What does one possess when they pay over 27,000 euros for an ‘NFT’ of a secret sauce recipe? And what exactly are these NFTs? But above all: what can retailers and brands do with them?
Record prices for… nothing
For the occasion of Quick‘s 50th birthday last year, the Belgian burger chain launched a unique collector’s item. Not a physical anniversary thing, but an NFT – a buzzword that popped up everywhere last year. Quick’s CEO made an audio recording of the secret recipe for the sauce of its staple burger, the Giant, then deleted the recording and auctioned off the remaining sound wave as a digital image. An anonymous bidder offered 27,775 euros – or better said: 7 etheriums – for this image.
The buyer received a downloadable file in return for their money — no hamburger, no canvas to put up, no trophy to display, nothing tangible. Yet, NFTs are hot: the ‘non-fungible tokens’ provide digital goods with a unique and traceable identity card. An invisible signature, as it were, to protect copyrights on non-physical products. In practice, they are mainly used for digital art and digital design.
NFTs have made it possible to assign property rights to something that previously could not be owned. For example, the digital artworks by graphic designer Mike Winkelmann, aka Beeple. When auction house Christie’s offered a virtual collage of his work as NFT, it earned the 39-year-old American fifty million dollars. Until he discovered NFT, Winkelmann received barely… a hundred dollars.
Object of hypes
As a brand or a retailer, why should you get involved with NFTs? Quick’s example is one of sheer marketing and PR. It is an initial application of which some of the world’s biggest brands have already seen the benefits. When American fast food chain Taco Bell sold GIFs and images of tacos, they sold out within half an hour. Barbie also auctioned off three images of their dolls but dressed in the latest collection from fashion house Balmain. Those who bought an NFT also received ‘actual’ Balmain Barbie clothes.
What is in it for buyers? In the short term, they are mainly buying bragging rights, just like art collectors when they buy a Picasso. NFT platforms offer some tips: make the print your profile picture on social media, exhibit it in online NFT museums (yes, they exist) or display it on a screen in your home. NFTs are also popular investments: they are often resold at a multiple of the purchase price. Primarily, they are collector’s items, albeit without a physical component.
An NFT also provides a certificate of authenticity: all transactions are recorded and stored in the blockchain, just like crypto coins. That way, one can always trace back to the origin precisely. And that is where it gets interesting for fashion houses and designers. All kinds of intangible brand ‘merchandise’ – such as exclusive video clips, designs, recipes or even designs for 3D printers – can be traded as NFT. Karl Lagerfeld and Burberry are among the first fashion brands to jump on the bandwagon and offer an exclusive range of 3D figurines as NFT.
Virtual objects in the metaverse
In the longer term, brands and companies see many potential applications within the ‘metaverse’, the world in which physical and digital reality are destined to merge. Today already, actual parallel virtual worlds are emerging, and these will become even more intertwined with physical reality in the future. The popular virtual gaming worlds of Roblox, Fortnite and Minecraft come closest to this today.
The idea is that a person’s digital identity, including avatar, virtual clothes and belongings, is personal property and can be transferred from one world to another. You could teleport yourself from a work meeting on Horizon Workrooms to Fortnite to attend a virtual concert with friends. Virtual clothing, furniture, accessories and more simply move along with you. A virtual interior specifically for Zoom meetings or an outfit just for Instagram photos? It is possible.
Fashion with hugely reduced carbon output
Especially the players within luxury fashion see value in virtual fashion that can only be worn online, in computer games or social media posts. For two weeks, Roblox had a Gucci Garden, where a virtual handbag got sold for more than 4000 dollars – more than a ‘real’ one would cost. In Fortnite, gamers have already bought over forty million dollars worth of digital clothing and accessories. The market for digital objects in games is estimated to reach fifty billion dollars by 2022.
As an example, DressX is one of the first successful producers of digital clothing, with outfits ‘worn’ by rapper Lil Nas X and other celebrities. The fashion industry is one of the world’s biggest polluters, the brand argues. In contrast, today, almost 9 % of all fashion is purchased purely for content creation, for Instagram posts and photoshoots, for instance. Digital fashion is the solution: the same beauty, creativity and amazement but with 97 per cent less carbon emissions.
You can buy the brand in Decentraland, the virtual world that might come closest to the metaverse today. It is an online world using the cryptocurrency Mana as its own currency, governed by a decentralised autonomous organisation. Anyone interested can buy a patch of virtual land and build anything. A virtual storefront on Decentraland’s Fashion Street was recently sold there for a record sum of 2.4 million dollars. “The patch will be developed to facilitate fashion shows and commerce within the exploding digital fashion industry”, the buyer said.
Pre-financing tool
There are even NFT sofas: furniture designer Andrés Reisinger sold an animated drawing (GIF) of his Complicated Sofa for 5,000 dollars. The NFT can be put into any virtual space, such as the cyber world Decentraland or the computer game Minecraft. The accompanying 3D model can also be admired through VR glasses. With the money, Reisinger can now convert his cyber furniture designs into physical objects. This is a third interesting application for NFTs in retail: pre-financing.
It could also be an idea for real estate developers. Silicon Valley entrepreneurs want to establish a kind of free state in the Mediterranean Sea: the island Praxis, which is yet to be built, is to become a technological Mecca with references to classical antiquity, full of monumental sculptures and buildings. The people behind the initiative want to sell drawings of these future monuments as NFT works of art to raise money. They hope to auction these NFTs for millions, arguing that the collectables will be worth a fortune when the city actually exists in the future. Something worth trying for the next ambitious shopping centre project?
Should everyone be launching their own NFTs now? Retailers and brands must decide for themselves whether there is a market among their target audience. At the moment, it is still mainly hype, without any actual functionality. These digital gadgets are also surprisingly polluting: they consume electricity and digital storage space. Nevertheless, we will be hearing a lot about them in the coming years, especially if the predicted metaverse takes shape.
This article is based on excerpts from the book ‘The Future of Shopping: Re-set Re-made Re-tail’ by RetailDetail founder Jorg Snoeck and editor Pauline Neerman. The book will be published in March by Lannoo Campus and Van Duuren Management.
