Fashion Houses are Finding a Home in The Metaverseby@qinen
1,634 reads
1,634 reads

Fashion Houses are Finding a Home in The Metaverse

by Qin EnJune 6th, 2022
Read on Terminal Reader
Read this story w/o Javascript

Too Long; Didn't Read

What we wear symbolises who we are (and who we're not). As luxury fashion labels start to invest in the metaverse, who will win? I look at the 4 different strategies fashion houses have adopted since 2021, and argue that luxury brands can increase their odds of finding product market fit by running multiple experiments across the four, as Gucci and Dolce & Gabbana have demonstrated

People Mentioned

Mention Thumbnail

Companies Mentioned

Mention Thumbnail
Mention Thumbnail

Coins Mentioned

Mention Thumbnail
Mention Thumbnail
featured image - Fashion Houses are Finding a Home in The Metaverse
Qin En HackerNoon profile picture

I never owned any luxury fashion. Until last month.

Before, I struggled to justify spending $100 on a black t-shirt with the italicized words “agnès b” emblazoned on the front when a shirt without the six characters would cost a tenth of the price. Some would call me stingy, whereas others would shake their heads and think, “He just doesn’t get it.” They were right - I didn’t.

Luxury fashion is a $108B market and will hit excesses of $130B by 2025. Clearly, enough people “get it”, creating a robust global demand that is unabated by COVID-19. Luxury fashion is not merely about the raw materials, craftsmanship, and high quality of that agnès b t-shirt, but the aspiration to communicate economic status, social status, and consumption. What we wear symbolizes who we are (and who we are not).

The Challenge of Digital with Luxury Fashion

Despite the e-commerce boom since the early 2000s with the likes of Amazon, only 9% of luxury goods sales in 2017 happened online - paltry in comparison to the industry average of 27% of total fashion sales online. Factor in the COVID-19 impetus on fashion and online sales are still expected to amount to only 25% in 2025. What might explain this?

When it comes to fashion - especially luxury fashion - consumers want to “touch it, feel it, try it”. Most of us probably had the experience of browsing fashion sites, thinking “Oh! That looks good on the model, and it’ll probably look good on me”, only to be disappointed upon receipt of the merchandise - a size too small, cutting too loose, color tone off, the fabric feels cheap,....the list is endless.

These issues are exacerbated when it comes to luxury fashion - it is no longer about fit or feel but the optics in which we perceive ourselves. Throw in the white-glove, personalized service from well-groomed, polite, and incredibly helpful ambassadors at physical luxury fashion stores - it is little wonder that experiencing Haute couturedigitally is lackluster at best.

So what can we expect when luxury fashion brands take a step into the metaverse, sinking deeper into the digital? Will consumers bite? What will the experience be like? Will it be a step up from the status quo of purchasing the physical online?

Luxury fashion in the metaverse remains an unknown, but brands are experimenting

To explore some of these issues, I outline four strategies luxury fashion houses are experimenting with as they attempt to transform digital fashion from lackluster to experiential.

Broadly, luxury fashion houses experimenting in the metaverse have to answer two questions in their approach toward web3:

  1. Do we want to go ‘phygital’ by bundling digital fashion with IRL physical pieces, or keep it digital-exclusive?
  2. Do we want to strengthen our position as a coveted luxury or increase our accessibility to a broader audience (that is affluent nonetheless)?

The Purists - Digital-Only + Coveted Luxury

The purist approach focuses on limited-edition, high-priced, digital-only merchandise. Purists tend to draw clear boundaries - a metaverse strategy should be targeted solely at the digital realm and not cross over into the physical world (at least not yet). In addition, luxury comes at a price - only the elite can access it in limited quantities. Examples of this strategy include:

  • Dolce & Gabbana: Collezione Genesi was a nine-piece collection that sold out for more than $6M in October 2021, including gold and silver dresses (titled “The Dress from a Dream”) embellished with shimmering beads and crystal accents, as well as two gold-plated and gem-studded silver crowns, called The Lion Crown and The Doge Crown - the latter being sold for 423.5 ETH, or $1.27M at the time of auction. It is interesting to note that Dolce & Gabbana first adopted this Purist approach before rolling out their second initiative as Adventurers (discussed more later)

  • Nike and RTFKT released the Dunk Genesis CryptoKick virtual sneakers for the metaverse for $4,000 to $9,500, with select limited-edition pairs exceeding $100K

  • Luxury jewelry and watchmaking brand Jacob & Co. selling the “first-ever NFT watch”, an SF24 Tourbillion timepiece, for $100,000 at a 24-hour auction on the ArtGails NFT platform

The purist strategy is centered around creating an aspirational desire among the luxury fashion house’s digital-savvy audience - introducing pieces that are inaccessible to most consumers due to limited quantity and exorbitant price tags. Furthermore, the lack of immediate utility, even as most metaverses like Sandbox and Decentraland are being built, transforms from a ‘bug’ to a ‘feature’ - a not-so-subtle message that the collectors of these pieces have demonstrated sufficient wealth and status where utility is not of consideration, and the work can remain merely as a collector’s artifact.

