Even though shares in LVMH and other luxury brands soared during the pandemic (on the belief that the rich will still shop regardless of the economic situation), a discernible shift was observed in the shopping habits of the well-heeled.
With shops and restaurants closed because of the coronavirus pandemic, showing off that latest “it” bag purely on Instagram seemed like a pyrrhic victory.
And not being able to see the look of jealousy in another fabulous friend’s face who failed to get their paws on this season’s couture felt somewhat inauthentic.
If the whole point of owning a piece of luxury is to show it off – flaunt it cause you got it – then the pandemic posed an entirely different set of challenges for the jet set and those who clothe and accessorise them.
Sure, the very wealthy could continue to buy clothing, and in many cases did.
But fatigue was noticed in the higher end of the fashion spectrum, particularly in couture, with the bulk of events happening virtually and via Zoom, shelling out for that ball gown seemed unnecessary.
Yet even as the coronavirus pandemic raged beyond our homes, one branch of fashion had done particularly well – outfits for virtual avatars and skins for in-game characters in video games.
The trading in virtual items in video games is estimated to be worth about US$50 billion, much of that being in the form of skins or outfits for characters, with the rest comprising of special weapons, armor and abilities.
As more people than ever in recent history were confined to their homes, the concept of a digital life took hold.
A captive audience had few options outside of Netflix and video games, and it is the latter which spurred a revolution in what may be luxury fashion’s next frontier.
Because what’s the point of the latest couture if no one’s there to see you wear it in person?
In-game skins are not new and have been traded and sold for almost as long as immersive online games have existed.
Gamers can put their avatars in exclusive outfits and costumes, decking and dolling their digital selves out in ways that they could only dream of in real life, but spend real money in the process.
And the luxury fashion world is now cottoning on to the possibility of expressing couture in cryptocurrency.
While the art world was stormed by NFTs or non-fungible tokens – essentially unique tokens that tie the ownership of a piece of art, video or any other digital asset to a specific digital wallet address, thus ascertaining ownership – the fashion world is only just catching on.
Fashion brands which have seen sales plummet because of the pandemic, are now poised to jump into the world of NFTs.
According to Vogue Business, Italian fashion house Gucci recently confirmed that it’s “only a matter of time” before a brand like Gucci would release an NFT.
And the fashion magazine confirmed with multiple industry sources that several luxury fashion houses are close to releasing NFTs as well.
Because luxury fashion houses were behind the curve when it came to e-commerce, superseded by digital portals like Net-a-Porter, they’re now more open to considering blockchain technology to boost their fortunes.
Call it a case of the digital FOMO (fear of missing out) if you will, but in recent months, more fashionistas are talking about NFTs and what can be done to integrate them with high fashion than ever before.
But with fashion, the cryptocurrency connection is not always immediately obvious.
For starters, digital properties like art to music, acquit themselves well to NFTs, but fashion is a very tactile medium.
Because a photograph of someone wearing an outfit is quite different from the actual act of wearing it, luxury fashion is only skimming the surface when it comes to the possibilities behind blockchain technology.
The Emperor Wears No Clothes
For fashion, the NFT use case is still in its infancy.
The whole point of fashion is to wear it – but right now, the luxury brands are really looking at it from the lens of fashion as art – which is the only link to NFTs at the moment.
But if fashion is to be worn, what more should digital fashion be worn by our digital selves?
The coronavirus pandemic has arguably strengthened the image of our digital selves and customers are more willing to spend on digital goods than they may have in the past.
Right now, fashion being sold via NFT is just art, with limited utility.
While brands are selling GIFs of clothing pieces, buyers can’t really do much other than admire them.
But if NFTs can be adapted for luxury fashion houses to clothe and accessorise a customisable avatar that can run, jump, duck and shoot on any one of a number of video games, this untapped customer base and potential revenue stream could be a potential game changer.
On Decentraland, a decentralised digital reality, players inhabit avatars which can buy fashion NFTs on the Decentraland wearables market.
But a recent stroll through the wearables marketplace revealed a motley assortment of cartoonish and pixelated outfits, with the game itself lacking the poise and polish that most gamers have grown to take for granted.
To make matters worse, the hassle of setting up a browser-based Ethereum wallet called Metamask, may be unlikely to appeal to all but the most tech-savvy luxury fashion shoppers.
But all that may be set to change as companies schooled in all things blockchain try to bridge the digital block that many luxury fashion houses seem to have when it comes to understanding this new technology.
And where fashion could make the crossover into the digital realm is through digital fashion skins.
Imagine your next Fortnite (a massively popular online battle royal-style first person shooter game) character spotting the latest “must have” bomber jacket from Gucci.
But even better, imagine that jacket being an NFT limited to just 500 pieces and tagged to the physical item and suddenly the crossover from the physical to the digital creates a seemingly infinite number of permutations and possibilities.
NFTs have the ability to create digital scarcity, especially against the backdrop of internet abundance.
And one of the best ways to create scarcity is to tag physical fashion to digital fashion.
Video game streamers with more followers than some celebrities are obvious spokesmodels for both the digital and physical fashion houses of the future.
And with esports tournaments gradually making a comeback, professional gamers, with their cult-like followings could help boost luxury brand sales by sporting the fashion in person and in their gaming streams, while tagging an NFT to that exclusive run of the physical clothing in real life, creating a demand where previously none might have existed.
Last year, sportswear brand Adidas caused a minor in the gaming community when it released its Cyberpunk 2077 line of sneakers, that were quickly sold out.
In the same vein, professional gamers could sport the latest luxury fashion outfits to their next stream or tournament, and NFTs could be woven into the very fabric of such limited gaming lifestyle releases.
To be sure, luxury fashion and video gaming are strange bedfellows.
But considering how quick some of the most prestigious fashion houses were to adopt the athleisure trend, embracing professional gamers and streamers, and their captive following, is not beyond the realm of contemplation.
The pandemic provided an opportunity for luxury fashion houses, some of them centuries’ old, to have a rethink about not just their survival, but their legacy in an increasingly digital world.
By Patrick Tan, CEO & General Counsel of Novum Alpha
Novum Alpha is the quantitative digital asset trading arm of the Novum Group, a vertically integrated group of blockchain development and digital asset companies. For more information about Novum Alpha and its products, please go to https://novumalpha.com/ or email: ask@novum.global
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