Prada and Dior’s Adoption of Blockchain Technology in the Fashion Industry: What Factors Are Behind the Heightened Crisis Awareness and the Key Role of Three Major Trends?

Why are Prada and Bulgari participating in Web3 events?
At the “NFT Paris” Web3 event held in February in Paris, a unique group of participants was seen. Luxury giant LVMH Group, fashion brands Prada, Christian Louboutin, jewelry brand Bulgari, and even the century-old fashion magazine “Harper’s Bazaar” all sent representatives to the forum at NFT Paris to discuss the integration of fashion and blockchain technology.
So why are fashion brands collectively appearing at Web3 events? The more crucial question is what they have done and why high-end fashion brands need to keep up with the trend of Web3.
3 reasons! Fashion brands enter the online world
According to a report released by market research platform Market.us, the global Web3 market is expected to exceed $6.63 billion by 2024 and could reach $177.58 billion by 2033.
The “Web3 market” referred to by Market.us includes cryptocurrency, NFTs (non-fungible tokens), DeFi (decentralized finance) applications, DAOs (decentralized autonomous organizations), metaverses that integrate digital assets, game platforms, and the infrastructure that supports these platforms.
Among them, the collaboration between Web3 tech companies and traditional industries, or the cross-domain integration of Web2 and Web3, is seen by Market.us as a key opportunity for market growth, and fashion brands are naturally one of them.
Fashion brands enter Web3 through methods such as integrating NFTs with the physical world and entering the metaverse. In addition to capturing the attention of consumers in novel ways, there are three deeper reasons behind this, which have prompted brands to actively explore blockchain technology.
Reason 1: Preparing for the EU Digital Product Passport (DPP) regulations
The authenticity of luxury goods worth hundreds of thousands or even millions of New Taiwan Dollars is crucial. In addition, customers are also concerned about details such as the origin of the product and how it is made.
The “Digital Product Passport” allows consumers to easily view information such as product origin, material composition, supply chain, sustainability, and recyclability.
The EU has included the Digital Product Passport as part of its strategy for sustainable and circular textiles and has called for the mandatory use of Digital Product Passports for textiles sold in Europe by 2030.
Using blockchain and NFTs as digital identification for products can prepare brands to comply with regulations and address consumer concerns about the authenticity of luxury goods.
Daniel Duan, the CTO of the virtual-physical integration technology company Legitimate, pointed out that identifying authenticity has always been a challenge for fashion brands, as many clothing and handbag items are sold through third-party platforms.
In the past, it was necessary to judge the authenticity of goods based on complex elements such as stitching and logo placement. However, by combining chips with blockchain technology, the threshold for counterfeiting can be reduced, greatly improving the accuracy of authenticity identification.
Using blockchain and NFTs as digital identification for products can prepare brands to comply with EU regulations and address consumer concerns about the authenticity of luxury goods.
Reason 2: Sustainable development goals
The fashion industry is the second-largest polluting industry in the world, second only to the oil industry. However, achieving net-zero emissions by 2050 is an important goal globally, which means achieving a balance between carbon emissions and carbon reduction. Fashion brands must also strive to keep up.
Eliana Kuo, co-founder of the Italian fashion technology group Lablaco, observed that many fashion brands’ Web2 systems cannot track the status of products after they are sold and cannot connect with Web3 systems. Because the information about brand design, retail, and the customer side cannot flow, designers may continue to produce blindly, resulting in waste.
“Digitization” is a top priority. Kuo believes that through virtual-physical integration, in addition to recording all data on clothing production and transactions on the blockchain, brands can also use the model of “selling NFTs before producing clothes” to reduce blind production. Based on the data recorded on the blockchain, brands can also analyze public preferences more accurately and make adjustments in production or design.
Reason 3: Meeting the demands of Generation Z
According to payment provider NMI, Generation Z, who are digital natives, make up half of the adult population already in or about to enter the labor market.
In the United States, the average income growth rate of Generation Z (usually referring to people born in the late 1990s to the early 2010s) is almost twice the national growth rate. By 2030, their after-tax income could reach $2 trillion, and their collective purchasing power is also growing rapidly.
Square’s “Retail Future Report 2024” also shows that 43% of marketers agree that to successfully attract Generation Z, brands need strategies tailored to this generation. Fashion brands entering the gaming industry and partnering with NFT native IPs are also ways to establish their presence among Generation Z.
According to the “Digital Expression, Fashion & Beauty Trends Report” released by the metaverse platform Roblox in 2023, based on a survey of over 1,500 Generation Z users in the UK and the US, analyzing their views on fashion and participation, as many as 56% of respondents said, “Creating their own virtual characters is more important than dressing their real-world selves!”
Fashion brands entering Web3! Four methods to rely on
When fashion brands have reasons and motivations to enter the Web3 field, the challenge lies in their creative approach. From LVMH to Prada to the Kering Group behind Gucci, each has different insights and methods.
