Luxury Staples Embrace NFTs

they remain a powerful draw for some consumers. High end retailers Gucci and Tiffany are the latest to jump into the fray with new n f T offerings. Caring Scucci says it will accept eighte coin as a legal tender, and select US stores l V, M, H, S, Tiffany and Co also an it's launching what it calls n f TIFFs. These are collectible passes that can be redeemed by owners of crypto punk n f T s for

a physical custom pendant. Some two trillion has been wiped off of crypto's market cap, and the demand for n f t s has slumped in recent months along with resell value. So why are these brands so bullish on crypto? With me to discuss why luxury brands have embraced n f T s are Bloomberg journalists, Emily Nicole, You buy one at the top and hope that it holds its value over time and you might be able to sell

it for triple the price. Lace around and Tazz actor the building shops, outlets, virtual galleries in the actual metaverse. Emily Tazz, thanks for joining me today. Thanks for having us, Hey Anna, thanks for having thus. Okay, let's get right to it. So when did luxury brands fall in love with n f T s. So luxury brands have been circling around the n f T space for about a year.

You know, really is n f T collections themselves started to take off and they began to see it's what younger generations might be interested in in terms of luxury items, because n f T s, if they're successful, aren't cheap. A digital artwork a non fungible token and n f T the name of the artist is people has sold for sixty nine million dollars at Christie's auction House in

New York. Older generations are more keen on buying the things that they know, like watches and cars and clothes that younger generations are more open to new product streams, and so an n f T might be something that they can particularly tap into because they're already at a higher price point. Younger generations might be more savvy. They're also massive wealth signalers as well, so for the people who want to look like they have money, n f T s are a really big way to do that.

So I think obviously many fashion brands are still in like a very experimental stage right now, so um Dodging Gubano is a very notable brand. They launched their n f T doing the fashion event that they hold every year, and their n f T s particularly well because I've sold for millions and they've also had like a physical item also given to the person that's obviously bought the n f T. What's going on with with Gucci and Tiffany?

Why did why did they make the news recently? So for Gucci, it was that they wanted to expand the number of cryptocurrencies that they accept as a means of payment in their stores. At the moment, it's just stores in the US, and there's a few there's a few cryptocurrencies that are involved. The one that we reported on was ape coin, which is a cryptocurrency that is affiliated with a popular n f T project called the board

ape Yok Club. UM. It's not necessarily linked to it, so it's not necessarily like a win for one is a win for both UM. But in the case of Gucci, the way that they accept these cryptocurrencies is quite interesting because for a big company like Gucci would be a big deal if they were to be taking those cryptocurrencies directly onto their balance too, and that would mean you know, a lot of tax implications, a lot of accounting implications, and the regulatory hurdles for that would just be insane.

So they do it via third party provider that basically gives Gucci the dollars. Once the crypto comes in, it gets um converted and then put into the into Gucci's bancout as a dollar UM. So whether or not that counsels accepting crypto, I guess is up to you. For Tiffany as well, it was also another area where it's

a bit of like, you know, playing both sides. They decided to launch an n f T collection for holders of the Crypto Punk n f T. So if you own a crypto Punk nty, which by the way, it isn't to do with tiffany um, you could buy an an f tiff which is a Tiffany n f t UM and then that would basically be a digital pass to then convert that into a physical Tiffany necklace in the likeness of your crypto Punk. So again you're buying something digital, but really you're getting something physical out of it.

So who are they going after with this, right because you said that they are not going to accept the actual coin, and how many people have that coin and do want to spend it to buy like bags? Like what is the deal here? Is it for a marketing like you know, you mentioned younger generations trying to you know them, trying to attract them, like, what what's the deal? I mean, I'm a little bit on the skeptic side.

So in my mind, it's always a marketing point. It's a it's a it's a way to show that you as a brand are keeping up with the times and keeping up with you know, what's hip among the young people, which is crypto at present um but i'd be interesting to see, you know, how many people are really spending with crypto. And actually there was a story that Tas wrote earlier this year where she went to visit a

store in London, the Philip Line. Yeah, yeah, and they actually accepted what was it like quite a lot and there was they started to accepting crypto. So it's like a web three crypto concept store opened in like old Bond Street. Um, really flashy and yeah, I mean some of the sneakers were priced sorry ridicularly surprised. Sorry Philip Blind. I'm sure they're worth it, but um, and then they had like QR colds, they had like, you know, really trendy s type n f T s that they were

giving away with purchases. And I think that Philip Line store is the first in London to accept crypto as well. Um, yeah it is, isn't. Yeah, So I'm just looking back at the article you wrote then, which was in April, um and back then that Philip Pline said that last year, payments in crypto accounted for around three percent of its roughly one hundred million euros and online revenue, which isn't a large amount, but it's also not nothing and so there's a I guess that arguments that we had for

