5-minute read

Intricate detailing and impeccable design: it’s not a dress or a bag, but a non-fungible token (NFT). NFTs offer luxury shoppers a novel experience by enabling in-store and online purchases of digital products, without the worry of storage space. Here, we share how NFTs can provide exclusivity and fun for the modern shopper – and drive brand loyalty and revenue streams for retailers.

Digital collectables: loyalty, experiences, and unlocked revenue

The financial value of digital collectables – such as NFTs – can be tricky to assess in a volatile market where prices fluctuate wildly. However, looking beyond their potential as investments, it’s clear there is an appetite for the exclusivity, creativity and security they can inspire – because sometimes, the most valuable handbag a person can own is an NFT. That’s why some of the world’s most exclusive brands use digital collectables to unlock new revenue streams, create great customer experiences and drive loyalty.

Selling loyalty by gamifying exclusivity

Louis Vuitton’s VIA¹ project has proved to be a perfect vehicle for loyalty-driving activities, especially when they’re linked to wider online communities. Buying a ‘Treasure Trunk’ offers more than a desirable digital artwork; it grants access to exclusive Discord channels (a popular virtual community platform) and future product drops. This gamifies and rewards engagement, turning customers into collectors and fostering a sense of community. While the €39,000 (£33,400) price tag indicates a new revenue stream, the real value lies in the deeper, more personal connection it builds between the brand and its customers.

Make shopping fun again

Our YouGov survey of 500 UK luxury consumers provides new insight into the changing habits and expectations. Asked about new retail technologies, including NFTs, artificial intelligence (AI) and augmented reality (AR), research shows there is growing enthusiasm for the exclusive rewards that come with loyalty programmes. Although 42% have the expectation that these exclusive perks would be offered as standard, enthusiasm for digital collectables currently remains limited.² With 23% not knowing what an NFT is,² there’s an opportunity to increase enthusiasm for them by clearly communicating how they work, their value and the ways in which they can help consumers connect with a brand. 

Art at the heart

Creativity has always been at the heart of NFT technology, with each exclusive token tied to an artwork. By collaborating with artists and creators to make your own artwork, brands have an opportunity to connect with new audiences outside of the traditional market.

NFTs are not cutting out creatives: designers are simply being replaced by artists. Collaborations could be as extensive as the Gucci Metaverse³ – which featured a series of digital galleries, showcasing cutting-edge art and installations on the brand’s history – or as exclusive as the Balenciaga hoodie with a built-in avant-garde electronica soundtrack.⁴

Connect your digital and in-store experiences

Products don’t have to be the only point where digital and physical worlds meet – NFTs can be integrated into in-store shopping experiences. Selfridges Oxford Street has experimented with selling NFTs and digital fashion, helping to drive footfall through this unique experience.⁵

But bridging the payment gap between online and offline commerce presents specific security challenges. The Selfridges pop-up allowed customers to buy an NFT with a credit card instead of via traditional online registration, providing the luxury experience genuine customers expect. David Jeffrey, Product Director of Intelligent Payments and Risk at Barclaycard Payments, notes that “NFT ownership, once registered, cannot be easily undone, ” highlighting the need for AI-driven data processing. Solutions like Barclaycard Transact will help quickly identify high-risk transactions without two-factor authentication. 

Authenticity and ownership using NFTs

The immutable nature of NFTs mean they offer opportunities to protect your brand and customers through authenticity verification. Combining NFTs with near-field communication (NFC) technology can help prove the authenticity of products throughout their life cycle. For example, Dior have integrated a scannable NFC chip into their B33 men’s sneakers,⁶ which is then paired with a blockchain-based certificate of authentication. The digital certificate can be transferred to new owners during resales, with the reassurance that the certificate of authenticity has not been faked – ideal for buyers with one eye on resale value.

Customer relationships: trusting brands

It’s important to consider whether NFTs fit your brand rather than simply focusing on the technical possibilities and challenges. With technology evolving in exciting ways, the focus remains on the fluctuating financial worth of NFTs, presenting certain risks for brand history, heritage and customer-first approaches.

Blockchain-based digital collectables can enhance customer relationships, as they become part of the retail experience, but there may be a need to offset any broader sense of volatility. Ensuring brands consistently offer high levels of security and maintain a refined customer experience is an aspect of luxury which cannot be faked, whether customers are shopping digital collectables or haute couture.

The key takeaways

While customers are more excited by the exclusive perks, rather than NFTs specifically, there is potential for growth if their benefits can be properly communicated: from authentication to audience expansion. The process of paying for NFTs needs to minimise fraud and error – and to make sure digital ownership is being allocated to the right person, without compromising customer experience. With these measures, digital collectables could help drive customer loyalty through exclusive content and artistic collaborations.

NFTs still prove to be relatively untested financial investments, resulting in a need to ensure security throughout the payment and ownership process. Barclaycard’s built-in fraud protection and regulatory support to retailers can help make sure customer trust in your brand isn’t eroded through association with a volatile market. Developments in luxury retail are about keeping the focus on fun and connection, rather than finance.

A quick guide to NFTs

What is an NFT?
A non-fungible token (or NFT) is a unique digital asset. In theory, they can be anything digital but common formats are digital artworks, virtual clothing items and music tracks.

How do they work?
Each digital asset has a unique code, which is stored on a blockchain – a decentralised ledger hosted across a network. Information on this ledger cannot be changed – only added to – making it a highly secure way to track what happens to that asset over time.

What’s the difference between fungible and non-fungible?
Fungible tokens (such as cryptocurrencies) are not unique, meaning they can be swapped or divided at a set rate. A non-fungible token is unique, indivisible, and cannot be reproduced. While ownership can be transferred, which means they may have a monetary value, this doesn’t change the unique nature of the asset. Having an NFT is closer to owning a potentially valuable piece of artwork, than it is to having money in the bank.

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