During the pandemic, the NFT craze on the internet attracted more investors as more individuals sought out new and alternative methods to make money in the comfort of their homes. The world is becoming more digital, especially with the move to Web 3.0, which is completely decentralised due to the incorporation of blockchain technology.
What Are NFTS?
The internet has been experiencing a new fad that has significantly impacted the art, design and fashion industry. NFTs have been on the grapevine in the fashion industry for the opportunities and exclusivity they provide. Digital designs and collections, for instance, can be transformed into unique collectors’ commodities.
There is much potential for NFTs as more people believe this new form of technology may be just what the fashion industry needs to democratize it.
NFTs is an acronym for Non Fungible tokens initially designed for cryptocurrency but have slowly been adopted into other sectors. They are records associated with a physical or digital asset stored on the blockchain; the cryptographic assets have unique codes and metadata that distinguish them from each other.
They cannot be exchanged for other assets as they are one of a kind and thus are not replicable. They are stored on the Ethereum blockchain, a distributed ledger system enabling smart contracts. They can represent real items such as art, identities, property rights and fashion pieces.
They are backed by blockchains, thus decentralized simplifying transactions between the owners and the buyers. Their uniqueness makes them more valuable, especially to collectors, and makes them an appropriate medium for business transactions. Converting digital items to NFTs is known as tokenization.
NFT Adoption in the Fashion Industry
NFTs are bound to profoundly change the luxury fashion sphere as scarcity is an essential element for both NFTs and the fashion world. NFTs are introducing a new perspective on exclusivity by allowing fashion owners to turn their digital assets into highly scarce, luxurious and collectible pieces.
Fashion brands are bringing NFTs and fashion together through numerous creative ways, such as augmented realities and virtual stores. Customers’ self-expression is accelerating towards the virtual universe, contrary to the physical world. They can own a digital twin of their assets in the virtual world, which has value.
Sneakers, streetwear and sneakers are some categories that have already adopted NFTs. For instance, Gucci has yet to unveil its own NFTs, while famous brands such as Louis Vuitton and Dolce & Gabbana have constantly been trying to introduce these tokens to their marketing. As millennials, Gen Z and generation alpha enter the market, the mindset of buying virtual clothes with real money is slowly being embraced by the public.
Augmented reality, for instance, has enabled customers to still put on clothes they purchase as NFTs by overlapping online images over real-world camera footage. Using try-on features, brands such as ASOS, GAP and Burberry have enabled consumers to enjoy this luxury.
Consumers can also purchase their NFT clothes in virtual stores where most fashion brands have already established showrooms and stores which appeal to young consumers. Gucci, Nike and Balenciaga are some brands that have already based virtual shops on the Metaverse.
Luxury brands are aware that their clientele do not purchase their products due to necessity but due to the need to be part of the heritage, culture and unique story that the brand has created. As a result, some brands have created utility tokens that give the buyer ownership of a physical item which have become popular, especially through loyalty programs.
By posting pictures of their clothes, the consumers can acquire a token, and only NFTs will have access to the new drop. This way, the brands create a virtual community that delivers fresh content that benefits the brand and the customers.
An NFT can solve the problem of reproducibility of digital clothing, making fashion items unique; this is because NFTs cannot be duplicated, making it easy to trace the real copy to the rightful owners in case of such an attempt. This could broaden the unique and special catalogue in the fashion industry, thus democratizing the industry.
NFTs are still at their infant stages. However, the recent surge in 2021 has attracted more investors and sectors to the new form of technology. The fashion industry has embraced the technology, which is already causing paradigm shifts, especially as more people prepare for the Metaverse.
Fashion brands can use NFTs to gain extra revenue by selling different products based on their logos; they can also encourage sales through discounts while ensuring their products’ uniqueness. However, fashion brands need to take it upon themselves to educate consumers on the benefits of this technology, especially those who still are sceptical about the NFT concept.
This will play a significant role in democratizing the industry, which requires intermediaries and marketers to reach consumers. NFTs are the magic bullet for fashion brands and the fashion industry.