Non-fungible tokens (NFTs) are becoming a bigger part of the fashion landscape. In so doing, they are also becoming a substantial part of retail.
An NFT is a unique, “bespoke” item that by its very nature fits right into the fashion world.
To put it in terms of physical collecting: anyone can buy a Givenchy dress. But only one person can own a bespoke version (like Megan Markle).
An NFT is registered on a blockchain, which is used to record ownership of an asset. Limited-edition, unique digital fashion items are purchased, and buyers receive “1 of 1” certificates of ownership – adding a level of exclusivity that has long been the hallmark of fashion culture.
NFTs and brand loyalty
NFTs can also be integrated successfully into loyalty programs. With NFTs, fashion brands can give customers tokens for enticements, including yearly access to new products, discounts, admission to exclusive events and private communities.
For example, Dolce & Gabbana debuted its NFT collection, Collezione Genesi, which has physical, digital, and experiential value.
The NFT holder receives the physical, fitted version of Dress from a Dream, an original signed sketch, and a custom digital recreation of the dress—in addition to two-year access to Dolce & Gabbana Alta Moda, Alta Sartoria, and Alta Gioielleria couture events in Italy.
In that way, the customer is encouraged to continue engaging with the brand.
Hype and controversy
The strategy to market NFTs with products can be wildly lucrative.
For instance, Adidas made its first NFT drop, Into the Metaverse, of 30,000 NFTs, priced at $800 each. The drop sold out almost immediately, and generated more than $23 million in sales.
But not everyone is gung-ho over NFTs. Much of the controversy surrounds the carbon footprint of NFTs.
They are supported by blockchain technology, which is extremely energy-intensive. The cryptocurrencies used to buy and sell NFTs generate millions of tons of planet-heating carbon dioxide emissions.
Others argue against NFTs because they are part of a new, unregulated market – and those types of markets, in general, have a greater propensity to harm the environment.
Digital opportunities around NFTs
But NFTs and cryptocurrencies are offering retailers entry into new markets. Some shoppers don’t have access to bank accounts or credit cards—and others simply don’t want them.
Those customers can now make electronic transactions with cryptocurrency.
According to Statista, the number of blockchain wallet users is increasing dramatically: From roughly 69 million in February 2021 to 81 million a year later. Benefits include superior payment security, lower transaction fees, and speedier transactions.
Ralph Lauren has been selling branded digital apparel in virtual worlds such as Zepeto, while Dolce & Gabbana has auctioned millions of dollars in NFT-based digital couture.
Those well-known luxury brands and others are forging into the “metaverse,” expanding their retail channels. And retailers see that brand expansion into NFTs offers a way not only to expand sales but also to increase revenue receipts via cryptocurrencies.
