When it comes to providing goods for customers, there is an added incentive for luxury goods brands to not only provide premium items, but also bolster other aspects of the buying process in order to provide a truly luxurious customer experience. Finding new ways to enhance the customer experience in luxury retail is increasingly important in order to preserve market share and appeal to a changing customer base. As brands scramble to find new ways to engage and delight their audiences, blockchain, NFT and Web3 technology is emerging as an effective solution.
The buying of luxury goods is not purely transactional. A growing number of customers now expect to make informed choices based on information provided around provenance and authenticity, but more and more than that, they are also looking for brands that deliver on sustainability promises, as well as deliver an enhanced customer experience. In terms of providing value to the customer, a sense of exclusivity, verifiable ownership, rewards for customer loyalty, and verifiable authenticity are all aspects of the luxury goods market that are being explored and bearing the fruits of increased customer acquisition and retention.
However, putting bigger emphasis on increased customer trust and an improved customer experience in luxury is one thing, executing it is another. That being said, there have been major strides taken in improving luxury brand experiences with technology. Blockchain in luxury retail being a major factor, and an edge that some are taking, and gaining from.
Some examples of where blockchain and Web3 technology is helping with improving the customer experience in luxury include its ability to prove sustainable and ethical sourcing; the expanding NFT and Metaverse space, as well as digital product passports proving authenticity and facilitating evolution and opportunities in the resale market.
Sustainability and Ethics in the Supply Chain
There is a generational switch happening in the luxury goods market as Millennials and Gen Z start to become the driving force. With this comes a new expectation of knowing how, and where, goods are manufactured.
A 2021 study has revealed that UK consumers would be willing to pay an average of 25% more for sustainable alternatives to their usual products. This figure will continue to rise especially with Gen Z entering deeper into the market with even higher expectations.
This generation’s demand for provenance of goods, as well as verifiable data on ethical sourcing is not adequately being provided with current complex and convoluted supply chains. However, with blockchain technology’s ability to provide an immutable and verifiable product journey readily available to all, a lot of boxes can be ticked with regards to providing customers with proof of ethical sourcing and sustainability.
Moreover, the use of blockchain along the luxury goods supply chain can also ensure authenticity and curb the near global counterfeit market which reportedly makes up over three percent of world trade, an advancement that will significantly improve the customer experience and improve trust in luxury brands.
NFTs and the Metaverse
Arguably two of the biggest buzz words in the technology sector throughout 2021 and 2022 have been NFTs and the Metaverse. Both these arenas are made possible through blockchain technology, with applications and use cases that range from digital collectibles, to exclusive customer/member rewards, exclusive experiences, proof of ownership and more; blockchain technology is already helping some of the biggest brands to enhance their customer experience.
When it comes to a new customer experience, NFTs and the metaverse can provide never-before-seen experiences which play perfectly into the hands of luxury goods brands who want to deliver an experience, not just sell a product.
For luxury goods brands, the continued move towards online has often been at the expense of a traditional in-store experience which can be tailored to customers. But, with the application of new technologies, much of the in store experience can be recreated, and enhanced in the digital world, to attract new audiences. In fact, there is the chance to unlock new opportunities, expand into new revenue streams and markets, and create new experiences. While re-creating the in-store store experience is possible, there is a much higher degree of innovation that can boost the customer experience to offer things that other brands do not, or cannot.
Department stores, often seen as the height of customer experiences, would have taken a hit through the Covid-19 pandemic. But, rather than succumb to the world advancing to digital, many are following the trend, while maintaining a solid customer experience. Luxury French department store Printemps has built its own mini version in the metaverse, evolving its e-commerce platform to include a Web 3.0 virtual store experience.
The immersive 3D space set in an enchanted garden beneath a digital reimagining of Printemps Haussmann’s famous dome is populated with a shoppable edit of bestsellers and exclusives from partner brands Balenciaga and Gucci to By Far and Ganni.
Even if luxury brands don’t want to create a digital metaverse store, the use of NFTs can add a brand new edge to the customer experience. NFTs have exploded in popularity and brands are using this to create new, digital, products, or coveted add-ons for physical products — all while wrapping a big Web 3.0 experience around it.
Nike, which recently took command over RTFKT Studios, has sprinted into the NFT space with CryptoKicks — virtual shoes designed to be worn in the digital realm. These latest generation sneakers can also be modified with Skin Vials technology.
Luxury Italian sneaker label Hogan hosted an after party at Decentraland’s Metaverse Fashion Week. Headlined by French superstar DJ Bob Sinclar performing live via a screen, it involved a dance competition interface where avatars could throw shapes with the help of a bespoke created dance move generator application. Within this metaverse event, there was a pop up store where NFTs are redeemable for physical versions of its new ‘Untraditional’ sneaker — an entirely new and exciting experience for customers.
Blockchain Passports and True Resale Value
Another aspect of blockchain technology that can bolster customer trust and enhance the customer experience in luxury is digital product passports.
With there being such a large counterfeit market, customer trust is at an all time low, and it is up to the manufacturers to provide verifiable authenticity. By utilising blockchain product passports, goods can firstly be traced back to their origin to prove fair labour practices, ethical manufacturing and sustainability; but further than this, these passports can also prove the goods are authentic.
Rather than relying on a physical certificate, which could be fraudulently produced, lost or destroyed, immutable digital passports which utilise NFT technology are becoming the chosen method for certifying a product’s existence. Within the luxury goods market, examples of NFTs can be seen in fine wines, art, fashion, watches and more.
These real-time digital certificates are proving helpful for both brands and customers alike as they both prove an item’s authenticity to a new buyer, but also help a seller when it comes to reselling a valuable item as the new buyer can be assured it is authentic. With ownership – and the digital passport – transferred through blockchain to the new owner, provenance is provable via a public ledger, mitigating the risk of a counterfeit product being purchased accidentally. In this way, digital product passports are enhancing the customer experience in luxury by providing proof of ownership, authenticity, provenance and more. Protecting the customer from counterfeits and increasing trust in the brand.
Blockchain for a Better Customer Experience
Through all these different scenarios it becomes clear that blockchain, NFT and Web3 technologies via their various applications are firmly capable of significantly enhancing the customer experience for brands innovative enough to utilise them.
While many luxury brands continue to rely on traditional in-store experiences to retain customers, the tide could be turning. For brands looking to take their offering to a new level, there needs to be an added experience if they want to attract this new generation of customers. The ruthlessness of the luxury goods market calls for better customer experiences, and some of the key ways to deliver this enhanced experience comes in the form of verifiable supply chains, NFTs and the Metaverse, as well as digital product passports.
Enhancing Your Customer Experience
At Protokol, we utilise flexible and interoperable blockchain platforms as well as developing custom NFT and Web3 solutions, to help luxury brands enhance their customer experience.
We help luxury brands both define their strategy and explore the opportunities that blockchain and associated technologies can unlock, especially through the lens of offering exclusive rewards and experiences for customers.
Alongside the Protokol Digital Product Passport and our custom solution development services, we consult on the use of digital product passports, NFT and Web3 technologies to help your business understand how they can be utilised to enhance the customer experience, unlock new revenue streams, or increase customer loyalty for your organisation.
Why not take the first step today and let Protokol help your organisation uncover the benefits of blockchain technology for luxury goods. Book a consultation with our blockchain experts to discover your use case and learn about Protokol’s services and solutions for luxury brands.