Balmain CMO: NFTs a 'Powerful Tool' For Luxury Fashion Brands

Hardly a day goes by at the moment without an announcement from a high-end fashion brand about getting into Web3. Most recently we have seen Balmain’s creation of an NFT-backed ecosystem, followed a day later by Prada announcing that it was also getting in on the NFT game. As well as NFT releases, crypto payment options and digital stores in the metaverse are quickly becoming part of the luxury playbook.

The enthusiasm with which fashion has embraced Web3 may be, to some, a little surprising. This is the same industry that dragged its feet on online shopping, the same one that experienced a mini existential crisis the first time bloggers sat on the front row at Fashion Week.

There was a sense at the Vogue Business and eBay Technology Forum late last month that luxury has changed its approach on digital innovation, and is now leaning hard into Web3. Txampi Diz, chief marketing officer at Balmain, argued that this next frontier will be just as crucial as those previous developments.

"To us, Web3 is like social media 10 years ago or e-commerce 20 years ago,” he said. “We need to build our own space in Web3, and we need to test which experiments make sense for us as a luxury house. This has to be part of the global marketing strategy for every brand."

Opportunities for brands

In another sign of the times, the event, put on by Condé Nast’s fashion industry publication, selected Web3 as its theme. This may have had something to do with the century-old publisher’s decision to launch its own Web3 team, a move it announced during the forum.

When the publisher of Vogue and GQ decides it’s time to enter the metaverse, it seems like a cultural shift is on the cards. So, in this new paradigm, what exactly does Web3 have to offer fashion—and vice versa?

There are quite a few natural alignments between the two worlds. In contrast to the hostility high-end fashion showed to e-commerce 20 years ago, when there were fears of brand erosion, executives are now talking about ways technology can enhance exclusivity.

Diz, who has steered Balmain’s forays into NFTs, sees digital assets as a way brands can produce additional content to serve the brand's devotees.

“We like to say we have an audience and not only customers,” he said. “We believe that luxury brands have also become media, and for us, NFTs are an interesting and powerful tool.” 

For one of its NFT releases, in collaboration with fitness brand Dogpound, Balmain sold NFTs that had special physical experiences attached, playing into the aura of exclusivity that surrounds fashion labels. These extras included private sessions with Dogpound founder Kirk Myers, fashion show invitations, and the chance to meet Balmain creative director Olivier Rousteing backstage. 

Another point of connection is in the fantasy nature of fashion—couture designs that are impossible to build with fabric can be made real in digital spaces, or even layered onto real-life with augmented reality. Balmain’s first NFT was a couture design by Rousteing that could never exist in reality, because the entire garment is engulfed in flames. (To your correspondent, the design bears a striking resemblance to a flaming dollar bill—a nod to Bitcoin maxis?)

The reality of couture is that, while it might give the designer the best chance to express themselves, very few people will ever wear the garments. But with digital garments, the cost of making them is much lower. Each one can still be unique, with personal touches added by the creative director, but they can also be made available to more people.

But the mystique and elusivity still needs to be maintained. Luxury items cannot be ubiquitous if they are to retain their allure. George Yang, founder of Web3 fashion brand Cult & Rain, says there are parallels between the ways designer sneakers are kept deliberately scarce and the NFT model.

“When it comes to sneakerheads, everybody wants something scarce. Everybody wants sneakers that are special, everybody wants sneakers that other people can’t have.”

Meanwhile the NFT market has boomed because collectors “want something that’s rare, that is scarce, that adds value”, he said. 

Yang’s brand combines limited NFT drops with the release of quality physical goods in the real world, a model known as “phygital”.

Challenges

But Yang also raised one of the drawbacks of the phygital model, which is the disconnect between how fast digital items arrive in customers’ wallets, and how long the physical equivalent takes to get into their hands.

“With this model, immediately when we sell our NFT, what you see is what you get, and that [physical version of the] product will ship to you within 12 to 16 weeks,” Yang said. “With that said, that’s still not fast enough.”

This is something that the fashion industry has already been moving to address in recent years. Traditionally, collections would be shown months before the clothes would appear in stores. This window has tightened as social media and online shopping made the idea of instant shoppability more common, and designers now often do smaller ‘drops’ of new collections throughout the year instead of relying on the old seasons model.

Nevertheless, the idea of a fully Web3 fashion industry is hard to imagine. Nelly Mensah, head of Web3 and metaverse at French luxury powerhouse LVMH, said this was why her company was looking at something in between the old web and new web.

"Everyone is very excited, but it's really early and there are [considerable] challenges, so we've been talking about Web2.5,” she said on a panel. 

High-end fashion is almost the opposite of decentralized. Part of a brand’s desirability is its centralization: a single designer directs the vision, a dominant owner directs the commercial strategy, and each person who works for the brand, right down to shop assistants and customer service, is invested with a kind of authority from that association.

Web3-native brands like Cult & Rain may be experimenting with allowing their communities to help design products, but for the old guard to do this would be a radical reinvention of the top-down structure that invests designers and owners with such sway. There did not seem to be much appetite for such a bold shift on display at the conference.

Mensah also pointed out that the high-quality customer service that brands use as a selling point would also be difficult to deliver without some centralisation.

“In a truly decentralized internet, there's no help desk, but consumers, users, customers—need a little bit of that support.” 

“I think it’s OK for companies, for brands to actually hold their consumer’s hands a little bit through this process, just to make it easier and more frictionless,” she added.

What happens next?

For now, fashion businesses are taking baby steps into the space, but that doesn’t necessarily mean they are building dedicated Web3 teams on their staff. “We believe it makes no sense,” Diz said of Balmain’s approach. “We have to integrate everything that is involved in the metaverse/Web3 universe into our global strategy and it’s up to our digital team, our PR and communication team and our creative team to integrate those metaverse/Web3 elements into our strategy.”

If high-end fashion companies don’t enter the metaverse themselves, independent artists and creators will be only too happy to fill the void—like Samuel Jordan, whose digital fashion items are some of the top-selling on Roblox.

Speaking at the Vogue Business event, Jordan noted that the people already working in the space will be an important source of talent for big brands looking to make their mark in Web3.

“It’s so important that you find someone that’s native to each platform that they’re entering,” he said. “Being good at creating something in one space does not mean you can create in another.”

While fashion in its traditional form may not fully line up with the mission statement of Web3, it’s obvious that this is an area the big names are taking seriously. The upbeat discussions at the technology forum painted a picture of a future where physical and digital fashion go hand-in-hand thanks to the metaverse.

But LVMH’s Mensah brought the mood back down to earth, noting that many more people need to be onboarded into Web3 before it can reach its potential. 

“Because we can see what the internet and social media can do, everyone is I think rushing ahead of themselves a little bit, especially us in the tech world,” she said. “We’re very much technology optimists. But the reality is there’s a huge consumer base that is not really aware or interested yet.”