According to a report this month from McKinsey & Co. on value creation in the metaverse (which increasingly leans on Web3 elements such as cryptocurrencies and NFTs), the longer-term opportunity for fashion brands is “engaging consumers with NFTs for more pragmatic purposes, such as loyalty tokens or digital twins, [which] can host information about a physical or digital product’s history, authenticity and ownership — especially beneficial to luxury retailers battling counterfeiting”.
And fashion investments and projects don’t seem to be slowing. Last week, Endstate, which links physical products to digital twins via NFTs, announced it had raised $5.5 million, with other digital fashion startups set to announce funding soon.
Cassatt related the success of these industry niches to their utility rather than their inherent monetary value. “Consumers buy a digital asset in the form of a token, membership or virtual object or wearable to use in the digital world because they are a fan, not because of the market trends,” she says. “We can expect to see these use-cases continue to grow throughout market conditions.”
Now is a smart time for new designers to think of how they will enter the space, connect with people to collaborate, test new tools and explore the possibilities for creators, says Marjorie Hernandez, founder of fashion-focused blockchain Lukso and co-founder of fashion NFT marketplace The Dematerialised. “Bear markets tend to shake off speculators or short-term projects built without long-term strategies and foundations. Many companies are still hiring in Web3.”
A November report from Morgan Stanley estimates that by 2030, the “base case” market for luxury NFTs, meaning conservative estimates, will range from $3 billion to $11 billion by 2030. Its “blue sky” analysis is $25 billion, with estimates that metaverse gaming and NFTs could constitute 10 per cent of the luxury goods market by 2030.
What happens now
While the current slump might have spirits down, technologists are still planning for a Web3 that is as influential as the e-commerce and social media eras before it.
As Puma chief brand officer Adam Petrick recently told Vogue Business, “We kept e-commerce sitting within marketing for a bit too long, and that put us behind the eight-ball for a long time [and] when you think about the step-change that mobile computing and social media brought … I don’t know if we had embraced that change from an operational standpoint, maybe we’d be in a different place now. It’s not that frequent when there are really technological step changes.”
Gmoney points to some of the dot com success stories. “Amazon was built in 2000, Google didn’t even exist till 2001 — these are companies that define the Internet. These are companies born out of that recession or a tech bear market. When you look at the underlying tech, the tech is incredible. And to me, that’s the real story here. So people saying, ‘Oh, the hype died down,’ you would have been shorting the Internet in 2001, and that would have played out very terribly. And I think this is very much like the same type of scenario.”
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