This article is an excerpt of the Vogue Business Index: Winter 2021 update, which provides the industry with the most extensive dataset to benchmark brands against competitors, identify best-practice strategies and ultimately make better decisions.
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The demand for resale is growing. When asked which of the innovative features covered in this chapter excited them most, 45 per cent of the 6,101 Vogue and GQ luxury consumers we surveyed said brands offering resale directly. That is more than double the number who said gaming (17 per cent) or NFTs (21 per cent).
It is a missed opportunity then that just 15 per cent of brands have publicly involved themselves in resale. Brands have been counted here if they have collaborated with a leading third-party site such as The Realreal or launched a white label resale service through a company such as Thredup. Valentino and Mulberry are among the luxury brands to have gone it alone and launched a dedicated resale portal themselves.
Clothing rental, filled with logistical hurdles for any brands choosing to get involved, continues to be viewed with scepticism. Of the few involved, Ralph Lauren is the only index brand that launched a dedicated rental subscription service earlier this year, by partnering with rental tech provider Caastle. Dubbed the Lauren Look, consumers pay $125 for four outfits monthly, which can either be returned, kept for another month or bought at a discounted rate.
In all, 36 per cent of brands are available on leading rental player Rent the Runway. In most cases though, these partnerships are limited, with most Index brands renting accessories rather than clothing.
Fashion consumers covet traceability
One development that could hasten brands getting involved in resale is the wider use of blockchain technology to trace product journeys in fashion and guarantee authenticity. A significant minority (41 per cent) of luxury consumers are excited about the development of traceability features, with enthusiasm particularly high among Chinese shoppers (58 per cent).
LVMH fast-forwarded this process by giving all of its brands access to the Aura blockchain system it developed in 2019. The involvement of the LVMH group means 30 per cent of brands now have the capability to collect traceability details of their products via technologies like blockchain. The group stated in April that all products would have traceability information by 2026. Other brands recognise the customer concern around authenticity, with 58 per cent having a dedicated website page on the subject.
Virtual consultations and video shopping
Pandemic restrictions and hesitancy to visit stores increased online video consultations with consumers. Less than half (43 per cent) of brands now allow consumers to book digital appointments with customer service representatives. There is room for improvement: shoppers can book physical appointments online with seven out of 10 brands.
Store staff have been upskilled to deliver video consultations at Gucci’s Via Monte Napoleone store in Milan, with Moda Operandi, Neiman Marcus and Brunello Cucinelli among the other brands with an added focus on video consultations for clientele.
Some of this energy suggests aims to replicate the mammoth $171 billion market for live commerce in China, where an online livestream broadcast is linked with an e-commerce store. Many brands hope that video social platforms such as Tiktok and Instagram might soon herald a similar trend in the West. Many brands hope that video social platforms such as Tiktok and Instagram might soon herald a similar trend in the West. Goldman Sachs and Kering recently led a $50 million funding drive for new video-shopping platform Ntwrk.
Video consultations are viewed as important by 33 per cent of luxury consumers globally, significantly lower than other more established omnichannel features such as click-and-collect. As brands such as Louis Vuitton have discovered in China, however, it can be a strong way to maintain a link with key, high-spending clientele.
NFT party is in full swing
Few digital technologies have been embraced with as much relish by luxury brands as non-fungible tokens (NFTs), whose exclusivity and status align so closely with the industry. While the mechanics and use-cases are still being worked on, the marketing benefits and potential of future returns are luring brands in.
Data collected for the Vogue Business Index shows that 17 per cent of brands in the Index have already worked with NFTs. That is just two years on from when The Fabricant sold a digital dress for $9,500, widely regarded as the first instance of a high-fashion NFT.
Gucci became the first major luxury fashion house to sell an NFT in April when it auctioned Aria, a four-minute film inspired by its latest collection and produced by filmmaker Floria Sigismondi alongside creative director Alessandro Michele. Since then, other brands, including Dolce & Gabbana, Balmain, Jimmy Choo and Givenchy, have also been involved with NFTs.
There is no fixed use or winning formula for brands. NFTs created by Mythical Games and Burberry accumulated $395,000 for the game studio’s hit Blankos Block Party in a matter of minutes when they went on sale in August. The brand receives a cut every time one of these NFTs is sold on by another player, but it’s the engagement with a young, Gen Z audience where the power lies. Similarly, Hugo Boss CEO Daniel Grieder told the Vogue Business and Google Summit that the brand generated 7.5 billion views from its Tiktok challenge over fashion week where five bomber jacket NFTs were up for grabs.
