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When thinking of global tastemakers in the luxury space and their founding values, there are three characteristics that come to mind. These key features are exclusivity, price point, and heritage. The perfect balance of all three components are integral for brands to maintain their aspirational appeals to the larger consumer markets. However, once brands begin to shift the meaning behind these founding components, there will be, and already is starting, a seamless entry point for luxury into Web3.0.

  1. Exclusivity -> Rarity
  2. Price Point -> Currency
  3. Heritage -> Longevity

Rarity

Even as technology continues to advance in the world of e-commerce and shopping behaviors, the foundation remains the same: little supply = high demand. We have already seen the narrative across several NFT collection drops and digital fashion collections display properties of “rarity.” What this means is that collections with several thousand individual collectables may contain only a handful of pieces that have unique properties, rocketing the value of these rare pieces.

Currency

Following the supply and demand cycle, comes the topic of price point. The more limited an item becomes, the higher in value it appreciates. As luxury brands represent premium quality and craftsmanship, this premium quality then reflects a premium cost; brands will want to ensure this holds true in a digital sense. The goal is not to create a different marketplace for luxury products to preside over, but to show how the evolution is possible. With this digital evolution comes a chance in how consumers view currency. Currency tools such as stable coins* and alt coins* will take the place of credit cards. Consumers are able to purchase non-fungible tokens at prices set by artists and owners. In response to critics sitting on the line of indecisiveness because of this, this is a reminder to you that you are still the owner, and you are still in control of your pricing models. 

In regards to the consumer’s POV, as far as the process on the purchasing path, to purchase through the blockchain, one must be well aware of the process and to obtain and store their digital currencies. Brands such as Fendi have already identified this step in the process, and worked with Ledger, a hard wallet product built to safely store encrypted information, to collaborate on a leather goods item for a crypto wallet. This partnership only goes to show that physical assets do not need to disappear as digital assets become increasingly popular, the rise of one does not equate to the fall of another. However, brands do need to understand the need to be open minded for these transitions to positively impact their bottom line.

Longevity 

Though we’re on the precipice of this new digital era, we are already seeing examples of luxury brands succeeding in their adoption of the metaverse. A few of our favorite examples combine components of Web3.0 foundational elements such as community and interactivity with gaming and virtual reality. These brands are already taking advantage of innovative new ways to display their designs while maintaining their aspirational appeal and influence to their consumer base. The takeaway? Digitalization in any form will cement brands identities and will document the transition season after season, creating an everlasting legacy for designers and their creations as trend cycles are coming and going faster than ever before.

Takeaway: Why it Matters

While much of the metaverse is still to be determined, it undoubtedly will present opportunities for brands, advertisers, and people to meet and connect with their customers, fans, and followers in new and unprecedented ways. In the metaverse, perception is reality. 

Definitions:

  • Stablecoin - A cryptocurrency whose value is tied to an external reference typically an underlying fiat currency 
    • Examples of Stablecoins:
      • Dai (DAI)
      • Binance USD (BUSD)
      • USD Coin (USDC)
      • TrueUSD (TUSD)
  • Altcoins - Any cryptocurrency other than Bitcoin
    • Examples of Altcoins:
      • Ether (ETH)
      • XRP (XRP)
      • Solana (SOL)
  • Coin - Any cryptocurrency that uses its own independent blockchain

Author: Lexi Fried

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