If you’re a luxury brand owner, your world today is probably filled with all sorts of technology buzzwords like blockchain, authenticity, supply chain digital assets and non-fungible tokens (NFTs)! Already swamped with the demands of a changing audience, managing disrupted supply chains – as the Covid pandemic continues to affect shipping and logistics – ensuring authenticity, and still ultimately working towards increasing revenues and reducing the bottom line.
There are a plethora of new digital technologies on the market, but how can they help and what benefit do they offer in response to the challenges above?
Are NFTs just the latest trend or will they transform my business?
NFTs have been the mega trend in the fashion industry in recent months, with the success of virtual fashion products. A growing market, fashion specific marketplace Mintable recently raised $13m after partnering with fashion brand A Bathing Ape in a bid to ride the wave of fashion NFTs. What started as an idea in cryptocurrency circles has taken the fashion world by storm. A digital asset can be copied, but the private key proving ownership of its uniqueness creates the conditions for scarcity which is vital to the perceived worth of luxury goods. The flip side is of course the lack of tangible goods, the original reason the consumer buys into a brand is because of its quality of design, manufacture and overall luxury look and feel. Whether it’s for you or not, it’s coming and luxury retailers need to take note.
Authenticity and sustainability leading the digital charge
What we do know is that authenticity and sustainability are absolutely key in the minds of today’s consumer – but this change also coincides with luxury goods retailers continuing to wage a war on counterfeiters, with luxury brands incurring more than $30bn in losses in the last year. Traceability will play a huge part in not only proving provenance to customers, but by defeating counterfeiters. That’s where digital identities come into play, and the likes of blockchain and Internet of Things technology – that will offer huge commercial benefits to businesses.
So how do digital identities work?
Digital identities enable brands to create a digital profile for a product. It tells consumers its story with a digital experience unique to the consumer using technology and data to guarantee it is exactly what it says it is, and connecting the consumer to the item and the brand together in a way that has never been possible before.
As a result, products can generate and respond to real-time data throughout their lifecycle, driving greater operational efficiency, better consumer engagement and higher brand advocacy. If you’re familiar with the Internet of Things you’ll know that it’s possible for everyday items to be integrated with the Web, the prerequisite of which is for each item to have a unique product identifier. These product identities can be read by an electronic device and the appropriate information assigned to that item is then fed into an appropriate piece of software. What that means is that products can be traced from point of origin right through to point of use or consumption.
When you attach QR codes or NFC tags to physical products, secure authentication technology meets digital experience.
Everyday items such as a scarf, a T-shirt or a handbag can be enhanced with web connectivity and a digital identity, making them smart, trackable and interactive. These digitised products can generate cost efficiencies and new revenue streams throughout the product lifecycle. Most importantly, they can profoundly change the relationship between the client and the brand.
Ralph Lauren goes digital with its Polo apparel line and gets closer to its customer
Luxury fashion retailer Ralph Lauren recently launched the apparel industry’s first mass-scale digital activations of its entire Polo apparel line. With consumers demanding more transparency and authenticity from brands, and increasing pressure to operate with efficiency and sustainability to meet circular economy goals – Ralph Lauren implemented real time supply chain visibility, with end to end traceability and authenticity for every item.
Today, every Polo apparel item is given its own unique digital identity at the moment of manufacture, enabling the product to be tracked and authenticated throughout its lifecycle. Not only does this meet the demand of consumers, and help in the fight against counterfeiters – but Ralph Lauren now has access to consent-given customer data captured at the point of purchase and beyond. The brand can gain key insights that will deepen brand loyalty and engagement and ultimately affect the bottom line.
The opportunity that the Internet of traceability brings
Never has there been a more critical time for luxury goods retailers to embrace digital technology. As the retail world gets back on its feet after an unprecedented collapse, consumers are also changing tack. Two respective global studies conducted in 2020 by the IBM Institute for Business Value in association with the National Retail Federation and leading Austria-based sustainable fibre producer, Lenzing, found that 77% of consumers surveyed said sustainability is important to them, 57% of respondents were willing to change their buying habits to reduce any negative impact on the environment, and 70% will actively educate themselves on sustainability through researching the production process. Another study carried out by Morning Consult found that 64% of respondents were more likely to purchase a garment if new technologies could prove its sustainability claims.
Transparency and traceability will be pinnacle to the ongoing success of retailers in the coming months and years, embracing technology to reach the goal will be key to success.
The needs of businesses and customers have accelerated at an incredible pace over the last year. The diverse environment we find ourselves in means that you need a data management system that can transcend market and technological changes. Having a digital ecosystem that can quickly adapt to your business and products needs is no longer a nice to have, it’s a must.
Now is the time to ask yourself – if the technology to transform your business is available, and the demand for your customers is now, then what are you doing about it?