AI might be the overarching focal point in fashion/retail tech right now (see: Google’s Generative AI Try-on tool, for instance), but web3 continues to boast compelling use cases. On the heels of Louis Vuitton announcing the launch of a physical product-linked NFT collection (think: physical trunks that are tied to benefit-bearing digital twins), its owner LVMH announced this week that it has partnered with Epic Games, creator of Fortnite and Unreal Engine, to “transform [its] creative pipeline and bring customers new types of immersive products discovery experiences.” Not limited to Louis Vuitton, LVHM said at the VivaTech conference this week that the “strategic partnership will empower [it] and its Maisons to further utilize Epic’s powerful 3D creation tools to offer experiences like virtual fitting rooms and fashions shows, 360 product carousels, augmented reality, creation of digital twins and more.”
“The partnership with Epic Games will accelerate our expertise in 3D tools and ecosystems, from the creation of new collections to ad campaigns and to our maisons’ websites. We will also engage more effectively with young generations who are very much at ease with these codes and uses,” LVMH managing director Antonio Belloni said.
As for the current state LVMH’s web3 bet, it looks a little something like this …
While none of this seems like an indication that LVMH head Bernard Arnault is walking back on his comment from last year that LVMH is “not interested in selling virtual sneakers for 10 euros,” it is a noteworthy new venture, nonetheless, and potentially, a firm signal of where luxury is headed. LVMH is not alone, after all, as Hermès, for instance, has also hinted at the potential for digital twins in connection with its lawsuit over the MetaBirkins NFTs, with Nicolas Martin, group general counsel for Hermès, speaking to the company’s web3 plans during the trademark trial, including its potential use of digital twins to aid in the authentication of its sought-after handbags.
And all the while, Kering has been among the early-movers in luxury when it comes to the virtual world; its biggest brand has been offering up virtual Gucci trademark-bearing goods since it first debuted on the Roblox platform back in 2021. (Side note: I think the consumer response to the limited-edition versions of its virtual Dionysus bag still makes for a striking case study for the potential of a secondary market in the metaverse.)
THE FLIP SIDE: The flip side of this seemingly bold vote in favor of web3 is the reality that many brands are still coming to terms with how their trademarks will be used in the virtual world, particularly in light of the fact that many platforms allow users to generate “assets, content, and value,” which may bring unauthorized use of brands’ IP into the fold. “The co-creation [element] is the key thing that most brands are nervous about,” BNV founder and CEO Richard Hobbs told Decrypt. As a result, he says that the challenge for his company – which provides brands with 3D product creation, tokenization, community building, and interoperable wearability services – is demonstrating how companies can “still retain their brand DNA, their brand identity, their brand IP, but also enable their community to be proactive around that” in the virtual world.
The idea of getting consumers involved in the virtual world is being touted as a benefit for brands. As EY, for one, asserted in a report about “how meeting customers in the metaverse can unlock lasting value” last year, “Moving away from tightly curated, clearly defined customer experiences to co-creating products, services and experiences with customers will ultimately drive enterprise-level change and build long term relationships with future consumers.”
THE BOTTOM LINE (for now): It seems safe to say that the most meticulously-managed luxury brands are not there yet, but in an attempt to meet the demand of at least some pools of digitally-connected consumers, they are wading into web3 by way of carefully-controlled and time-tested partnerships and more utility-based uses of web3, such as digital twins.
– Concord Music, et al. v. Twitter: More than a dozen record labels are suing Twitter for copyright infringement, accusing it of “consistently & knowingly host[ing] & stream[ing] infringing copies of music compositions” because it has failed to enter into music licensing deals. They are seeking $225M+ in damages. (Complaint here)
– Roadget Business PTE. Ltd. v. Whaleco, Inc: Shein filed a second amended complaint in its lawsuit against burgeoning competitor Temu. Bloomberg reported this week that U.S. spending on Temu’s app surpassed that of Shein in May.
– Two new China-focused bills were introduced this week (see: our fashion/retail legislation tracker) that stand to impact imports from Chinese companies, including big-name fast fashion retailers …
Import Security and Fairness Act (S.2004), which would amend the Tariff Act of 1930 relating to de minimis treatment to “close a key loophole” that foreign companies “exploit to avoid paying duties & fees to unfairly compete in the U.S. marketplace.”
De Minimis Reciprocity Act of 2023 (S.1969), which would “bar Chinese exports from entry via the expedited ‘de minimis’ channel & reduce the threshold for duty-free imports into the U.S. to an amount that matches the threshold our trade partners use, ensuring reciprocity & increasing transparency at our borders.”
– AI Act: EU Parliament approved the AI Act this week, paving the way for the AI-focused legislation to become law. More about that here.
– Our newest tracker charts pending U.S. bills that focus on AI. As of now there are roughly a dozen on there & they range from legislation that aims to require AI-generated to be disclosed as such to a bill that would block nuclear launches by AI. You can find that here.
– Gruppo Florence has made 3 new acquisitions: Snapping up embroidery specialist ABC Ricami & as part of its launch of a dedicated leather goods unit, it acquired Effebi srl & A.L.B.A. srl.
– NY-based biomaterials startup, which focuses on “sustainable leather alternatives,” UNCAGED Innovations has raised $2M in a pre-seed round.
– Oakland, CA-based robotics/apparel co. Unspun has raised $14M in a Series A round. The co. provides “low-impact, on-demand” manufacturing solutions for the apparel industry.
– And once again, the list of AI funding is long. One of the standouts: Meshcapade has raised $6M in a seed round. The German startup specializes in “AI solutions for modeling, analysis & synthesis of 3D digital humans in motion,” including for fashion brands.
– BlockSpan has raised $1.4M in a pre-seed round in furtherance of “an effort to make it easier than ever for software companies and builders to develop powerful Web3 apps.”