some of these companies. This obviously was online revenue compared to instore revenue. And how many of us are being like trying to spend crypto in a physical way when you enter a store as another matter. But it's definitely also a revenue stream that brands don't want to ignore. So obviously this isn't happening in a void, right, Like there's a market around n f T s and there's a market around crypto, So so what's happening there? And how do the Gucci and Tiffany lot drops as people say,

in the sector fall within that? Emily, do you want to give us a sense At the moment, particularly this year, we've seen a bit of a slump in demand for n f T s, a lot of the performance of even some of the top n f T collections sometimes we call them blue chip collections, like crypto punks, like board apes, um, those have been falling. Four prices are lower than they used to be, and there's even just little demand for things once they've already been minted. The

secondary sales market isn't doing that well. I think our colleague Olga Cry for a really great story earlier this year that said that, you know, one in three n f t s has little to no secondary trading after it's been born. Once red hot, n f t s are now cooling off a bit. The secondary market for the majority of people's paintings today is down from the peak, as is most an ft art. So kind of shows that n f t s are performing in line with the same way the rest of crypto is. At the minute.

Nothing is really you know, booming. Nothing's going to the moon in general. It's pretty much just subdued slump. I guess it's how you could put it. And so when these brands have come in, we expected to see a bit of a bounce, and I guess we did see a little bit of a of an uptick and some of the floor prices of these n f t s, you know, on the day of the announcements, but those

bounces haven't really held since then. We'll be right back with more from Bloomberg reporters Emily Nicole and taz Aktar on how big brands are getting into the cryptosphere. So I'm curious to hear your thoughts on this. I've been hearing that you know, in a sense, the n f T world is a bit disconnected from the broader like crypto markets in the sense of crypto prices of bitcoin.

Do you think that in a way, you know, it's become its parallel thing because it's more connected to reality because we have these brands and these companies coming in, or do you see it as always intertwined in that you know, if one goes badly, the other one will go badly too. If we look at this purely from a market's perspective, crypto has been very volatile over the

last year, as it as it always has been. We haven't really seen that improving en T s haven't been as volatile, and so in that way, they're not really

a parallel because they do operate slightly different. It is more of a kind of store of value in a sense, because you buy one at the top and hope that it holds its value over time and you might be able to sell it for triple the price later on, compared to crypto, where people are you know, making quick arbitrage trades and trying to make money off the pennies, and difference between prices on different exchanges um but that's not to say that they don't also get affected by

the same things. You know, if you were a crypto trader and you were seeing losses elsewhere in your portfolio, you might sell an enterty to make some money back, and vice versa if you if your n f T s were crashing, which to be honest, doesn't happen very often.

We don't see crashes that often in floor prices. What did we learn about Gucci while we were reporting this Emily and that that's also connected to n f t s, but not necessarily just n f T s. So when we were looking into this story, we were kind of trying to position how these most recent drops in enterty collections or accepting more crypto payments is situated within their broader push into web three UM, and for Gucci, it's

something they've been working on for a while. Speaking to a representative at Gucci, we learned that, you know, this is part of a push they've been doing for about a year and a half and they have this new unit within the business um that they hope to become a little bit like a startup that is more free to do what it wants within crypto and web three without the constraints of the big parent behind Gucci carrying,

you know, tapping over its shoulder. And one of those things is to hire a head of Web three, like a global manager that can oversee the operation stions and

push the brand forward in this digital space. But they advertise for that role in January and it's still accepting applications in August um, so you know how successful that push has been is a matter of a guest looking at whether or not this drop takes off, will find out in results whether or not, how like how much they accept every quarter and crypto payments, and if they ever fill this role, you know what that person's strategy will be and what their goals will be, because that

would be quite interesting to see how that how they plan to take the Gucci brand forward in a digital world. They've also bought like a plot of digital land in the sandbox as well, is a gaming virtual world built on the Ethereal block chain where players can build on and monetize their gaming experiences using non stopes and crissies

of experimenting with similar as well. They're building shops, outlets, virtual galleries in the actual metaverse, right, so everything is yeah, virtual alright, so we do have to go back to the real world, in our real desks to do some you know, reporting of the world that's not in the metaverse for now, so amazing. Thank you both for joining me.

You can find more of Emily and taz is reporting on the Bloomberg terminal on Bloomberg dot com and on Twitter at Emily J. Nicole and at Tanzil Underscore Actor. On the next episode of Bloomberg Crypto. Even if you haven't ever heard the phrase the merge before, you should know that it's one of the most important upcoming developments in the world of crypto. We'll tackle this long awaited software upgrade to the Ethereum blockchain and what might happen next.

This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get you our podcast. Send us your comments, questions or suggestions for the show to Crypto at Bloomberg dot net or find us on Twitter. We're at Crypto. The supervising producer Bloomberg Crypto is Vicky very Galina. Our senior

producer is Janet Babin. Our producer is Mohammed Farup, Associate producer is Mosses and Um Desta wonder At is our engineer. Original music by Leo Sidrin. I'm Stacy Marie Schmal We'll be back tomorrow.