A Deep Dive Into NFTs in Fashion and Luxury

"Fashion turns to blockchain" is far from a new narrative — Cointelegraph reported on it in 2019. But fashion and luxury brands made real progress (and real money) in 2022.

Messari also mentioned the luxury goods market as a high-potential sector for NFTs in its Crypto Theses for 2023 report.

Furthermore, a highly informative graph about the use of NFTs in different industries shows that NFTs are particularly interesting for brands in the luxury goods and apparel sector:

Source: CoinGecko

Do we have a new potential narrative on our hands? In this article, CoinMarketCap Academy analyzes the NFT and luxury goods market, covering:

Which brands are entering the NFT space?
The utility of NFTs for fashion and luxury brands
Trends and developments of NFTs in luxury and fashion
The top 10 fashion and luxury brands using NFTs

So, are fashion NFTs the real deal or another temporary fad?

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Big Brands Entering the NFT Space

Frankly speaking, who isn't jumping on the NFT bandwagon these days?

Nike set a high bar by making mouth-watering NFT revenue in 2022. The apparel giant pocketed a cool $120M+ in revenue from NFTs thanks to its cooperation with RTFKT, a company producing "sneakers for the metaverse." We'll address Nike's recipe for success in more detail later, but it's worth pointing out that other companies were not slacking either. Five fashion and luxury brands made at least eight figures in total NFT revenue in 2022:

Source: https://dune.com/absinthan/nft-brand-case-study-or-sector-or-by-kingjames23

The beans have been spilled, so more big companies are waking up to the profitability of the NFT game. Starbucks recently unveiled Starbucks Odyssey, a "new experience powered by Web3 technology that will offer Starbucks Rewards members [...] the opportunity to earn and purchase digital collectible assets that will unlock access to new benefits and immersive coffee experiences."

Big brands are getting into NFTs to boost their marketing efforts. By pairing them with physical items, brands are zeroing in on how to leverage the power of the new technology. Moreover, the adoption of NFTs by big tech companies introduces NFTs to consumers’ daily habits. Instagram now allows the minting of NFTs, YouTube has them in its creator tools, and even Apple allows in-app minting and trading of NFTs (despite bickering over its 30% fee).

However, NFTs are particularly prevalent in the fashion and luxury industries. Why is that?

The Utility of NFTs for Fashion and Luxury Brands

For a long time, the utility of NFTs in this space was a case of "here's what NFTs could do for fashion." But 2022 brought a genuine change in that regard.

NFTs as a Revenue Driver

The proof is in the pudding or, more precisely, in the numbers. NFTs drove a fresh $120M in revenue to Nike. That is revenue the company would otherwise not have generated. Moreover, these buyers may likely be repeat buyers of future NFT collections and Nike apparel in general. Other brands made less money, but the principle still applies. The proof of concept for NFT as a revenue driver is there, and many brands are surely on the lookout after Nike’s success. This applies to increasing revenue with existing customers and generating higher brand awareness among potential new ones.

Creating New Customer Experiences and Exclusive Benefits

Brands are starting to figure out how to deploy NFTs to retain and motivate their customers to spend more money. For instance, RTFKT, Nike's NFT partner, launched a digital sneaker collection called Nike Dunk Genesis Cryptokicks. Users can change the look of their sneakers by applying different skin vials. The collection consists of 200,000 sneakers and costs a staggering $6,000 to $10,000 per pair. The sneakers come with varying levels of rarity and stylistic elements.

Another example is Blanksoles, a Solana-based sneaker company. Its members can customize a white shoe NFT with different skins and redeem it for a physical version.

Considering these are still trial runs, the fashion industry seems to be edging closer toward finding more use cases for NFTs.

Building and Fostering Communities

This remains the most intangible benefit, though companies are making progress here too. Social commerce is growing rapidly in the US, and the market is projected to triple in size between 2020 and 2025:

However, as big as social media advertising may be, privacy regulations like GDPR and increasing costs of customer acquisition force brands to evolve. NFTs can serve as a novel way of attracting and retaining customers since they allow brands to attach unique benefits to certain collections. While this was also possible without NFTs, they facilitate the process and tracking of verified owners, while allowing brands to offer more exclusivity to their most loyal customers — something that is the backbone of the luxury industry.

Trends and Developments of NFTs in Luxury and Fashion

Delphi Digital covered important trends and developments in its two research reports titled Why the Future of Fashion Is in the Metaverse and The Year Ahead for NFTs.

The Physical and Digital Worlds Are Merging

Many words can be written on how our online and offline lives are increasingly intertwined. NFT fashion provides concrete examples.

