Over the decades, there have been some things that never go out of style: little black dresses, trench coats, and white button-ups, just to name a few. However, there have been plenty of trends that have gone out of style over the years. (Think 60’s futuristic fashion, leg warmers, acid wash jeans.) From year to year, season to season, brands dedicate much of their resources to getting ahead of the trends before their competitors can.
But what if the newest trend in fashion wasn’t something you could wear? While it sounds impossible, the growing presence of NFT is allowing companies to revolutionize their brands by giving a new platform to sell on. With this new platform comes new products to sell as well. Everyday fashion companies have already begun to enter this new marketplace. Artists have started selling GIFs of clothing items, but the technology has not expanded beyond much else. What luxury consumers are looking for are a sense of polish and purpose from companies that will convince them to go through the hassle of buying and selling on the blockchain.
Luxury brands that are used to sparking innovation are looking to revolutionize the fashion industry’s involvement in the creation and selling of NFTs. Specifically, Gucci is looking to be among the first to get its digital products on the marketplace.
Here’s a guide to the topics we will be discussing in today’s article:
- Gucci Background
- Gucci’s Future with NFTs
- Risks of the Fashion Industry Joining the NFT Market
1. Gucci Background
Before Gucci became the fashion powerhouse that it is today, the brand had its humble beginnings as a leather goods store in Florence, Italy in 1921. The idea for the store was born from Guccio Gucci’s time as a porter at the Savoy Hotel in London, where he interacted with high-class guests of the luxury hotel.
Gucci began innovating the fashion industry in the early years of the brand, when, with the help of his sons, Guccio released among the first hemp-woven bags during a leather shortage in Italy, a result of a League of Nations embargo against the country during World War II.
The brand continued to grow in the 20th century, even after Guccio’s death in 1953. At this point in the company, Gucci had stores in Milan and New York while quickly gaining steam with the world’s top celebrities. Jaqueline Kennedy, Grace Kelly and Elizabeth Taylor were all spotted wearing Gucci and had great impacts on merchandise like the Flora print and classic bamboo bag.
Gucci seemed to hit some highs and lows throughout its existence, with disagreements within the company causing rifts between executives and creative directors. In 1994, the tides turned when designer Tom Ford took over as Creative Director. According to InStyle, Ford is the designer who “truly revitalized Gucci, incorporating hypersexual designs and campaign imagery”.
Fast forward to today, and Gucci has been labeled the world’s hottest brand for the second year in a row according to Lyst Index’s rankings. Celebrities like Harry Styles, Jennifer Lopez, and Jared Leto can all be seen sporting Gucci daily. Throughout the brand’s rich history, its constant need for innovation remains the same. Gucci’s next move appears to be paving the way for the fashion industry in the NFT marketplace.
Unless you’ve been completely absent online, you’ve seen that non-fungible tokens have been taking over the internet. NFTs are crypto assets that live completely in the digital world. They often take the form of images, GIFs, video clips or audio files. Online platforms have given digital artists a marketplace to sell their NFTs and intangible art.
Non-fungible tokens are essentially digital assets whose value cannot be expressed in terms of another. So, for example, with a fungible asset, like money, a $100 bill has the same value of two $50 bills, ten $10 bills, and so on. But, this sort of exchange is impossible with NFTs. One NFT does not have a comparable value to the next. These assets are based on a principle called “blockchain”. Blockchains are global networks of computer users that keep permanent transaction records for every asset bought and sold on the marketplace. There
There are several concerns when it comes to buying and selling NFTs. The biggest risk when it comes to the sale of this sort of digital asset is the negative impact the transactions have on the environment. This may seem counterintuitive—how could the sale of something that exists only in the digital world be hurting our physical environment?
The most detrimental part of the NFT auction process is mining. Miners are responsible for verifying NFT transactions and adding them to the blockchain—they are users located around the globe that essentially try to solve a math problem or puzzle to enable another block to be added to the chain. Once the puzzle is complete, the miner is provided with a “proof of work”. Proof of work is, in general terms, a security system that keeps all transactions secure and tamper-proof.
However, this proof of work comes at a high price. These puzzles and problems are intentionally created to produce a waste of energy so that it would be less profitable, and therefore less reason for hackers to interfere with the mining process. According to The Verge, these blockchain transactions using Ethereum just as much electricity as the entire country of Libya.
Environmental implications have not stopped artists from selling their work for millions of dollars. Most notably, the artist known as Beeple sold his piece, “Everyday – The First 5000 Days” for $69.3 million at auction, the largest sale for a piece of digital art in history. Sales ranging in this size have forecasters predicting that NFTs are more than just a fleeting trend and will remain valuable for years to come.
