Home News Can blockchain help legacy fashion brands win over Millennial and Gen Z consumers?

Can blockchain help legacy fashion brands win over Millennial and Gen Z consumers?

by gbaf mag
gawdo

By Leanne Kemp, CEO, Everledger 

Today’s generation of Millennial and Gen Z consumers are particularly suspicious regarding the supply chains of fashion brands, and want to be assured that the items that they love are what they think they are – not only beautiful, but socially and environmentally responsible.

Millennials and Gen Z are definitely not consumer groups that brands can afford to alienate. Millennials represent approximately $200 billion of spending power in the US alone, which is expected to rise further over the coming years. Gen Zers are the first generation of true digital natives, and already make up 20 percent of the population in Brazil and will represent 25% of the population of Asia by 2025 – the same share as Millennials.

Members of Gen Z are huge on sharing information. They grew up in the age of social media, and sharing news across social platforms comes naturally to them. McKinsey reports that “the search for the truth is at the root of all Generation Z’s behaviour.” Gen Z is very inquisitive, and they like to make decisions rooted in information.

Sustainability and social issues are very important to these consumers, as so many new brands are being more transparent about their business practices. Sustainable companies are advancing with new material science – some fashion brands produce their fabrics out of recycled water bottles, and secondhand merchants on peer-to-peer websites are popular among younger consumers who are aware of ethical shopping and protecting the environment from non-biodegradable clothing and fast fashion.

The Millennial and Gen Z “scenius”

Brian Eno coined “scenius” as the genius created by a certain scene or group of people. He  defined this neologism as “the intelligence and the intuition of a whole cultural scene. It is the communal form of the concept of the genius.”

Scenius can occur anywhere minds meet: a town, a company, a region or a virtual space. It tends to have a subversive quality to it. Some of the most lasting and influential cultural movements have happened without permission or broad market appeal. Often, subversion of the status quo is the core driver of their success.

For over two millennia, the rich and powerful have bankrolled cultural production and reaped the benefits, and in many cases, artists were placed in a precarious position — subject to the whims and sensitivities of their patrons. Galileo, the father of modern astronomy, was abandoned and betrayed by the Medicis when faced by charges of heresy for his discoveries and later died under house arrest.

Industry gatekeepers played a vital role for artists in a less connected and integrated world — and in fact, broadened the scope of cultural production and consumption — but it was not until the arrival of the internet and the World Wide Web that a viable alternative could present itself — one that could potentially reify the magic of scenius in the digital age.

The Web 3 is the rise of scenius within creative industries, and the redefinition of artistic patronage.

Fashion faux pas

To retain market share with this growing and influential demographic, fashion brands need to be able to prove beyond a shadow of a doubt that they are ethical. Any suspicions among Millennial consumers will quickly see them turn to competitors, potentially causing significant financial and reputational damage.

However, blockchain technology offers a solution to this challenge. Blockchain – in combination with technologies like Near-Field Communications (NFC) and Internet of Things (IoT) – provides an indisputable record of the truth that is uniquely capable of showing Millennial consumers that the goods they buy benefit everyone involved in their production.

Over the last few years, it has become clear to businesses in all industries that modern consumers are increasingly drawn to ethical brands. Compared to previous generations, millennials are more sensitive to how their clothes and accessories are made and won’t stand for nefarious practices such as exploitative working conditions or unsustainable production processes.

This heightened awareness of social and environmental issues is reflected in where they spend their money. According to McKinsey, a third of global consumers have expanded their scope of purchasing decisions over the last three years to incorporate principled values and views.

Therefore, the burden of evidence is with manufacturers to evidence – not just say – that their operations conform to the highest ethical standards. Millennial and Gen Z customers want to know that workers are being properly compensated, that raw materials have been sourced sustainably and that brands are proactively taking steps to minimise their environmental footprints – such as by reducing waste and cutting down CO2 emissions.

But it isn’t just sustainability and ethics that fashion brands have to think about. Fraud is also a prominent issue, particularly in luxury goods where counterfeiting is rife. For example, the Global Brand Counterfeiting Report recently estimated losses of nearly $100 billion, highlighting just how effective counterfeiting has become.

Although dealing with knock-offs isn’t anything new for the global luxury fashion market. Counterfeiting operations have become so sophisticated that they now threaten the integrity of the original high-end fashion brands. Knock-offs are harder to spot than ever before, which means fashion brands have to find ways to reassure customers that what they are buying is genuine.

Ultimately, the most successful fashion brands will be the ones that are able to build trust among Millennials and Gen Z, and differentiate themselves through ethics and sustainability. This is where technology has a key role to play.

Digital assurance

Today’s forward-thinking fashion brands have an opportunity to win over customers by leveraging the likes of blockchain, NFC and IoT to display provenance, improve traceability and demonstrate their commitment to ethics and sustainability.

For example, these technologies can be combined to create unique digital identities that provide an accurate and indisputable record of a product’s origin and history. By fitting garments with NFC tags and using blockchain to seamlessly record all activities related to those garments on an immutable ledger, fashion brands will be able to build a secure and permanent record of each clothing item.

Customers will have access to the lifetime history of a product – including when and where it was designed, from where the raw materials were sourced and whether it has been previously owned – before they make a purchase. This provides a whole new level of transparency into a brand’s ethical and sustainable business practices, enabling them to build trust with consumers as well as combat counterfeiting. It also provides a completely new Customer Experience, as fashion brands are already offering, like Alexander McQueen’s MCQ.

Equipped with the authenticity that blockchain enables, Millennial and Gen Z customers can buy items safe in the knowledge that they are contributing to brands that meet their standards related to factors such as ethical sourcing, sustainability and workers’ rights.

In an age when consumer demands are higher than ever and brand loyalty can be hard to come by, being able to present reliable information about a product’s history and characteristics offers a vital differentiator. By providing unparalleled levels of transparency and traceability, blockchain technology can help fashion brands build trust and endear themselves to today’s consumers.

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