For instance, Nike's partner RTFKT was already a successful content developer before its partnership with Nike. After getting acquired, it released a Nike AR hoodie that can be worn on Clone X avatars. Clone X is an NFT collection consisting of 20,000 3D NFT avatars. The NFT owners were entitled to claim the same physical hoodie as their metaverse avatar had. Nike sold over 8,000 AR hoodies at 0.2 ETH, generating over $2M in sales.

If we order food, transportation, and even find relationships online, why would we balk at creating digital avatars of ourselves? A world where digital fashion and real-world fashion overlap and merge is not only possible but likely.

Fashion Is Moving Online (and Luxury Too)

Not only is social commerce growing, but digital fashion is also growing. Fashion that exists only in the digital realm is projected to become a market worth over $6B in 2026, according to research firm Technavio. According to Morgan Stanley analysts, the virtual luxury goods market could reach up to $50B by 2030.

That is not surprising. Gen Z and Generation Alpha (the pre-teenagers of today) are practically digitally exclusive. It's not a stretch to imagine Gen Z'ers value digital fashion as highly as real-world fashion, particularly if its ownership and exclusivity can be verified.

Digital Investments Are Becoming Digital Consumables

NFTs had their run as digital investments. A few select strong brands will survive and new art projects will pop up. But the next wave of NFT adoption will, in all likelihood, not be investment-driven but consumption-driven.

The easier it is to sell physical items with NFTs, the more brands will jump on the bandwagon. Brands that figure out how to create unique customer experiences that complement their physical products will cash in big. Think of NFTs not as a speculative investment frenzy but as a digital receipt of ownership entitling you to unique benefits.

Furthermore, brands will be able to better query, segment, and reward their most loyal customers thanks to blockchain technology. Privacy concerns will have to be addressed at some point, but where there's money to be made, there's a way.

Fashion and Luxury NFT Buyers are Web3 Natives

Much of the above sounds juicy for fashion and luxury brands. But hold your horses, we have a long way to go. Most NFT minters of "branded NFTs" were web3 power users:

Source: Delphi Digital

Only Adidas' NFT collection bucked the trend ever so slightly (11% of minters were new users). That goes to show that brands are thus far selling to the converted. Those interested in NFTs are the prototypical crypto bros, young and male crypto-natives. That is why 81% of NFT sales were generated by athleisure (athletics & leisure) companies.

Luxury brands cashed in with eight figures worth of revenue, but the majority of luxury goods customers are still not a crypto user. Metaphorically speaking, NFT owners and luxury brand owners still hang out in different metaverses.

Web3-native Fashion Brands Rise

Messari published an interesting graph of web3-native fashion brands:

Source: Messari

Considering that established brands may find it difficult to reach crypto users, partnerships make sense. Nike paved the way, and other companies will undoubtedly follow. Web3-native brands have competitive advantages:

Permissionless entry for designers not working in the traditional fashion sector.
No physical store is needed.
They can bootstrap funding by selling their own NFT collections.
They can tap into their own audiences.

Collaboration between web3 natives and established brands will be the key to success.

The Top 10 Fashion and Luxury NFT Projects

Many household brands in the fashion and luxury industries launched NFT projects in 2011 and 2022. Here are the top 10 fashion and luxury NFT projects.

Nike x RKFT

Nike started making moves in the NFT space, acquiring RTFKT Studios in December 2021. RTFKT is known for its fashion collectibles and virtual sneaker site for gaming companies. It had previously teamed up with the digital artist FEWOCiOUS to produce limited NFT sneakers, netting over $3.1 million from selling 600 pairs in just six minutes.

Nike continued to innovate in the NFT space by releasing special edition Flying Formation Air Max 1 shoes and limited NFT sneakers, also available for redemption as physical sneakers. The brand also partnered with Roblox to create Nikeland, a virtual world where players can wear their digital Nike sneakers.

Gucci

Gucci sold its iconic Aria Collection NFT for $25,000 at Christie’s to celebrate its 100th anniversary. This NFT, in the form of a short film, features a collaboration with Balenciaga, marking a historic moment for the brand. All proceeds will go to UNICEF USA.

Gucci also launched "Vault Art Space," a metaverse product that showcases 29 digital artists interpreting the Gucci brand. The first exhibition is called "The Next 100 Years of Gucci" and features artworks from eBoy, Alanna Vanacore, An Chen, Sasha Katz and Kris Andrew Small, created in collaboration with NFT marketplace SuperRare.

