Cryptocurrency In Retailer & Luxury - How Blockchain Technology Can Promote Sustainable Shopping
In recent years sustainable shopping has gone from ‘just another option” to an almost fundamental necessity. 2021 indicates a new beginning for the fashion industry with retailers and designers gearing up to leave their questionable business practices of the last decade behind, and take a whole new approach to reduce their environmental footprint.
This comes as no surprise given that millennials and generation Z consumers are responsible for 85% of the global luxury sales growth with 60% of them driven by environmental, animal, and ethical manufacturing concerns. Retailers and luxury brands alike quickly aligned themselves with new consumer values and reset their brand strategies to focus on investing in the right products to better their environmental and humanitarian impact on the world.
A study from Nielsen reported that 66% of global consumers and 73% of millennials are willing to pay more for sustainable products if they come from a brand that resonates with their own personal values. Furthermore, 81% of millennial consumers demand transparency in their marketing, manufacturing, and production processes.
But, how exactly the fashion industry managed to meet the ever-changing demands of its consumers?
Blockchain In The Fashion Industry For Sustainability And Transparency
With sustainable and eco-friendly practices in play, luxury brands and designers need to communicate that message to their audience and offer more efficient and transparent ways to track, and trace the entire lifecycle of a luxury item from the manufacturing, up to the selling point and beyond.
Using blockchain technology, brands can create an unchangeable, permanent record of all steps until the finalization of the product to ensure transparency on all data points, such as sustainability certifications, ethical work environments, fair wages, and provide unlimited access to this “digital diary” publicly.
By tokenizing physical assets (properties, equipment, and inventory) and allowing consumers to see from where their items were sourced, retailers are using blockchain technology to redefine the luxury market and bring cryptocurrency to the masses. The innovative ledger technology helps brands to also manage their manufacturing process from raw material to the final consumer, and share this high level of information with the public.
Fashion Companies Using Blockchain To Redefine Customer Experience
In the words of Amanda Razani at CoinClarity “ I was surprised to learn that New York Fashion Week, sent out a model garbed in a cryptocurrency themed outfit. With blockchain being one of the biggest headlines in the news, it should probably not be a surprise that someone in the fashion industry would eventually turn their focus towards it.”
In 2018 The World’s first Blockchain Fashion Conference was held during Kyiv Fashion Week aiming to connect designers and developers to work hand in hand towards a more sustainable future for the fashion industry. “ Participants will be able to develop their product using the technology presented, obtain quality consultation from blockchain industry experts and eventually create a prototype to cater to their projects” mentions Jillian Godsil.
However, some designers were already on board with the idea of high fashion meeting blockchain technology. In 2017 the London-based designer, Martine Jarlgaard created a single digital token for every piece of clothing she manufactured, with the sole purpose of allowing full details to be displayed to the public from the origin of her materials up to the sale point.“Technology will be what helps to reconnect us to the people and the places involved, and that information will increase consumer expectations, which will put more pressure on the big companies,” Martine Jarlgaard mentioned in her Forbes interview.
All potential customers can scan a QR code or NFC-enabled label (Near Field Communication technology allows users to make secure transactions, exchange digital content, and connect electronic devices with a touch) to gain access to all the information about this specific item of clothing.
Transparency in the supply chain increases customer trust, enhances their experience, and creates a connection with the brand, which can be used as a huge advantage in the industry.
How Blockchain Technology Can Prove Authenticity For Luxury Products
In 2020 the annual sales losses from counterfeiting in the fashion industry reached a staggering 26.3 billion euros. The global sales loss from counterfeit and pirated goods doesn't only harm the revenue of specific brands. The traditional cycle of flooding the market with plastic, unethically sourced items can only negatively impact the environment. By tagging each luxury item with a unique QR Code brands can mitigate counterfeit risks by digitally tracking products along the supply chain and after the point of sale.
More precisely, the annual Preloved Pop-Up, LUXARITY gives customers the chance to score gently used luxury products without having to worry about their authenticity. Each item is tagged with a unique QR code. When customers scan it, a plethora of background information is presented to them such as its previous owner, its environmental impact, the manufacturing and sourcing process, etc. Each code also shows a digital note from the first owner of the item, which makes the whole customer experience a lot more transparent and fun.
Chinese-New York Babyghost, has joined forces with a blockchain specialist, BitSE, a Chinese startup responsible for the anti-counterfeiting application VeChain. They utilize blockchain technology to track and verify luxury goods in the never-ending fight to eliminate fake designer products. Rebecca Cambell at Bitcoin Magazine describes VeChain as “ An anti-counterfeiting, supply chain management, asset management, and client experiences. By putting unique IDs on the blockchain and embedding each product with an NFC (Near Field Communication) chip, RFID (Radio Frequency Identification) tag, or QR (Quick Response) code, all of which can verify whether an item is genuine or not.”
The product’s digital label can deliver information about specific details of each item like the composition of the fabric, where the fiber came from, the origin of the polyester, what chemicals have been used in the manufacturing process, along with vital information of where the items were made, by whom and all about the conditions in which they worked.
The tremendous impacts of fast fashion and consumerism on the environment are unfortunately very real. The fashion industry is filled with cheap, massed produced clothing and luxury counterfeits that have no durability or quality to them. Dangerous chemicals for the people and the environment can be found in all of these products. Most of these harmful materials are non-recycled and cannot be bio-degraded, meanwhile, the conditions in which they are created can only be described as modern slavery.
Blockchain can actively make the whole industry fairer, more transparent, and better for the people and the environment. The millennial generation tries to push brands in the right direction and take action against this injustice by investing in sustainable fashion labels that thrive on transparency and ethical practices. Using blockchain, brands can keep a public “digital diary”, tracking and tracing the entire lifecycle of a luxury item.