What’s fad? What’s future?

Luxury fashion houses have been forced to look at digital avenues to combat the ongoing pandemic. Brands are exploring innovative digital methods that engage consumers virtually to offset declining sales. Sheetal Jain gives a sneak peek at the emerging trends in the luxury sector, such as the gamification of NFTs or pre-loved clothing and how they connect with younger consumers.

The ongoing pandemic is forcing luxury fashion houses to explore digital avenues. Take a look at the current state of affairs in this sector.

The luxury industry is starting to recover after a disastrous year caused by the covid-19 thecovid-19 pandemic. According to a recent Bain& Company study, 2019 levels will most likely be reached this year. Luxury brands have been forced to move into the digital world at an alarming rate by the pandemic. More than ever, many brands are realising the importance of transformation and revolution. To offset declining sales, they are exploring innovative digital methods that virtually engage consumers.

The most frequently asked question today is: Are emerging trends such as gamification, Fts, and pre-loved clothing in the lux industry the future?

Gamification During pandemics, gamification is a popular marketing tool to give consumers an immersive experience. Gamification is becoming more and more important to brands as they integrate it into their digital marketing strategies. Dior, Burberry, and Chanel are among the luxury brands that have embraced gaming platforms in order to attract, engage, and acquire young consumers. In China, recent trends have confirmed that beauty, gaming, and e-commerce are a successful combination. MAC’s limited edition lipstick, which Tencent commercialized for the game Honora of Kings, was sold out in less than 24 hours.

Afterword’s Age of Tomorrow, an interactive online video game, was used to reveal the latest collection of high-end fashion brand Balenciaga for autumn/winter 2021. The Garden Experience game on Roblox blurred the line between the virtual world and the real one. Gucci was among the first luxury brands to recognize the potential of the “metaverse”–the virtual world that is emerging where users can have a parallel existence to their actual life.

Video games allow consumers to purchase digital outfits to dress their avatars. This gives them access to luxury brands that they may not be able to afford in real life. New Zoo’s latest report states that the global games industry is expected to generate revenue of $200 billion before the end of 2023. Online games are helping GenY and millennials reinvent social communities in the digital world. The ‘digital-native’ generation, which includes young consumers, finds traditional media tedious because it focuses more on transactional aspects than experiential ones. Gaming, a new-age unconventional platform, creates youthfulness, fun, and a special bond between users. Today, the same, if no more, time is spent by young consumers on gaming than on music and movies. It is, therefore, logical for brands to enter this market.

[Note: Gamification can be a powerful tool for luxury brands in reaching a wider audience, boosting brand awareness, increasing engagement, creating a competitive advantage, building reputation, acquiring user data, and ultimately building a strong customer base.]

Nonfungible tokens (NFTs). A NFT is a unique digital asset such as artwork, video, audio, and music that can be tracked via blockchain but cannot be exchanged.

We hear daily about new NFT record sales, from Beeple’s $69 million artwork to an 18-year-old Vampire Queen worth $500,000. FT applications are still in their infancy at the moment, especially for luxury fashion. Luxury brands are pondering whether affluent customers will be interested in NFTs for luxury fashion. Will they be of any use to consumers? This strategy will lead to a dilution of the brand. Luxury brands are not willing to miss out on the opportunity that NFTs offer. Diverse luxury fashion brands have announced plans to release NFTs. According to Vogue Business magazine, Italian luxury fashion brand Gucci recently said that it was “only a question of time” until a brand such as Gucci released an NFT.

NFTs could pave the path to the democratization of luxury, just as high-end fashion brands have created diffusion lines in order to make luxury more affordable. Customers who cannot afford the real Gucci gowns can buy their digital versions. They can create their images of themselves wearing the 3D gown and upload them to virtual platforms. Or, they can use it as an avatar for games.

NFTs are also able to help solve the counterfeiting issue, which is a challenge for the luxury industry. This can be done by authenticating and tracking expensive items. By storing information in a digital ledger, shoppers can also know about previous owners and other details, which could help brands get royalties for each resale. Luxury brands can also create digital collectibles using NFTs. Brands can use them to generate new revenue. [Note: The NFTs are used in conjunction with AR filters, 3D visualization, and virtual try-on technologies to create a more engaging online shopping environment for consumers.]

Pre-owned luxury:

The demand for used luxury fashion has been growing exponentially in recent years. Environmental concerns, the desire for exclusivity, affordability, and a wide range of products drive this market. A few years ago, no one could have imagined that luxury brands and pre-owned fashion resellers would collaborate. Most luxury brands were reluctant to enter the resale marketplace due to fears of reducing sales of their new products and dilution of their brand.

Today, this is a trend that’s gaining popularity. Recently, Gucci has partnered up with The Real Real and Alexander McQueen with Vestiaries Collective. Recent BCG-vestiaries collective research showed that the global second-hand market will grow between 15 and 20 percent over the next five years. The findings also showed that 62% of shoppers were willing to spend more on fashion brands that collaborated with resellers. According to CPP Luxury, the global market for pre-owned luxury products is expected to grow from $30 billion in current value to $64 billion in 2025.

[Note: Luxury brands are increasingly looking for business models that encourage circularity and sustainability in order to attract a growing number of conscious customers.]

WHAT WILL THESE RESULTS BE?

Innovative ways to connect with new-age customers include gamification, non-financial transactions (NFTs), and pre-owned luxury. Many luxury brands may find that they have a great opportunity to flourish in the future. Luxury marketers face a challenge in striking the right balance between exclusivity and inclusivity.

Brands shouldn’t jump on the bandwagon. Instead, they should develop strategies that are more client-centric and deliver a clear value proposition.