Tracking and verification have always been an issue when it comes to luxury goods, but digital IDs are the key to the growth in the preloved market, writes Karl Escritt, CEO at Like Digital & Partners
Karl Escritt, CEO, Like Digital&Partners
The luxury market is experiencing a significant surge, propelled by the increasing spending power of Gen Z. However, this younger demographic is not merely seeking designer labels; they demand a deeper commitment to sustainability, ethical sourcing, and the circular economy from brands to maintain engagement.
Pre-loved products have become highly coveted, prompting luxury labels like Gucci, Rolex, Chloe, and Alexander McQueen to initiate their own resale programs to cater to this demand. Yet, when purchasing from multi-brand platforms, authentication remains a challenge – how can buyers ensure they are not purchasing counterfeit goods?
In recent years, the popularity of digital IDs has soared. These IDs offer insights into a product’s supply chain, manufacturing process, and authenticity, addressing authentication concerns.
Authenticating luxury goods with AI, NFTs and blockchain
Non-fungible tokens aka NFTs were all the rage in 2021 but the bubble burst very quickly as the market became saturated and people realised that not all NFTs would retain their value or deliver the high returns they had promised. Set against the backdrop of higher inflation and interest rates, they were seen as a bit of a flop.
But NFTs have made a comeback because the technology at the heart of them can be used for digital identities, property rights in virtual worlds, and authenticating and monetising digital content for creators in music, literature, and the arts.
In 2021, Aura Blockchain Consortium was set up by LVMH, Mercedes-Benz, OTB, Prada Group and Cartier, on a mission to create the technological standard for the luxury sector and enhance the customer experience. Originally intended to serve as the public transaction ledger of the cryptocurrency bitcoin, blockchain has since evolved into an important form of digital identification which allows brands to put a tamper-proof digital stamp of authenticity on any product or component.
In the diamond industry, for example, proving ethical sourcing is key to sellers being able to maintain their reputation. With blockchain technology, dealers can record the entire journey of the mined diamond and provide transparency to the supply chain.
Imagine being able to take a series of photographs of a handbag and tell if it’s counterfeit. Entrupy, an artificial intelligence solution, promises a 99.1% accuracy rate in verification. A mobile app instructs you to take a series of images using the patented Entrupy device, which AI then evaluates against millions of records in its database and provides authentication.
Going beyond authentication
Many major luxury fashion houses have already begun investing in methods to track their products, and this trend is expected to continue growing in the coming years. Beyond offering consumers peace of mind through authentication, digital IDs also present an opportunity for brands to enhance transparency and share the unique stories behind each product.
Take British luxury brand Mulberry, for instance, which is leveraging digital IDs to revolutionise its customer connections. Each handbag is linked to an ID powered by EON, a leader in product digitisation. Customers can tap their smartphones to the NFC-enabled tag fitted to each bag, accessing a personalised digital experience. This includes information about their item, exclusive content, and services such as authentication, repair, and resale. Mulberry envisions this initiative fostering a direct and ongoing relationship between the label and its customers throughout the product’s lifecycle.
As luxury brands lead the charge on digital IDs, the high street is following suit. This technology represents more than just identification; it marks a significant step forward in the realm of circular fashion.
