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Perhaps the most widely referenced use case for blockchain is track and trace, the benefits of which have been expounded upon countlessly. Still, how often are these benefits applied to industries outside of banking and manufacturing? Blockchain as a service continues to prove itself across industries, having graduated from successful pilots such as those in responsible sourcing and intelligent tracking in the food supply chain. Yet not all industries suffering costly preventable losses have caught on.
Though the luxury retail business is rarely considered a tech-savvy sector, the changing landscape of consumer demand is forcing luxury giants to reconsider this historic aversion to technology investments. Dedicating funds to blockchain exploration would serve as a proactive response to existing counterfeit problems, currently costing this industry approximately USD 3 trillion annually.
This loss not only hurts bottom lines which luxury retailers might handle better than most, but also impacts long-term brand perception and consumer trust as well, which are paramount for these retailers.
Technology for a fashion upgrade
Blockchain is the conduit for transparency, but a key to solving this issue also lies in the further development of smart tags (RFID, nanotag and others) and their applicability to luxury goods.
The basis of luxury in these goods lies in their origins, the storytelling, and the ability to give consumers confidence that their item is authentic and one of a kind. Most luxury goods are handled in a cradle-to-grave manner, where consumers can rely on the brand for guidance on the item’s care and repair — for example Barbour’s re-waxing service or Hermès handbag spa.
But in the lifetime of the item, many intermediaries can present themselves. Items can be resold in the secondhand market, repaired at third-party shops, and of course taken apart for reuse. In an effort to salvage the integrity of their goods through these various exchanges, the luxury watchmaker Audemars Piguet has leaned into the secondhand business, now managing an in-house trade-in business to avoid degradation of their goods. This does not, however, solve the industry-wide counterfeit problem.
Just as the pharmaceutical industry is looking to approach counterfeiting from an industry-wide perspective, luxury retailers should consider this network-minded approach.
Making accountability and sustainability fashionable
We can imagine the future of luxury goods as defined by consortia of brands — ranging in networks of watchmakers, makers of leather goods and others. Individually, these giants suffer from the same counterfeiting headaches and declining revenues due to little technical innovation and attention to changing consumer preferences. Together these brands can leverage their influence to offer their customer base verifiable authenticity and a more transparent customer experience, whether purchasing new or secondhand luxury items.
Redefining transparency in the world of luxury retail, and better serving the e-retail preference of millennial consumers, will require moving past these manual methods as much as possible. Digital asset tracking and the infusion of IoT in blockchain-enabled supply chains can bridge this gap.
In utilizing asset tracking smart tag technologies for luxury goods, there are some factors to consider, including the potential transformation of business processes, feasibility of mass adoption, ability to withstand physical travel through supply chain, and the aesthetic compatibility with the brand.
Of course, tags utilized would also vary based on the asset tracked and the use case selected. Though this is an IoT space that is mainly explored in hardware tracking, brands like Martine Jarlgaard have already proven its applicability in the fashion industry.
Fad or innovation?
Fashion is an extension of art, and the intersection of fashion and technology is ripe with this inherent creativity — from The Fabricant’s creation of digital couture selling at nearly $10 thousand, to watchmaker Gvchiani’s timepiece including a functional titanium crypto wallet.
These projects garner excitement, but they also risk being a novelty of their time. If these investments are applied to exploring blockchain and IoT, industry giants could make sustainable change to the luxury retail landscape, rather than generating temporary marketing buzz.
As consumers continue to shift to e-retail and more virtual customer experiences, luxury giants must innovate or risk of losing the eco-minded and transparency-driven millennial market. If luxury retail brands can harness the technological advancements of their competitors and partner together, they will comfortably ride through this next wave in fashion.
Read more about how blockchain can help reinvent the retail industry.