The Consuls - Phygital + Coveted Luxury

The consul approach builds on similar aspirational desires as the purists but extends luxury fashion from digital to include physical pieces that act as accompaniments. Examples of this strategy include:

  • Givenchy, is a French luxury brand that collaborated with Mexico-based airbrush artist Chito to create an exclusive collection of 15 NFTs. The “Chito x Givenchy NFT” collection features an array of cartoonish characters and symbols, some of which are animated and others bearing the Givenchy logo. These NFTs are then printed on streetwear-adjacent pieces and accessories and retail in select geographies and stores. While the physical apparel is non-exclusive and remains relatively accessible, the 15 NFTs remain exclusive, with a minimum price of 5 ETH / $10,000 at the time of writing

  • Bulgari bundled the launch of their exclusive watch, the Octo Finissimo Ultra - claimed to be the thinnest mechanical watch in the world at 1.8mm in thickness - with an engraved QR code that yields access to a unique non-fungible token (NFT) representing digital art. Only ten pieces were produced at a cost of $440,000

  • Balmain’s collaboration with Barbie to launch the Barbie x Balmain-branded apparel line, along with three NFTs sold between $12,490 and $21,379. Each NFT is accompanied by “a one-of-a-kind BALMAIN x BARBIE collector fashion”

Select fashion houses have also pushed the boundaries of what physical entails and ventured beyond wearable apparel to exclusive merchandise. Examples include:

  • Gucci’s collaboration with SUPERPLASTIC to create SUPER GUCCI, ten unique NFTs, each accompanied by a handmade Italian ceramic sculpture designed by both Gucci and SUPERPLASTIC. At its peak in February 2022, the average secondary market price for a SUPERGUCCI exceeded 15 ETH / $30,000 at the time of writing

Similar to the purist strategy, the combination of an ostentatious price tag and limited edition triggers the scarcity mindset in consumers for the consuls. Yet, as the name suggests, consuls bridge the world of the metaverse and real world with well-integrated digital and physical apparel that might give well-heeled customers an additional reason to open their wallets.

On the flip side, select luxury fashion houses have chosen metaverse strategies that expand outreach to new audience groups by increasing accessibility - not just in price but in available quantity. In pursuing these audiences, luxury fashion houses are undoubtedly aware of brand dilution risk, as seen by the careful targeting of consumers with disposable income but have yet to consider fashion labels as means to communicate economic status, social status and consumption.

The Campaigners - Digital-Only + Increased Accessibility

The campaigners' approach leverages the power of digital to broaden accessibility to the brand. Whereas in the physical world, the creation of fashion entails costs, from manufacturing to logistics to retail distribution, the digital world enables pieces to be produced in mere clicks, replicable for an infinite amount at near-zero marginal cost (though in practicality, no luxury fashion house produces infinite quantities of a piece, underscoring the effort to mitigate brand dilution). The 2 quintessential examples of this strategy are iconic luxury fashion brands that have chosen to engage in the metaverse at no cost (free!):

  • Louis Vuitton, arguably the world’s most well-known luxury fashion brand, recently celebrated their 200th anniversary with a metaverse game titled Louis the Game. Players can dress their avatar with different Louis Vuitton monogram prints and colorways at zero cost, and 30 embedded NFTs are discoverable throughout the game. Each NFT is a collectible that cannot be sold.

  • Prada also took the first step into the metaverse in collaboration with Adidas by inviting anyone (yes, anyone!) to submit a photograph using a specially-designed filter that partially removes the image to be anonymised. 3,000 photos were selected to create an artwork that would be minted and airdropped to the individuals who submitted the photograph. While the output leans more towards art than fashion wearable in the digital world, it reflects an unprecedented ‘opening-up’ of fashion houses to co-create and co-own

The campaigners' strategy can best be described as ‘careful inclusion’, as exemplified by Louis Vuitton and Prada. While both have opened up their metaverse plays to a broader audience without price-gating, they have noticeably excluded their namesake-branded digital apparel. This distance preserves the prestige and exclusivity of the brand, even as they lean into the metaverse. While others pursuing the campaigners' strategy have included their fashion items such as virtual puffer jackets and checkered beanies by Ralph Lauren, the balance between brand expansion and brand dilution remains delicate.

The Adventurers - Phygital + Increased Accessibility

The adventurers’ approach then boldly challenges expanding the audience and increasing accessibility while offering both the digital and physical. Unsurprisingly, this is the strategy that the fewest luxury brands pursue, as it is almost antithetical to the (potentially outdated) tenets of luxury fashion - exclusive, high-priced pieces sold through a delightful (and almost subservient) white-glove in-person experience.

