The group announced a partnership with Epic Games in June, whereby the game software developer will help the multinational maison embark on new digital paths. In the same week, subsidiary house Louis Vuitton launched its first-ever non-fungible token (NFT) project, taking its lauded LV trunk into the metaverse, generating an audience response so big it made its way onto the pages of the UK’s Daily Mail.
“With this partnership, we will work with LVMH’s designers to transform physical and digital product creation using Epic’s suite of advanced creator tools. We are excited to accelerate the Group’s adoption of Unreal Engine, Reality Capture, Twinmotion and MetaHuman technology, and help LVMH’s global brands engage with customers through immersive digital experiences,” Bill Clifford, VP, Unreal Engine at Epic Games tells Jing Daily.
LVMH is keeping the pace up. Last month, Dior launched its B33 collection, which connects a physical sneaker to its own NFT digital twin, while beauty division Fenty Beauty dived into the world of Roblox, a favorite among Gen Z.
Catering to the market
A global market leader, LVMH has helmed the ship of luxury by preserving its esteemed savoir faire since it was founded in 1987. With the technological era unfolding at record speed, the behemoth is wasting no time consolidating its nascent presence across the third iteration of the World Wide Web.
LVMH’s investment into the digital environment solidified after the appointment of Nelly Mensah, former Digital Strategist at Kering, as Head of Crypto and Metaverse of its Digital Innovation division in January last year. Since then, Mensah has pushed the conglomerate into new virtual frontiers through deploying tech such as augmented reality, near-field communication, and digital twins.
But with 75 brands under its belt, the answer is not a one-size-fits-all solution. Determining what technological use-case suits each brand best is a challenge in itself. Every project needs to embody distinct house codes, as well as resonate with its audience.
For example, Fendi’s low-key foray into the crypto space likely slipped under the average consumer’s radar (the project was positioned predominantly towards blockchain enthusiasts), while other initiatives rocked the luxury landscape – take Tiffany’s $50,000 CryptoPunk pendant, or Louis Vuitton’s $42,000 digital trunk, as cases in point.
Redefined business strategy
LVMH’s business strategy has already undergone multiple major changes as it leans further into Web3. But it’s only a recent pivot. Only in early 2022 did the giant’s Chief Executive Officer Bernard Arnault claim that he was wary of a metaverse “bubble,” implying that the company was taking new online trends, like NFTs, with a pinch of salt.
Fast forward to today, and its investment in the ecosystem extends beyond consumer-facing projects. Despite Arnault’s hesitancy, in 2021, LVMH teamed up with Prada Group and Richemont to establish its own dedicated blockchain solution platform, the Aura Blockchain Consortium.
A first of its kind for luxury, Aura uses Quorum permissioned blockchain technology to allow brands and their suppliers to write data into the blockchain, without the need for any previous coding knowledge. The solution also aims to assist luxury labels in leveraging their supply chain transparency, authentication of products, after sales service, and transfer of ownership.
“The significance of Aura lies in its provision of a much-needed technological infrastructure that addresses the challenges posed by the changing digital landscape. Luxury brands have recognized the importance of onboarding a new audience, particularly the digitally native generation, and the consortium’s implementation served as a strategic response to this need,” Alexandre Frih, founder of Paris-based tech company Next Decade and former Technical Program Manager at Louis Vuitton says.
Frih was part of the team that brought the Consortium to life.
“The concept behind Aura Blockchain was truly innovative, and its appeal resonated with numerous actors within the luxury sector. The fact that many luxury brands subscribed to this shared vision created a unified force that aimed to shape the future of the industry in many ways. Another groundbreaking aspect was the creation of teams within each member, even competitors in the industry,” he continues.
Unlike other blockchain networks, Aura is built on a private ledger that cannot be accessed publicly or display personal information to other participants of the consortium – a new, anonymized direction for Web3 which LVMH is leading the way in.
“This collaborative approach fostered an environment of cooperation and innovation, wherein luxury brands worked together to forge a path towards mutual growth,” Frih adds.
Embracing Web3 also means tapping new communities and creative concepts. For example, Fendi’s aforementioned Web3 debut saw the brand join forces with leading crypto hardware company Ledger to release a line of limited-edition wallet holders last year.
“We collaborated with Fendi because they were genuinely excited to learn more about the digital assets space. Successful collaborations at any brand are driven by the creative director, and our collaboration with Fendi was no exception,” Ian Rodgers, Chief Experience Officer at Ledger tells Jing Daily.
Rodgers believes that lesser-known startups and niche businesses like Ledger can benefit from partnering with big names like LVMH to amplify their presence in the luxury industry. But conglomerates as big as LVMH need to remain wary of harming their reputation by teaming up with the wrong partner, particularly in a space that’s unpredictable and subject to fraudulent activity.
“New companies will need to earn their stripes by sticking around through multiple cycles, and building a large consumer base, before brands will partner with them, especially after the mistakes made during the 2021 and 2022 cycle,” he says.
LVMH’s offline success has been buoyed by old-school luxury spenders. But onboarding them into a landscape like Web3 is never going to be completely smooth sailing. Even as the company courts a new generation of tech-forward consumers, it remains cautious about the online world’s checkered past, and how this could dent its success.
A step back from implementing blockchain language has been key to engaging a reticent audience. In May this year, LVMH-owned Patou tapped technology firm The Ordre Group to power its Web3-enabled digital verification feature. Although the function was essentially an NFT, Patou opted against marketing it this way.
“While it is a blockchain application, we don’t talk about it as such, and consumers don’t want to know about it. No one cares what the technology is built on. All they want to know is that they have the digital ID on their phones,” Simon Lock, co-founder of The Ordre Group told Jing Daily in an exclusive interview in May this year.
Though LVMH has deep pockets to fund its digital ambitions, the Web3 revolution has given birth to natives who aren’t easily swayed. This new wave of shoppers demands more from luxury leaders: more transparency, more autonomy, more exclusivity, and more benefits.
“No one is ever guaranteed success in anything. Every brand is judged by every product and collection it releases, and as they say in the music business, ‘you’re only as big as your last hit,’” Rodgers says. “Great luxury brands are great because they make things with high standards of creativity and quality that their audiences love. The same standards will hold true for digital items. Without high-quality standards and careful attention to the market dynamics, it can’t work.”
Even with resources aplenty, LVMH can’t only rely on its status to thrive in these new pastures. It requires the delivery of experiences from an authentic point of view, and not just a money-making one.
Web3’s journey to public recognition may be recent, but it’s already resulted in a competitive environment, especially in the fashion industry. LVMH’s peers aren’t far behind. Kering, for example, has had its own team working on metaverse activations since late 2021.
Despite having less of a brand presence in the space compared to LVMH, Kering has scored Web3 successes, in large part down to Gucci’s robust metaverse roadmap.
As LVMH prepares for Web3 to become a more dominant fixture in our reality, it’ll need to balance holding up its distinct heritage and championing the next era of tech-powered luxury.