Method 1: Virtual-physical integration of goods
Bags, clothing, and other goods are the foundation and most attractive aspect of fashion brands. Therefore, many brands guide consumers into Web3 through the combination of virtual and physical goods in a “gentle” way.
For example, the Italian classic fashion brand Prada has been releasing limited-time and limited-edition Timecapsule collections since 2019. Buyers will receive both clothing and NFTs linked to the collection. By 2024, Prada has released 50 waves of the Timecapsule series.
The century-old brand LV launched the virtual-physical integration NFT series “Treasure Trunks” in 2023, bringing its iconic hard case craftsmanship into the metaverse. Each NFT costs 39,000 euros, approximately 1.28 million New Taiwan Dollars. Treasure Trunks NFT holders can participate in future brand products and experiences, and have the opportunity to purchase “digital keys” to unlock the purchase rights of the future LV virtual-physical integration NFT series.
Method 2: Entering the metaverse
The Italian fashion brand Gucci is the best representative of storytelling in the metaverse. In 2022, Gucci built a virtual brand world called Gucci Vault in the metaverse platform Sandbox, allowing users to deeply understand the brand’s history through games.
Gucci’s actions in the metaverse are almost always related to the brand’s clothing concepts or exhibitions. For example, the first fashion show “Gucci Ancora” after the appointment of creative director Sabato de Sarno, and the Gucci Cosmos traveling exhibition, have been brought into metaverse platforms such as Roblox or The Sandbox. These virtual experiences have become a focus of Gucci’s operations.
LVMH Group announced a collaboration with game giant Epic Games at the end of 2023, allowing LVMH and its brands to use Epic Games’ powerful 3D creation tools to create virtual fitting rooms, fashion shows, 360-degree product showcases, augmented reality, and deepen interaction with customers through immersive digital experiences.
Method 3: Blockchain solutions
LVMH previously formed the Aura Blockchain Consortium in 2021 with Prada and Richemont Group, aiming to create transparent blockchain solutions for data in production, sales, and customer information.
The LV Diamonds collection, which will be launched in Asia at the end of 2023 and the beginning of 2024, uses Aura blockchain to create diamond certificates, tracking the entire process of gemstones from mining to becoming finger jewelry, including information such as mining locations, gemstone classification, polishing, and inlay locations, and permanently preserving them.
The Italian century-old brand Tod’s also followed suit at the end of 2023 and used Aura blockchain to embed the custom-made brand classic Di Bag into a chip. By simply scanning with a mobile phone, customers can access production information.
The US fashion brand Ralph Lauren also collaborated with BitPay in 2023, allowing customers to purchase goods in their new Miami store using Bitcoin (BTC), Ethereum (ETH), and the Polygon blockchain’s native token, MATIC.
Method 4: Cross-border collaboration with Web3 native IPs
As long as the IP of the NFT is strong, whether it exists in the virtual or the real world, it will attract cooperation from various parties.
Jewelry brand Tiffany & Co. once created a limited edition “NFTiff” pendant for CryptoPunks NFT holders in 2022. Each physical pendant is made with over 30 gemstones or diamonds and is engraved with the CryptoPunks NFT number on the back. Buyers also receive an NFT linked to the pendant.
At that time, 250 virtual-physical integration NFTs sold out in 20 minutes, raising a total of $12.5 million.
In 2023, Gucci also announced a partnership with Otherside, the metaverse under the parent company Yuga Labs of the blue-chip NFT project Bored Ape Yacht Club (BAYC), and plans to integrate the brand’s products into the world of Otherside.
Fashion supply chain digitization, why is it an inevitable trend?
Simon Lee, the COO of BrandLab360, which specializes in creating immersive virtual reality showrooms and retail spaces for brands, said in an interview with “California Apparel News” that Web3 and the metaverse allow brands to showcase their stories in a digital way, strengthening the dissemination of brand values and DNA in unprecedented ways, and have the potential to completely change the fashion and retail industries.
Galina Sobolev, CMO of virtual fitting room developer StyleScan, believes that blockchain technology may have a huge impact on the currently fragmented supply chains in the fashion industry.
Currently, there are many issues of data mistrust in the industry, but the immutability of blockchain can serve as evidence for their procurement, ethical production, and compliance with sustainable norms, helping to enhance brand image and consumer loyalty.
“Web3 does have tremendous potential. This technology is completely changing the way consumers interact with and shop for products. Fashion brands are also competing with each other, and the key to success is to understand the technology and its impact and then formulate strategies.” said Zarin Akhtar, Marketing Director of fashion tech company WFX.
She added that whether to try “virtual fashion” is a personal choice for each brand, but it can be said with certainty that digitizing the fashion supply chain through blockchain is a necessary measure.
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Sources:
Forbes, European Commission, NMI, Fortune, Market.us, DappRadar
Proofreaders: Gao Jingyuan, Chen Junyi