In another fashion-forward move for Gucci, from the end of May the brand will be accepting cryptocurrency payments in some of its US stores, with the plan to extend the pilot to all directly operated North America stores over the summer. Accepted coins will include (among others) Bitcoin, Bitcoin Cash, Ethereum, Wrapped Bitcoin, Dogecoin (initially created as a ‘joke’ at the expense of the speculation regarding cryptocurrencies at the time – perhaps not so funny now!) and Litecoin.
This is another example of Gucci embracing Web3 technologies (e.g. blockchain and crypto payments) having been the first luxury brand to release an NFT in the form of an art film, which sold for $25,000, and more recently with their foray into blockchain-based real estate on The Sandbox platform. To further solidify investment in this space, and to show real commitment to making strides in this area, Gucci has recently built out a Web3-focused team.
However, Gucci isn’t the only luxury retailer to start dipping their toes into the crypto-payments pool. Off-White began accepting cryptocurrency payments in March, and watch brands Franck Muller and Norgain, along with fashion label Philipp Plein all accept crypto.
Studies are starting to show that the diffusion of crypto among Gen Z luxury customers is significantly higher compared with that of older generations, and with Gen Z set to be the number one customer group for luxury spending by 2030, it’s certainly a smart move for luxury brands to look to these trends in order to stay ahead of the curve.
This therefore begs the question, should all luxury retailers be looking to follow in Gucci’s footsteps in order to not fall behind?
Accepting cryptocurrencies is a little easier said than done, and there are several issues to consider. For example, from a technical perspective, how will the payments be made? Gucci’s approach will be to enable customers to make the payments with a link sent via email, which will contain a QR code that allows the customer to execute the payment from their crypto wallet. Off-White, on the other hand, processes transactions using a terminal that finds the best crypto-to-fiat exchange rate at the point of sale, and scans a QR code that is provided by the customer’s payment app. However you choose to do this, it will involve serious thought and not insignificant set-up costs.
While cryptocurrencies are not currently regulated in the UK, there are other potential registration and consumer issues that brands looking to embed cryptocurrencies into their business model will need consider. My colleague Wendy Saunders and I provided some useful tips on this in The Collective’s Business in 2022 Report – to read more, click here.
Of course, the recent issues in the cryptocurrency market cannot be ignored. As at yesterday (12 May) Bitcoin had lost around 12% of its value in 24 hours, with Ethereum dropping by 20% in the same time frame. Global inflation is causing investors to stay away from the unknown and hedge their bets, which leaves cryptocurrencies slightly in the cold. Of course, this trend may not last, and we could see the market begin to level out over time. But it’s a risk.
As Wendy and I discussed in our article, the question that luxury brands really need to consider is whether digital assets are fad or fashion. How important is it to take the risk and invest in these Web3 technologies in order to not fall behind? Clearly for Gucci, it’s a risk worth taking, and it will be interesting to see if the rest of the luxury industry agrees.
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