The new frontier of Hyper Luxury: The phygital ownership

Photo by: Fashion Trust Arabia

As luxury searches out NFTs, in-game worlds, and 3D virtual real estate, opportunistic players are racing to be the first to get there, betting on a first-come, first-served premise. The race to own the Metaverse and virtual intellectual property is on.

But in this race to digital environments, many brands seem to forget concepts such as exclusivity and luxury. But let’s take it by steps, analyzing the main components of a luxury product and how the ownership experience affects consumer loyalty in the digital landscape.

Four key dimensions

There are four key dimensions of luxury value perception according to Wiedmann, Hennigs, and Siebels’s model: social, individual, functional, and financial.

1) The financial component considers immediate monetary variables such as pricing, resale cost, discount, and investment, as well as the value of a product and what consumers are willing to give up to receive it.

2) The functional dimension relates to the most important features and benefits of a product, such as its quality, distinctiveness, usability, dependability, and durability.

3) Individual themes such as materialism, hedonism, and self-identity are addressed in the individual component, which focuses on a customer’s attitude toward luxury purchasing.

4) The social dimension refers to the perceived utility that individuals derive from products or services that are recognized within their social groups. Conspicuousness and prestige value can have a significant impact on the evaluation and willingness to buy or consume luxury brands.

It may sound strange, but the first two drivers, financial and functional, actually account for a small portion of the total value of the product.

Luxury refers to the ability to turn a physical item, such as clothing, leather goods, perfumes, or shoes, into an experience.

This is why when it comes to luxury, lifestyle, and consumer companies, it’s apparent that their storytelling has a strong correlation with their market performance. Those that convey who they are with clarity — not just on paper, but by the quality of their everyday execution — have a much better chance of engaging with their customers than brands that don’t. To develop a sustainable competitive edge, executives must go beyond status and tap into value creation. As such, the high price is a result of value creation combined with the intrinsic value itself. Therefore, to create luxury, brands need to create value.

Ownership and experience

Indeed, luxury brands need to understand that they need to accompany their products’ features with proper ownership experience and storytelling.

Luxury has historically been characterized by both experiencing and owning. This interdependence isn’t a novel concept. Consider the first car owners and the excitement, novelty, and whole experience that came with starting the car. Or consider the experience of haute couture: personal fittings, extraordinary attention to detail, excellent craftsmanship, and the focus on having a dress or outfit planned, manufactured, and fitted… just for you. In all cases, the total experience of owning a tangible product was inextricably linked to its value.

“Owning” — and, more importantly, being seen to own luxury things — can be a way to demonstrate money and social position, as well as social acceptance.

This is especially true in collectivist cultures such as Korea, classless societies such as China, where luxury has become a social currency, and rising markets where luxury items may represent achievement and success. But why is this concept relevant, and how is it changing in digital spaces?

How does the Metaverse is changing ownership (and why Luxury brands need to keep focus)

The stakes for brands are much higher in an increasingly digital world. The Metaverse shifts power away from brands and toward customers. They may now choose when, how, and under what conditions they want to interact with a brand. Furthermore, the development of desirability is now virtually always taking place in the digital realm. As a result, brands that do not succeed in the Metaverse may not succeed at all — they will simply lack clientele.

That is why many brands are embracing the way of NFTs, to stay up to date and meet their client’s desires. However, these NFTs are most of the time issued in huge batches to accommodate everyone’s demand, but in doing this, luxury brands are harming themselves.

Exclusivity is at the heart of luxury.” People are turning to unique, non-reproducible experiences to satisfy a desire for the exclusive, according to Scott Clarke, VP of consumer products industry lead at digital consultancy Publicis Sapient. “As luxury goods become more ubiquitous and easier to access, people are turning to unique, non-reproducible experiences to fulfill a desire for the exclusive,” says Clarke. “For luxury businesses to acquire an advantage, they will need to go beyond what has traditionally defined them as ‘luxury.’

Photo by Wilmer Martinez on Unsplash

But which is the way to have exclusive NFTs?

Just handling out NFTs is making them prone to massification even though more people can make use of them. However, luxury brands cannot fall into this trap and should diversify their offer at least. Different solutions are comprehended in the utility NFTs category (we have reported some of them in a previous article that you can find here), but there is another option, much more exclusive and thought out for top-tier customers. Luxury brands could opt for exclusive NFTs, uniquely correlated to their top physical products.

At MyLime, we value what is tangible and real instead of fictional representation. Our vision of NFTs is not speculative, we don’t worship intangibility if a physical counterpart doesn’t exist. That is why we create NFTs that include unique specifications that refer to the tangible product.

We work side by side with manufacturers to bring the physical experience of craftsmanship into the digital. NFTs give us the possibility to solve the ownership paradigm inside digital landscapes, but just with a perfect integration within the two realms, therefore having a phygital product, we unlock an exclusive and unique hyper luxury ownership.

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