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NFTs: In Retail Industry
NFTs: In Retail Industry

October 28, 2022

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Non-fungible tokens (NFTs) represent one of the most exciting, fast-growing areas of the cryptocurrency world. Last year recorded, global trade of NFTs worth $44.2 billion on two types of Ethereum smart contracts associated with NFT marketplaces and collections. Of this, more than 80% of all nonfungible token (NFT) transactions have been worth less than $10,000 in 2021 which are categorized as “retail-sized transactions”. While the NFTs are still being explored for various use cases, it has become popular with retail companies, with companies such as Gucci, Adidas and Walmart, being some of the major retail brands that’ve turned to the NFT arena.

What are NFTs?

NFTs are blockchain-based digital asset each designed to be unique, which can be used for representing real-world objects such as art, media, in-game items, and videos. While cryptocurrencies are fungible and can be traded or exchanged for another, each NFT has a digital signature that makes it impossible for one NFT to be equal or of same value to each other and makes it easier to verify their ownership and transfer tokens between owners.

Deloitte
Deloitte : 2022 Retail Industry Outlook

NFTs in Retail industry

Consumers’ expectations from retailers are increasing with advancement and composability of the technology. According to Deloitte, majority of retailers are investing digital marketing followed by customer relationship management and advanced analytics. Further, leading retailers are highly optimistic about the prospects of digital goods such NFTs which is expected to evolve as one of the key digital marketing tools.

Fostering brand storytelling and enhancing the customer experience

Although digital art existed long before NFTs entered the ring, ‘democratized ownership’ lures artists and digital creators into the NFT space. Creations are no longer the sole property of one owner. Instead, fractional NFTs allow hundreds of interested buyers to own a stake in the artwork.

Collectables:

NFTs have already reinvented ownership, and its use in memorabilia is imminent. Since NFTs are tokens with ownership and traceability features encoded within them, they make the perfect use cases for sought-after collectables.

Building community and engaging followers to encourage brand loyalty

P2E gaming allows users to unlock achievements by crossing in-game milestones for which they get rewarded. The rewards comprise in-game items that can be uniquely owned via NFTs and traded over blockchain-backed marketplaces. One such example is Louis Vuitton, French luxury fashion company, which launched a mobile game called “Louis the Game” to invite players to learn about the brand’s story. The players could customize their characters with Louis Vuitton designs, and an opportunity to own NFTs designed by the renowned digital artist and animator Beeple.

Loyalty Programs:

Present-day consumers are quite distanced from the good old days of loyalty programs. CFI Group research shows that 38% of retail consumers refuse to participate in loyalty programs. However, they also found that consumers who participated in those programs were "12 percent more satisfied, 10 percent more loyal, and 13 percent more willing to recommend a retailer than other customers."

An example of deploying NFTs in loyalty programs is Coca-Cola's  'loot boxes' auction. Each loot box contained multiple NFTs of sealed mystery boxes. The winner of this 2021 auction was given a “retro, made-in-Italy SMEG FAB28” Coca-Cola refrigerator. Fashion brands are also using metaverse platforms like Decentraland to showcase digital apparel. Since NFTs can harness the power of smart contracts, they significantly reduce system management costs, thus adding to their appeal.

Memberships:

NFTs are the best way of producing and maintaining membership proof for clubs, events, or communities. Since they are blockchain-backed, they can be used as digital tickets to various events as well as exclusive clubs. They may even be used to access limited edition articles and items that are out of reach for many.

Community Development:

With increasing exposure to social media, users and fans are spending more and more time online. These influencer-loyal / celebrity-loyal folks can be offered limited edition NFTs of their favourite entity along with special benefits.

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Experienced Research professional with a demonstrated history of working in the information technology consulting industry. Skilled in Customer Relationship Management (CRM), Market Research, Primer Reports, and Competitive Intelligence projects.

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