“Phygital” is a term that seems to make many people cringe, possibly due to the blending of two already familiar words, physical and digital. Regardless, it’s making waves as the luxury brand Louis Vuitton recently announced the upcoming release of branded “Treasure Trunks,” which will merge physical products with non-fungible tokens (NFTs).
Empire podcast host Jason Yanowitz is among those who admit disliking the term, but he’s equally intrigued by the brand’s pricey physical-to-digital NFT concept. Santiago Santos, the co-host of the podcast, shares Jason’s intrigue despite being generally indifferent to luxury brands.
The fact that these NFTs are non-transferable and cannot be sold or given away seems to lend them a certain unique appeal, particularly when paired with Louis Vuitton exclusive items. Large luxury conglomerates such as LVMH push the boundaries of the space and force other luxury brands to take notice.
From a consumer retention standpoint, the blockchain approach “makes a lot of sense,” says Santos. The main advantage of using this technology is the exclusive access provided to unique future products. However, Yanowitz plays devil’s advocate, questioning whether the brand could achieve the same goal using a conventional membership club.
Despite the drawback of non-transferability, the use of NFTs in Louis Vuitton’s offerings carries notable benefits. For one, the concept is primed to gain more importance in the future. Additionally, a public blockchain allows for a range of possibilities, as LVMH and other high-end brands could utilize a broad portfolio in tandem with these digital assets. Ultimately, the value proposition with “phygital” offerings extends beyond monetary gains; it’s about the marketing and status that comes with owning such luxury tokens.
Though the term “phygital” may never gain widespread acceptance, the concept behind it is undeniably appealing. As luxury brands continue to experiment, it will be interesting to see how the market responds to these novel and exclusive offerings. With the promise of access to a range of high-end products and bragging rights on a public ledger, perhaps “phygital” will eventually capture the hearts of luxury consumers after all.
Source: Blockworks