Reality gets mixed and blended
Burberry’s work with Mythical Games is one of the most recent examples of the increasing convergence between the luxury sphere and the world of gaming. In August, Louis Vuitton celebrated its 200th anniversary with the release of Louis the Game. Players take on the role of brand mascot Vivienne, traversing digital replications of luxury capitals like Paris and London in search of 200 collectible candles that eventually reveal information on the brand’s history.
Around one in four Index brands (28 per cent) have joined Louis Vuitton in releasing their own branded gaming experience. Just under half (47 per cent) of these continue to exist on websites, apps or social platforms, while the rest are time-limited and linked to specific campaigns or events such as a treasure hunt launched by Max Mara in 2020 on Wechat and Weibo alongside the AW 2020 collection in China.
Marginally less common are brand collaborations with video game studios on either digital or physical products. A quarter of brands have been involved in one of these official tie-ups with games studios. The creations that have resulted stretch from Balenciaga dressing characters including Ramirez, Doggo and Banshee in Fortnite; to Louis Vuitton’s 2019 League of Legends capsule collection.
Brands are building for the future by tapping into the $300 billion gaming sector. Just 17 per cent of luxury consumers worldwide say they are excited about brands’ efforts in gamification, but younger consumers (25 per cent) and those from China (35 per cent) are much more enthusiastic. Nearly half (48 per cent) of Chinese luxury shoppers engage with video games.
Brands are recognising the potential of augmented reality and virtual reality experiences too, with 53 per cent already using this technology. Branded Instagram filters, the projection of digital avatars and virtual stores are some of the ways in which brands have been experimenting.
Key takeaways
- Consumers want resale and rental. Only a few brands have embraced the concept, despite its importance to circular business models, and some are actively resisting it. They may be fighting the inevitable.
- Brands are preparing for the metaverse. Augmented and virtual reality have exciting omnichannel ramifications, and getting involved with this technology now could help prepare brands for the new internet age.
- Greater traceability could be the big story of 2022. Investments in blockchain and digital IDs are coming thick and fast. Consumers will welcome these innovations.
- The puzzle of resale and rental remains unsolved with hesitancy among many brands. There is no doubt it is an opportunity — consultancy Bain & Company has hypothesised that a luxury brand could deliver 50 per cent of its 2021 to 2030 growth through resales and a further 25 per cent through rental. However, for some the perceived dilution of brand equity and the logistics involved are proving too high of a cost.
- With some vintage handbags approaching or even exceeding the ticket price for new purchases, brands including Chanel have pushed up prices while underlining the additional service that consumers get by buying directly from the brand. Other brands are investing in technology to track prices on the grey market. No matter what they do, brands are likely to be resold through the myriad of third-party services that now exist. Those failing to respond to consumer demand here are missing out on the data and revenue provided by a market segment that is growing in importance.
- Rental is a smaller category than resale, but there are growing opportunities for brands to experiment here: 36 per cent of brands are offered on peer-to-peer rental marketplace Hurr via its partnership with famed London department store Selfridges. Brands can lean on relationships with trusted partners like this to test out rental demand for products, without committing explicitly to a service of their own.
- Blockchain technology is advancing fast. Richemont, Prada and OTB have joined the Aura Blockchain Consortium, building upon the technology that LVMH developed alongside tech firms Microsoft and Consensys. Meanwhile, the Fashion Industry Taskforce led by Federico Marchetti with executives from Burberry, Chloé and Giorgio Armani, recently announced the immediate rollout of a digital ID system through which the sustainable credentials of a product could be tracked.
- Metaverse, gaming and NFTs could represent 10 per cent of the luxury goods market by 2030, says Morgan Stanley. As Facebook rebrands as Meta and companies including Microsoft, Disney and Tencent position themselves within the metaverse, the adoption of technologies that suit these exciting new worlds are likely to be crucial in ensuring relevance in years to come. Results from this edition of the Vogue Business Index (Winter 2021) show that Gucci, Balenciaga, Balmain, Burberry, and Louis Vuitton are the luxury names best prepared for this shift. Gucci and Balenciaga are among the brands to have filed metaverse-related trademarks for smart glasses and connected clothing, with all five having embraced AR/VR, gaming and experimentation with NFTs.
This is one of the five chapters comprising the Vogue Business Index: Winter 2021. To view the full report, register here to become an Advanced Member. The reports that make up the Vogue Business Index are available to our Advanced Members only. Click here to become an Advanced Member.
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More from the Vogue Business Index Winter 2021 Update:
Vogue Business Index: Winter 2021 Update