If this is the case, NFTs are likely to impact multiple creative industries—one being the fashion industry. An 18-year-old artist located in Seattle recently sold multiple NFTs of three different sneaker designs that resembled Air Force Ones for either $3,000, $5,000, and $10,000, respectively. In a period of seven minutes, the artist sold $3.1 million worth of digital designs. If an unknown artist can generate this level of profit in mere minutes, what kind of effect could fashion designers create with the purchase and sale of NFTs? It is only a matter of time before luxury fashion brands begin to make their mark on the NFT marketplace.
3. Gucci’s Future With NFTs
By the looks of it, Gucci is currently winning the race to be the first fashion brand to begin selling NFT products to consumers. Recently, the brand confirmed to Vogue Business that it’s “only a matter of time” before it will become a seller in the NFT marketplace.
Already, Gucci is testing the waters of digital asset sales. Currently, the company is in partnership with Wanna, a virtual sneaker app, to release its first augmented reality sneakers. According to Input, the sneakers come in a package of 25 pairs for around $12. The virtual reality shoes can be purchased on both the Wanna and Gucci apps. The sneakers do not have a real-life counterpart, so they can only be “tried on” and “worn” in a digital space. So, what exactly are the point of them then?
Aside from allowing consumers to be a part of NFT history, these virtual shoes have given consumers the option to be involved with the Gucci brand that often would not be able to. The lower price point appeals to beyond just luxury shoppers and targets those that are fanatics of the brand.
These VR shoes do not technically fall under the realm of non-fungible tokens, but they are a step in the right direction for the company. Once Gucci officially enters the NFT marketplace, the possibilities will be endless for the brand. As luxury fashion companies enter the digital asset world, they will be able to further the experiential aspect of their brand. This may take the form of selling digital design sketches, expanding virtual reality merchandise, or selling videos of runway shows in NFT form.
4. Risks of the Fashion Industry Joining the NFT Market
For any industry, there are potential drawbacks to creating a presence in the NFT marketplace. The fashion industry is already riddled with some controversies, like fast fashion, contributing to a negative body image culture, and lack of diversity, to name a few. Not only can more controversies arise, but it may not be the best fit for all industries to have a stake in blockchain. So, it may be important for luxury fashion brands to consider the following implications of being involved with digital assets.
- Target market: Currently, there appears to be a rift between the target markets for luxury fashion and NFTs. The luxury fashion market is oriented towards older generations, often women, with large amounts of disposable income. NFTs, on the other hand, are experiencing demand from younger males. The task at hand for luxury fashion companies that are interested in selling NFTs is to either create assets that are of interest to this new generation or to provide products that will bring their target market with them into this new marketplace. It is crucial to convince this older market that NFTs are worth going through the hassle of figuring out in order to gain sales from these consumers.
- Environmental impacts: As previously mentioned, NFTs are a major source of carbon emissions. The fashion industry is already the second biggest polluter in the world, so it is important for brands to consider the impact of adding another controversial production process to their list. There are options, however, for those brands like Gucci that are making the move to incorporate blockchain in their operations. Re-inc, a streetwear brand dabbling in NFTs, is working to offset carbon emissions with profits from sales. Other brands are waiting for blockchain systems like Ethereum to come up with a more sustainable system to complete NFT transactions.
Many industries and brands are intrigued by the NFT marketplace, and for the luxury fashion industry, it seems to be a race to be the first to enter the market. Enter Gucci, the brand that has been at the source of flashy trends since the company was brought to life by Guccio Gucci in 1921. Throughout the decades, the most popular celebrities like Grace Kelly and Harry Styles have been known to have Gucci clothes and accessories as closet staples. Now, Gucci is in the market to inhabit not luxury customers’ wardrobe, but their digital asset files as well. Gucci, among other brands, is looking to be among the first luxury fashion brands to enter the NFT marketplace.
Non-fungible tokens are assets that exist completely in the digital world. They operate through blockchain technology, which is a global network of computers. NFT’s, however, create many problems for the environment through a process called “mining”, which allows for the blockchain to operate. Even still, luxury fashion brands like Gucci are looking for ways to expand their brand to the digital world. Currently, Gucci, in partnership with Wanna, sells augmented reality shoes that can be purchased in the brand’s app. These shoes can be digitally tried on, but no physical counterpart exists for the pairs.
These shoes are not NFTs, but they are paving the way for Gucci to experiment with the sale of non-fungible tokens. Before they expend resources to enter the NFT marketplace, it may be a good idea for Gucci and other luxury fashion brands to consider the profitability of this business move. Many consumers in the traditional luxury target market will not be interested in participating in the NFT market, so it is important to consider how to merge interests. Also, with the fashion industry already taking a lot of heat for being one of the worst polluting industries in the world, brands like Gucci should consider how to offset these damages.