Why Fashion Hasn’t Given Up on Crypto

If the crypto meltdown is making fashion brands rethink their charge into web3 for even a moment, you wouldn’t know it.

Despite the global cryptocurrency market losing two-thirds of its value since November and NFT prices tumbling, the crypto-related moves keep coming. More brands and retailers are saying they’ll accept payment in cryptocurrencies. Alo Yoga will even let employees convert their salary to cryptocurrency. Tag Heuer released a watch that lets you display an NFT as the face. Burberry just announced its second NFT collection for the game Blankos Block Party. And on Tuesday at the NFT NYC conference, Gucci said it was partnering with the NFT art marketplace SuperRare on a project that will see it collaborating with a variety of artists.

The mood was buoyant at the event. Many of the speakers on fashion panels expressed confidence that consumer lifestyles would only get more digital, that web3 would offer new opportunities for fashion businesses, that the crypto community will continue to be a valuable source of sales and that the current state of the crypto market didn’t reflect the long-term potential it holds.

Some even welcomed the downturn.

“All the craze about this crypto world, making easy money, hype, et cetera et cetera — it’s kind of fading out and it’s fantastic,” said Stefano Rosso, board member at OTB Group and founder of D-Cave, a digital lifestyle hub. “Who stays is probably the real ones — the ones that have a vision, have solid roadmaps, have the capabilities to build stuff.”

It’s possible, of course, that fashion brands are carrying on because their projects were already in development and they didn’t want to scrap them at this stage.

But there’s also a sentiment among tech types more broadly that web3 is only just getting started. In an interview with the New York Times, Chris Dixon, who leads Andreessen Horowitz’s crypto investments, explained that, while hedge funds may place their bets based on short-term gains, as a venture fund they’re often thinking on a “12-year-plus horizon.”

Many also believe that the plunge in cryptocurrency prices isn’t the result of some unique weakness in crypto. The entire market is suffering, and institutional investors are getting out of the riskiest assets first. Crypto is in that category.

At NFT NYC, Rosso remarked that the turmoil in crypto should help to cull the weakest projects and weed out the speculators who see the space as an easy cash grab. What will be left, in theory at least, are the builders who will create the companies and capabilities that will power the next evolution of the internet.

Many in fashion seem to share the view and are thinking about how they can use those capabilities to improve how they serve and connect with customers. Olivier Moingeon, co-founder and chief commercial officer of Exclusible, an NFT platform aimed at luxury brands, said not a single brand has told them they were pausing or cancelling a project because of the bear market. A key theme of the fashion-focussed talks was the need for brands to experiment.

“Because we’re in early days of NFTs, brands can actually be more strategic, so looking at who their customer is and being realistic about who the current web3 consumer is and finding an overlap,” said Nelly Mensah, who heads web3 and metaverse-related initiatives at LVMH.

As an example, Mensah pointed to the overlap between the watch community and NFT collectors. (Early indications on Twitter and Discord are that crypto enthusiasts like Tag Heuer’s new NFT watch.) Focusing on one product category or region is a good place to start, and as more consumers begin using crypto products, brands can broaden their outreach.

Though brands don’t have to appeal to everyone either. Dolce & Gabbana’s new NFT programme offers different tiers, each providing varying levels of access to products and events, explained Shashi Menon, founder and chief executive of UNXD, the NFT marketplace that has worked with Dolce & Gabbana on its NFTs. The highest tier costs about $140,000 and about 75 people have joined it. The remaining 4,925 NFTs went for about $4,000 each.

“We see this as the future of the luxury industry and web3, which is a very specifically designed utility framework paired with a high-value, self-selecting community,” Menon said.

In fact, brands probably shouldn’t bend over backwards to appeal to the crypto community, cautioned Jessica Greenwalt, creative director at VaynerNFT, the web3 consultancy of entrepreneur Gary Vaynerchuk. It’s still a small niche in the overall market, and even these shoppers aren’t going to luxury brands because they want a great video game or amazing metaverse experience. They want the item that attracted them to the brand in the first place, like shoes or handbags. NFT programmes work best, in her view, as a way to enrich shoppers’ experiences with a brand and involve its super fans — a “loyalty programme on steroids,” as she put it.

Another point made by multiple speakers was that the technology will be truly effective once consumers don’t even realise it’s there any longer. Right now it’s often clunky, but ideally as it advances it will fall into the background.

As long as brands see web3 as offering a long-term opportunity to engage fans, create new revenue streams or provide more marketing opportunities, the crypto projects are likely to continue. It looks like it will take more than the current upheaval to change that outlook.