Luxury brands that failed to integrate blockchain-based technologies could lose out on a significant market demographic.
Luxury brands have a great deal to gain from blockchain technology. These high-end goods can be purchased faster and more efficiently through crypto, while resold goods can also be authenticated on a blockchain. A new market of digital goods via non-fungible tokens is also opening up to them.
Some luxury brands have come to accept the digital asset trend. For example, Gucci announced earlier this year that it would accept cryptocurrencies at 5 stores across the United States. Meanwhile, others have proven more resistant to adapting to the change. The chairman of French luxury group LVMH said it was “not interested in selling €10 virtual shoes,” instead insisting on “selling real products, very much in the real world.”
The global luxury market demographic
Yet, failing to implement a crypto strategy could prove costly for luxury brands in the long term. One study reckons the global luxury market will amount to $1.5 trillion by 2025. It also claimed that millennials will represent half the total market, and drive 85% of sales growth.
According to another study, nearly 3 out of 4 owners of cryptocurrency are under the age of 44. More significantly exclusive luxury brands are the millionaires among this demographic. For many of these millennial millionaires, over 25% of their wealth is in cryptocurrencies. Affluence is relatively commonplace for cryptocurrency holders, some 36% of whom earn more than $100,000 annually, according to another study.
Selective criteria with crypto payments
As this generation begins to flex its financial muscle, it is growing increasingly selective about where it spends its money. Another study revealed that millennials said they would consider alternative retailers to ones that do not offer payments in cryptocurrency. “At 32%, millennials are the most likely to say they are ‘very’ or ‘extremely’ likely to switch, followed by Generation Z consumers, at 27%,” the study said.Interestingly, favoring cryptocurrency is not only a deciding factor for consumers but increasingly for voters as well. Some 84% of respondents to a recent survey said a politician’s position on cryptocurrency would play a role in deciding whether they would vote for them.