Blockchain has grown in prominence in the past decade as adoption has increased. The luxury brands retail and apparel sector is one industry using blockchain to provide an enhanced offering to consumers.
Fighting fakes in the luxury brands sector
Blockchain technology, in essence, is a shared database of transactions. These transactions are recorded permanently in blocks, chained together and distributed to all users in a peer-to-peer network. Circulating information in this way offers transparency and accountability. Everyone in the network can see a record of all transactions and it is impossible to change or remove a block without creating a permanent record of this change. In this way, blockchain can support the transformation of information storage, dissemination and authentication.
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Blockchain technology’s authenticity is a goldmine for luxury brands grappling with rising volumes of counterfeit products, especially in the resale market. An estimated one in every ten branded goods sold is fake, with the Business of Fashion estimating the counterfeit market to be worth $3trn in 2022. Apart from the obvious financial implications this has for the industry, counterfeit products also pose a reputational threat to luxury brands, which place a premium on excellent craftsmanship and exclusivity.
The Aura Blockchain Consortium
In 2021, luxury vendors LVMH, Mercedes-Benz, OTB, PRADA Group and Richemont founded the Aura Blockchain Consortium in a bid to combat this issue and deliver an improved buying experience to consumers. The consortium aims to promote and support blockchain use among luxury brands to ease the authentication process, improve supply chain transparency and facilitate reliable ownership transfers amongst luxury products.
Italian clothing company Loro Piana, which joined the consortium in March 2023, hopes to use blockchain to enhance traceability from its supply chain through different phases of ownership. The latter element is particularly important to luxury fashion brands, whose high-quality goods are created with the expectation that they may be passed down through the generations. Loro Piana’s blockchain tool provides customers with a unique QR code that can be used to trace the production journey of an item through the supply chain. In addition, it provides them with a digital product certificate—this uses blockchain to simplify the transfer of ownership as customers can trace the history of the product’s possession back to its roots at Loro Piana.
LV Diamonds uses blockchain similarly to Loro Piana, providing an encrypted digital file that records each diamond’s weight, colour, purity and cut quality. This forgery-proof information is available to each diamond owner, making data transfer safe, efficient and reliable. Jewellers are also using blockchain to verify repairs on luxury goods. For example, Cartier uses Aura’s blockchain technology to confirm repair transactions and share the condition of its pieces with owners.
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By GlobalDataThe Aura Blockchain Consortium hopes to integrate blockchain in these ways to “raise the standards of luxury.” Buyers of luxury goods can therefore sleep more soundly with the knowledge of where their product has been and certification proving it is, in fact, the real deal.
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