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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.
To date, more than 20 brands are using Aura’s software, with over 17 million products registered on the platform.
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,
- Luxury watch brands including Hubolt, Franck Muller and Norqain are accepting crypto payments. Among them, Hubolt even launched a collection of watches that were exclusively available to purchase via Bitcoin.
- Luxury travel agent, Travala.com offers its clients a wide selection of cryptocurrencies to pay from for their vacation.
- TJB Super Yachts started accepting crypto early this year, and Tesla will most likely begin to accept Bitcoin as payment again.
- Sotheby’s Auction house sold Banksy’s “Love is in the Air” for US$12.9 million. It is the first piece of physical art sold by a major auction house paid for using crypto.
Crypto’s impact on the Luxury industry
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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