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Luxury
Cryptocurrency in the Luxury Industry
Crypto is a luxury
Cryptocurrency has demonstrated its influence over the Luxury industry, with luxury brands like Gucci, Off-White, Equinox, and Philipp Plein entering the crypto scene. Here’s an overview of how global luxury brands use cryptocurrency to grow their business and engage their customers.
Potential of crypto in the Luxury industry
The global luxury market will reach US$1.5 trillion by 2025, with millennials representing 50% of the total market. In 2021, 73% of crypto owners are millennials and gen Zs’ under the age of 44. As millennials and generation Z consumers drive 85% of global luxury sales growth, the decision for luxury brands to adopt crypto becomes more important. In addition, nearly half of all millennial millionaires, defined as those having more than US$1-million in net worth, have more than 25% of their wealth in cryptocurrencies.
It is also evident that the number of affluent individuals in the crypto population is high, given that over 36% of crypto owners having an annual income of more than US$100k. Customers who pay with crypto also tend to spend more. The typical crypto transaction has an average order value (AOV) of US$450, compared to an AOV of about US$200 for non-crypto transactions.
Blockchain as a solution to counterfeiting and transparency
Counterfeits are a huge problem for high-end designers around the globe: luxury brands lost $98 billion worth of sales to counterfeits in 2017 alone. These losses can damage both profit and reputation — which is why some brands are now turning to tech to protect their products, brand value and consumers.
In April 2021, luxury brand conglomerate LVMH (LVMHF) joined forces with Prada (PRDSY), and Cartier to establish the Aura Blockchain Consortium, a non-profit platform that creates a “digital twin” for designer products using blockchain technology, allowing brands to assign luxury products a unique digital identifier that will help customers ensure their purchase is the real deal.
Blockchain could also be useful beyond fashion, luxury sectors including art, cosmetics, perfume and furniture could also benefit as the ledger could also hold information on product maintenance and upkeep, helping to better determine a product’s value for resell.
Luxury brands that are accepting crypto
Global luxury brands have set foot in the crypto space. Below are some of them to pay attention to:
Off-White
The LVMH-owned contemporary luxury label started accepting cryptocurrency payments in its Paris, London, and Milan flagship storefronts in March. Customers will be able to purchase Off-White products with accepted cryptocurrencies including Bitcoin, Ethereum and Tether, marking an “This is another important step in the growth of the brand, that looks towards the future including Web 3.0 technologies, understanding the needs and desires of its ever-evolving customer base,” Off-White said in a statement.
Charles & Keith
During its appearance in the first-ever Metaverse Fashion Week in March, this high-end accessory label partnered with TripleA to launch cryptocurrency as a payment mode on its website for its markets in Singapore, the United States, Australia, Canada, Malaysia, UK and the EU. The company is exploring using crypto as an everyday payment mechanism, according to a press release.
Equinox
In May 2022, the luxury gym announced that it will now accept membership payments in cryptocurrencies for any of its 35 NYC locations. According to the New York Post, Equinox is the first gym in the US to accept digital payments for membership fees, and it reportedly has plans to expand crypto payments to other locations in the future.
Off-White
In 2021, Luxury Swiss watchmaker Montres NORQAIN SA partnered with TripleA to accept cryptocurrency payments. Customers are now able to purchase Swiss watches with bespoke engraving using digital currencies such as Bitcoin and Ethereum.
Gucci
One of the first luxury brands to enter the metaverse, Gucci announced in May that it would accept crypto payments for goods at North American stores. Accepting currencies including Dogecoin, Bitcoin, Shiba Inu and more is another advancement of Gucci’s meta-branding that will likely appeal to its gen Z fan base.
Crypto’s impact on the Luxury industry
According to Morgan Stanley, digital demand for fashion and luxury brands is expected to grow from current low levels and result in extra sales for the industry that could reach $50 billion by 2030.
Cryptocurrency is going to be around for a lot longer than most think. As major brands in the other industries start to accept cryptocurrency, this will influence the luxury industry to shift toward crypto adoption.
