (Non Fungible Token) of the Dionysus bag. There is a common thread between these news items. And it is not (only) the corporate relationship between the protagonists of the events, the luxury holding company Kering and its flagship brand. It is the definition of a new front in the high-end market. This prospect of an intangible challenge with very concrete consequences. The “decoupling”, as Claudia D’Arpizio of Bain & Co defines it, between the product and sales. The decoupling of traditional production and distribution activities, to use our own words, from the more pervasive communication and brand positioning strategies.
Let’s take a step back
A preliminary remark is necessary. At the beginning we mentioned a few examples of initiatives or business results. There are others. We could mention Dolce & Gabbana which cashed in $5.7 million from the NFT auction of the nine garments of the Genesis Collection on UNXD, a marketplace built on the Ethereum cryptocurrency network. What are NFTs? Nothing more than files with a JPEG extension.
That is, images, like digital photos. But NFTs are encrypted and protected by blockchain, so they are unique and non-reproducible: collectible. It’s not just Vestiaire Collective that’s on the rise, back to the second hand. The Realreal is also running: the platform may have had problems with Chanel, but it is already working with Burberry. Continuing the overview of “unusual” brand initiatives (and let’s just stick to the most recent ones), Gucci comes to mind again, joining forces with the Xbox gaming platform, and Nike, which is also registering its brands for virtual environments.
OK: What’s going on?
Fashion houses are aware of their social responsibility, but they are not philanthropic organisations. So the fact that virtual NFITs sell for real money and that second-hand resale platforms make a profit is decisive for these fashion houses to invest in them. Of course. Equally important is that these markets not only work now, but promise to work even harder in the near future: an estimate published by Jing Daily claims that by 2025 the revenue of digital worlds will approach 400 billion dollars.
But there’s more. Mark Zuckerberg, explaining Facebook’s transformation into Meta to shareholders and the public, said that the metaverse is “the next chapter of the internet. Instead of viewing content, you’re in it”. Fashion is already inside this immaterial challenge.
A challenge called decoupling
The challenge also implies a change in perspective. There was a time when the fashion business was linear. A fashion house would prepare a collection, present it on the catwalk, invest in communication and, finally, cash it in the boutique. It was a process completely centred on the product chain, from its packaging to its sale. It was a material process. Now, on the other hand, the fashion market requires us to be diligent about intangible activities, such as NFT or the management of a second-hand product (i.e. one that has already been sold at least once).
But these activities are capable of increasing the value and perception of the brand in the eyes of the public. The public craves new points of contact. And it is open to ever-changing suggestions in all media. Luxury brands have entered a dynamic in which,” explains D’Arpizio from the stage of the Altagamma Observatory, “value is no longer created exclusively with physical or first-hand products.
In the words of those who do
“Today, it is no longer the possession that is important, but the experience. The consumer wants to belong to a community and we have to offer him the same experience in all our expressions”. Remo Ruffini with Moncler Genius and MondoGenius has been very diligent on the subject of new value creation tools. But he is well aware, on the basis of his own experience, how difficult it is to maintain the coherence of one’s own message in all the channels in which it is nowadays to be propagated.
It is a complex job, completely different from when the objective was just to sell in stores,” he says, “and from when communication was top down. At the same time, a fashion house cannot avoid the challenge: “Once upon a time, you could choose to be exclusive, to select your preferred channels,” concludes Ruffini. Now it’s different: if the consumer doesn’t find you everywhere, he will be disappointed.