Dolce & Gabbana

Dolce and Gabbana jumped into the Fashion NFT world with their launch of the Genesis Collection, or Collezione Genesi. The collection consisted of nine pieces including five NFTs with accompanying physical pieces and four digital-only NFTs. The NFT collection auctioned for a whopping $6 million and sold out instantly. The Italian fashion house's collaboration with luxury marketplace UNXD made the NFT wearables possible. The release of Dolce and Gabbana's NFT collection marked the first time a fashion house entered the NFT space.

Adidas

Adidas launched the "adidas for Prada re-source project" in collaboration with digital artist Zach Lieberman. The project is a community-driven effort to create large-scale digital artwork inspired by the physical Re-Nylon collection. Adidas is asking the public to submit anonymous photos that'll be turned into 3,000 unique NFTs and combined into a mass-patchwork NFT designed by Lieberman. The final product will be auctioned off at SuperRare, with the proceeds going to charity and distributed to artists and creators.

Adidas also launched another NFT series called "Into the Metaverse" in partnership with gMoney, Bored Ape Yacht Club, and PUNKS comic in 2021. Holding an "Into the Metaverse" NFT allows you to explore different virtual and physical products from the fashion company.

Salvatore Ferragamo

Salvatore Ferragamo opened a concept store in Soho, New York City, featuring an NFT booth and a hologram sneaker customization tool. The NFT projects are free and designed by digital artist Shxpir. They welcome new community members into the store's immersive experience. Customers can mint unique artwork with a range of backgrounds to choose from. The store also produced a limited edition capsule collection, with all proceeds going to the LGBTQ+ organization, The Center. Additionally, the hologram station allows consumers to digitally customize the 6R3ENE sneakers.

Burberry

Burberry, the iconic British luxury fashion house established in 1856, collaborated with Mythical Games for the "Blankos Block Party" project. The project features a bespoke social community where players can connect in the digital world and own digital vinyl toys called Blankos . The latest NFT collection includes a unicorn named Minny B wrapped in Burberry’s new TB Summer Monogram.

In addition to the NFT collection, Burberry also launched in-game NFT accessories, including jetpacks, armbands, and pool shoes, which players can apply to their Blankos. The NFT collection was available for in-game purchases on June 22, 2022, and was accessible to all Blankos Block Party players worldwide.

Chito x Givenchy

Givenchy, a French fashion house owned by LVMH, has partnered with Mexican airbrush artist Chito to create a collection of 15 NFTs. The "Chito x Givenchy NFT" collection features cartoon characters and symbols, some animated and others bearing the Givenchy logo. The NFT collection incorporates elements from Givenchy's spring pre-collection. The collection was available for bidding on OpenSea, with a portion of the proceeds going to "Givenchy's Long-term Preferred Foundation".

The collaboration followed the fashion house's Spring 2022 pre-collection, where designer Matthew M. Williams commissioned Chito to create graphic prints for streetwear-inspired pieces and accessories. Some are now offered as unique NFT fashion designs for collectors to use as online PFPs.

Prada

Prada's Timecapsule NFT collection is an expansion of the brand's popular Timecapsule program, which started in 2019. The Timecapsule events take place once a month and offer limited-edition items on the Prada website for 24 hours. The NFT collection allows collectors to enter a draw for exclusive prizes and experiences. The launch of the Timecapsule NFT collection helped boost engagement with fans of the brand. Prada's financial performance in the first half of the year improved, with retail sales rising 26% to $1.72 billion and overall revenue increasing 22% to $1.92 billion. The company's net income also almost doubled to $191 million.

Louis Vuitton

Louis Vuitton launched Louis the Game to honor the 200th birthday of its late founder. The mobile game features a customizable figurine named "Vivienne," who travels through 200 virtual worlds to find 200 birthday candles. Players can collect thirty NFTs, ten of which were designed by digital artist Beeple. Louis Vuitton added new content to the game and offered NFT rewards to players who reach a certain threshold. The raffle gave away 10 NFTs featuring Vivienne as an avatar that can be used on social networks. LV recently announced another new NFT collection:

View post on Twitter

Overpriced

Overpriced, a web3-native fashion house, is making waves in the NFT fashion space with its unique concept of combining physical and virtual fashion. The brand, founded by a group of artists, sold its first NFT-associated hoodie for a whopping $26,000 at an auction on Blockparty.co. The hoodie comes with a physical copy and a special V-code that verifies ownership and can be invalidated if stolen or defaced.

Conclusion

Let’s answer the question at the start of this article:

No, luxury and fashion NFTs are not a fad. But they aren’t the new hype either (yet).

Even Nike’s successful launch sold mostly to existing crypto users. It also tailed off after the initial launch. There are still major issues to be addressed when it comes to merging the traditional clientele of luxury brands and NFTs.

But watch this space because NFTs and its involvement with fashion and luxury brands are likely here to stay.

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