  • Following the successful launch of Collezione Genesi, Dolce & Gabbana launched their second NFT collection - DGFamily Glass Box. Each glass box may be a Black ( common), Gold (rare), or Platinum (very rare) Box, which in turn unlocks access to a combination of digital, physical, and experiential benefits. Holders can redeem not only virtual D&G apparel for the metaverse but also exclusive D&G apparel that will not be sold at retail. While each NFT is not cheap (mint price at 1.2 ETH or $3,000 at the time of writing), it is consistent with the price points of D&G physical apparel - with the added benefits of virtual apparel

  • Balenciaga has teamed up with popular video game Fortnite to launch an exclusive collection of Balenciaga x Fortnite virtual and physical apparel, including a roster of outfits and backpacks. Consumers can purchase real-life apparel at selected stores and Balenciaga’s online store and unlock the same outfits in Fortnite. The price points of the apparel reveal a similar consistency to the brand, with shirts costing approximately $650 and hoodies for $1,500

The adventurers’ strategy combines both the physical and virtual to unlock more value for consumers. For similar price points, one gets to access virtual and real-life apparel, offering the benefits of luxury fashion - the economic and social status - twice. While what is offered is by no means cheap, the adventurers potentially unlock a new segment of customers who see the ‘double benefits’.

Winning in the Luxury Fashion Metaverse

With these four directions, we have seen luxury fashion houses adopt to experiment in the metaverse, which might be the winner?

I believe it is too early to tell - the metaverse vision, while exciting, remains to be in very nascent stages - but luxury fashion brands can increase their odds of finding ‘product-market fit’ by running multiple experiments across the four. Two fashion houses, in particular, stand out as they have launched multiple campaigns in quick succession that span different strategies - Gucci and Dolce & Gabbana.

Gucci has emerged as one of the fashion houses leading the charge in the metaverse and crypto space. In June 2021, they were one of the first labels to enter the NFT realm with a Purist strategy (digital-only + coveted luxury) by launching a category-defining four-minute film titled Aria. The ethereal-themed film depicting flora, fauna, and garments from the collection fetched US$25,000, with the proceeds being donated to UNICEF to aid in COVID-19 relief efforts (web3? Check. Creative? Check. Do good? Check.)

Subsequently, Gucci teamed up with Superplastic to create 500 NFTs and adopted the Consul approach - each NFT not only comes with digital art but also with an exclusive 8-inch tall white ceramic SUPERGUCCI SuperJanky sculpture, hand-crafted by ceramicists in Italy.

Most recently, Gucci adopted the Campaigners strategy by introducing the 10KTF Gucci Grail collection, where Gucci Creative Director Alessandro Michele took “a trip to New Tokyo – a floating city in a parallel universe”. In this project, Gucci sold-out passes to holders of blue-chip NFTs like the Bored Apes Yacht Club, and the passes are exchangeable for Gucci apparel to “dress” the blue-chip NFTs. The mint price of these passes cost 1 ETH / US$2,000 at the time of writing, which remains consistent with the brand’s price point.

Most recently, to solidify their preeminent position as the leader amongst the pack of fashion houses experimenting in the metaverse and more broadly, web3, Gucci also announced the acceptance of crypto payments across stores in New York, Los Angeles, Miami, Atlanta, and Las Vegas starting at the end of May. Now, all that remains is for Gucci to explore the Adventurers' strategy - one that would be unsurprising for their next metaverse / NFT initiative.

The luxury fashion house that deftly navigated from the Purists to the Adventurers is Dolce & Gabbana. After their record-breaking success from Collezione Genesi, the launch of DGFamily Glass Box reflects the boldness of their strategy, leaping from digital-only to phygital, and from coveted luxury to increased accessibility. As discussed earlier, the adventurer strategy potentially unlocks a new segment of customers - such as yours truly.

Last month, I bought a DGFamily Glass Box collection, marking my first luxury fashion purchase - in the physical world and digitally. I admit - I still am a far cry from the target customer luxury labels would want to target. Still, the prospects of receiving both physical and digital branded apparel did strike a chord within me, as I envision my future metaverse avatar dressed similarly to me in real life. As to whether this will be the first of more luxury fashion purchases, only time will tell. What is for certain is this - haute couture brands are just getting started in the metaverse + real-world play, and are proclaiming loudly to the world - gm.

Disclaimer: I own several NFTs, including the Dolce & Gabbana DGFamily Glass Box, which was recently revealed to be a Black Box (the least rare of the collection). This article does not constitute an endorsement or recommendation, and should not be taken as investment and financial advice. All views expressed are my own.