Cryptocurrency in the Luxury Industry
Cryptocurrency has demonstrated its influence over the Luxury industry, with brands like Philipp Plien, and Hublot entering the crypto scene in 2021. Here’s an overview of how global luxury brands use cryptocurrency to grow their business and engage their customers.
The global luxury market will reach US$1.5 trillion by 2025, with millennials representing 50% of the total market. As of today, 58% of the crypto population are millennials and generation Z under the age of 34. As millennials and generation Z consumers drive 85% of global luxury sales growth, the decision for luxury brands to adopt crypto becomes more important.
The number of affluent consumers in the crypto population is high, with over 36% of them having an annual income of US$100k. Crypto users tend to purchase more expensive items as a typical crypto user has an average order value (AOV) of US$450, compared to an AOV of about US$200 for non-crypto users. Besides, 56% of high-net-worth individuals have expressed their interests in crypto investment.
Every year, luxury brands lose around US$30 billion worth of sales to counterfeits online, and many expressed that they bought them without knowing it. Blockchain technology enables brands to tokenize non-fungible assets, also known as NFTs, allowing each asset to be held, purchased, exchanged, and traded with ease online. Through the use of blockchain, users can track and trace the product from raw material to production to sales, assuring the customer of its history and authenticity.
Luxury brand conglomerate LVMH, owner of the iconic Louis Vuitton label, is among the first few to launch a blockchain to prove high-priced goods’ authenticity. Other brands which are doing so include Gucci and Rimowa.
Global luxury brands have set foot in the crypto space. Below are some of them to pay attention to,
Cryptocurrency is going to be around for a lot longer than most think. As major brands in the other industries are starting to accept cryptocurrency, the influence will impact the luxury industry to shift toward crypto adoption.
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