Dolce & Gabbana grabbed the record of most expensive suit ever sold: it’s digital The Glass Suit fetched $ US1 million (351.4 ETH) in last October, with the broader D&G NFT collection banking $US6 million from buyers wanting access to the Italian designer’s exclusive virtual clothes. Gucci’s ‘Queen Bee Dionysus’ bag sold for 350,000 Robux (currency used in game for avatar accessories), or $ US4,115 – fore than its real life price tag.
“Influencing culture and the associated soft power is an incredible opportunity for businesses wanting to stay relevant,” Yat Siu, founder and chief executive of Animoca Brands, a Hong Kong-based venture capitalist and game developer, told the Macquarie Bank Conference earlier this month .
“Virtual clothing and digital fashion are a natural extension for people already using social media filters on platforms like Snapchat and Instagram. The comfort with which we operate in digital environments is how brands will capitalize on this momentous cultural-shift. They will want to sell products as well as have a presence in what we’re now calling the metaverse. ”
An NFT is a piece of tradeable code attached to a digital item, such as an image or a video. A secure network of computers records the asset on a digital ledger, giving the buyer proof of authenticity and ownership. As the asset changes hands, the ledger records each owner. This is a technical breakthrough that has cemented ‘ownership’ on the internet, a long-time problem for creators and artists whose work can be easily and instantly replicated infinitely.
But alongside the technical breakthrough emerged a speculative frenzy that has seen more than $US30 billion change hands in 2021 alone. While NFTs have dominated headlines these last 18 months as speculators spend eye-watering sums on what look like digital images, luxury brands have been busy embedding the new technology into their business models.
Bernstein global luxury goods analyst Luca Solca points to three main ways that these fashion houses are tapping into virtual goods.
By offering tokenized versions of their physical products – the way that Avakian did with his “Tears in the Rain” collection – they’re giving younger people a new price point, Solca says. Digital clothes cost a lot less to make and maintain than high-end physical garments, and Bernstein uses Gucci as a powerful example of giving young people a taste of luxury ownership sometimes for as little as under $10.
Also, luxury brands are developing immersive virtual spaces – like Avakian has with his New York meta retail store – means customers can visit and have a boutique experience, no matter where they are in the world. Staff can also work across both meta and physical locations – when one is quiet they can tend to the virtual store.
The pandemic also forced parties and events online, which Solca says, caught large fashion houses by surprise.
“The Covid-19 pandemic – and the lockdowns brought by it – have made it painfully clear how ill-equipped the industry is when it comes to creating virtual worlds events,” he says.
“Brands are racing to create digital events, exhibitions, product launches, presentations. These are getting more immersive and compelling by the day. ”
Last year, Louis Vuitton launched a video game in which a flowery creature called Vivienne explored a series of multicolored worlds. Players were hunting for 30 NFTs hidden within the digital universe, which granted them access to exclusive parties.
Balenciaga joined forces with Fortnite, a video game with more than 300 million users, to sell high-fashion “skins”, or outfits, to players. Ralph Lauren cashed in on the action, partnering with the South Korean social network app Zepeto to release a virtual fashion collection for players.
Many believe this is not momentary success. The uniqueness of NFTs means some can skyrocket in value: one created by digital artist Mike Winkelmann – also known as Beeple – was sold at Christie’s auction house in 2021 for a record-breaking $ US69.3 million, according to ARTnews. New York-based NFT marketplace OpenSea has over 1 million users and generated revenue of $US365 million in 2021.
Injury founders Eugene Leung and Dan Tse are the Sydney-based husband and wife team using digital fashion as a way to strip carbon emissions from their design process.
The couple – who has been showing physical collections since 2004 – decided at this year’s AAFW for a second year in a row showed a CGI fashion film for its 2022/23 ‘Rare Reality’ Collection. Eight avatar models were depicted in an otherworldly multiverse.
A physical runway show can cost a designer upwards of $50,000, but Leung says, by using technology it’s not only helped on costs but by using augmented reality to sample and manufacture to order, it minimizes waste.
The collection is available as a digital collection to purchase on digital fashion NFT marketplace DRESS X, where the buyer can wear it in AR, and the garment is also available made to order as a physical product.
Tse says not only is this a great marketing tool, but it will definitely create new revenue streams, and hopefully garner new customers.
“As you see in Gucci and brands like Artifact, they’re doing very successful in terms of revenue and profits. So, we’re definitely aiming to do that, ”she says.
“But as a starting point, we think that is definitely a very good marketing tool as well because these are like really hot topics. Now NFTs, metaverse and fashion – and we definitely want to be the first mover in this digital fashion theme. ”
Leung points to royalties on secondary trades of NFTs as another advantage.
“The original designer and creators get a percentage. I think that’s also one of the advantages for having NFTs, and being a first mover and a first adopter because the earlier you are in space, your NFTs will be in this space longer. If you keep promoting your brand, and you keep promoting the same products, you will get rewarded, ”he says.
Geoffrey Perez, Snapchat head of Luxury, is also focused on augmented reality and virtual try-ons. Snapchat helps luxury brands like Gucci and Louis Vuitton understand this new market of millennials and Gen Z.
“What we’re doing with creating these new augmented reality tools where people can make better sense and discover products,” he says from Paris.
Perez says those shoppers who engage in AR drive higher conversion rates, so there is a financial opportunity for these luxury brands. Beyond just higher sales, there is also a more sustainable way of selling since, Perez says, 42 per cent of returns could be avoided if people could try on and experiment with products beforehand.
As fashion week drew to a close earlier this month, new technology was just as talked about as new designs.
Avakian, whose ‘Tears in the Rain ‘NFTs have yet to sell on OpenSea, says the blending of art and technology will only increase.