The affluent consumer base is getting younger and savvier, embracing different financial behaviors compared to past generations. Zoomers have spent their entire lives surrounded by the internet and everything digital, fueling the need for versatility in payment solutions in the business world. In this regard, cyber money was meant to solve some of the problems and limitations that traditional payment systems involve, like security issues and bank dependency. While luxury brands hesitated to experiment with the novel technology, they slowly learned that meeting ever-changing preferences necessitated understanding the new players in the game and what drives them to use Bitcoin, Ethereum, and other alternatives.
Today, the growing number of luxury shoppers registering on crypto exchanges like Binance to check Bitcoin’s price, place orders, and use it to make purchases is one reason why this industry is turning its focus to cyber money. Because new shopping patterns emerge and the wealthy luxury customer has grown with Bitcoin, the iconic brands setting trends seek more exposure to blockchain technology to draw the new customer in.
So, what good can come from the match between cryptocurrency and the luxury industry, and what can we learn from their previous interactions?
Brands to remove the obstacles between consumers and luxury products
Some time ago, brands activating in the luxury sector, with fashion giants included, showed reticence towards the internet as they feared it would devalue the customer experience. They considered the internet’s features to contradict the core beliefs of luxury brands and affect their exclusivity. However, as time passed, they were forced to adapt to the digital era and embrace its principles. The COVID-19 pandemic is an example of an accelerator that led to this shift. Today, these once-mysterious entities are one of the most significant internet users and among its most enthusiastic supporters.
Cryptocurrencies provide anti-fraud protection, decentralization, and unique security features that traditional vehicles lack. It’s, therefore, understandable why megabrands like FARFETCH, Gucci, and TAG Heuer are quickly jumping on the trend. These aren’t only loyal advocates but also among the first adopters and supporters of digital money, being quick on the uptake to take a piece of the pie.
Fashion and luxury brands are on an upward trajectory, and they must be open to digital transformations to stay relevant and tick with the younger generation. It is expected that digital demand for these sectors to grow to a whopping $50 billion in the years to come, meaning that we’ll witness more and more exciting projects and a new payment venue in increasingly more stores.
The young luxury customer has matured alongside Bitcoin and Ethereum
Bitcoin and Ethereum have grown together with millennials and Gen Z, making it hard to separate them as they’ve slowly become part of their everyday vocabulary. Today, there’s a tendency among the new generation to invest in digital money as they’re becoming increasingly familiar with it and stumble upon it online, meaning it’s hard not to react to the appeal of cryptocurrencies. Therefore, they’re getting involved with investing to secure their financial wellness and get acknowledged with different financial tools to prepare for whatever the future may hold. With growing political and economic uncertainty, increasing inflation rates, failing banks, and other fear-inflicting events, it’s easy to understand why Gen Y and Z turn to assets neither backed nor issued by the government.
While luxury brands once targeted a slightly older category with money to splash, things have turned around. Now they’re serving another audience, meaning they must show openness to keep sales figures growing. Eventually, the brands that cater to a youthful market must adapt quickly because social media has played one of the most significant roles.
An increasing number of Zoomers own some form of crypto or NFT, making it an intelligent move to adopt Bitcoin as a cryptocurrency payment. Tesla, Phillip Plein, and Gucci were quick to act on this. By taking advantage of blockchain technology, they untapped an unexplored audience, reaching customers from all walks of life and of all ages and enabling them to make transactions in a revolutionary way.
In these times surrounded by financial instability, a business’s last desire is to see clients stray away. Losing out on this promising demographic and missing opportunities to expand can be expensive. And retaining a customer base is easier than arousing their interest again and regaining them after they’ve turned their focus to other brands, making time a game-changer in this regard.
For brands that can get under the skin of millennials and zoomers, cryptocurrencies represent an opportunity to keep a customer base engaged while exploring new possibilities.
Cryptocurrency’s underlying technology helps the market evolve
Cryptocurrencies’ monetary value is not the only factor that helps businesses evolve. It’s also a blockchain, their technology, that adds value and improves processes, ultimately solving issues like counterfeiting and product integrity. For this reason, luxury brands deliver upgraded products that use RFID labels, QR codes and ceramic signatures, each using blockchain in one way or another. Several companies like Prada, Cartier, and LVMH gave the world a valuable example by partnering to build a blockchain-oriented non-profit association to deliver related solutions to enable a more ethical future for the industry’s participants and young customers.
Luxury brands were once waiting for customers to enter their physical stores and seek out their offerings, running away from online interactions to protect that air of exclusivity. However, today, digital solutions are the way to reach out to the newest targeted audience, whose better part of life is spent online.
Cryptocurrency’s impact in the luxury sphere will always be significant, as the demand for digitalization is rising and the industry’s players acknowledge the technology’s potential to improve interaction with the young customers dominating the market. Gucci, Fendi, Farfetch and Balenciaga are just a few examples of the long list of savvy adherents that joined the cryptocurrency world and found ways to exploit the new opportunities. As customers turn to digital money as their favorite payment method, brands are paying attention and coming up with solutions that meet their desires and enable them to reach a new audience.
Published by HOLR Magazine.