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https://www.businessoffashion.com/news/china/luxury-sales-on-tmall-rise-159-in-q1

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http://www.diva-portal.org/smash/get/diva2:1334486/FULLTEXT01.pdf

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https://www.raconteur.net/technology/artificial-intelligence/virtual-influencer-authenticity/

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https://www.thedrum.com/news/2020/03/20/even-better-the-real-thing-meet-the-virtual-influencers-taking-over-your-feeds

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https://www.voguebusiness.com/technology/china-virtual-influencers

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The brands that are a proven success in the AI field are the ones who use this technology to present inclusivity.

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https://wwd.com/business-news/technology/miu-miu-bolsters-china-digital-presence-virtual-idol-tmall-shop-1203544394/

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https://www.lifestyleasia.com/sg/style/fashion/virtual-models-cgi-technology-bella-hadid-kendall-jenner/

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Size of AI Tech market in China 2019-2024

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Size of AI Tech market in China 2019-2024

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(iResearch. (2020). Size of the Artificial Intelligence (AI) technology platform market in China in 2019 with a forecast until 2024 (in billion yuan). Statista. Statista Inc.. Accessed: July 22, 2021. https://www-statista-com.ezproxy.falmouth.ac.uk/statistics/1194909/china-market-size-of-ai-technology-platforms/)

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https://jingdaily.com/prada-dark-horse-china-e-commerce/

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Virtual supermodels carried fashion through coronavirus – are AR and VR technologies the ‘new normal’ for luxury brands?

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Virtual supermodels carried fashion through coronavirus – are AR and VR technologies the ‘new normal’ for luxury brands?

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https://www.scmp.com/magazines/style/news-trends/article/3083526/virtual-supermodels-carried-fashion-through-coronavirus

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"On Bilibili, a favourite platform with Gen-Z, the average top-level influencer has over 10 million followers. Yet, the average top-level virtual influencer has only about two million."

https://www.scmp.com/magazines/style/luxury/article/3132445/are-influencers-over-virtual-kols-offer-brands-safe-solution

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https://daxueconsulting.com/virtual-influencers-in-china/

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Aimee is a virtual influencer created by e-commerce platform, Tmall to help promote the brand after COVID-19.

- She promoted Prada and Miu Miu when the brands launched on Tmall.

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The latest form of influencer in China who are experts in testing and reviewing products.

- The opinion is more valid and authentic.

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A trusted, well respected influencer with proven experience and  expertise in a particular field.

- They're opinion is often monitized and brands will approach them soely for their following.

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- The consumer associates a level of authority with brands using AI.

- Virtual influencers allow the brand and consumer to be a creator and manipulate character.

- We see a shift form KOLs (key opinion leaders) to KOCs (key opinion consumers.

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https://www.balmain.com/us/balmain/balmains-new-virtual-army

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It would be cheaper for the brand rather than using actual influencers.

"According to estimates by WalktheChat and Jing Daily, “WeChat influencer After Party, with 550,000 followers and about 32,000 average views charges RMB 40,000 (roughly $5,500) for one post. WeChat KOL blogger手账 with 70,000 average views charges RMB 33,000 (roughly $4,600) for one post."

https://jingdaily.com/are-virtual-influencers-the-future-of-luxury-retail/

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https://boutique.humbleandrich.com/virtual-models-balmains-got-em/

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Non-fugable tokens are crypto assest that are indisiable and unique, creating digital sarcity.

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https://www.culturewhisper.com/r/fashion/new_fashion_app_game_dress_up/14685

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Moschino x The Sims
Louis Vuitton x LoL
Hermes
Drest

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Joint Venture with Tmall to open gateaway to Chinese market

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Joint Venture with Tmall to open gateaway to Chinese market

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- Chinese business-consumer platform founded by Alibaba.

- Provides authenticity for Chinese shoppers when shopping foreign brands.

- Fixed yearly fee: $5000 to $10,000.

Joint Venture: a mutual beneficial agreement between brand and foreign business.

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Brands and retailers like Fenty Beauty, Chanel, Tory Burch and are selling goods via Tmall, the online marketplace owned by e-commerce giant . Even Amazon closed down its Amazon China marketplace in April but has maintained its presence in Tmall.

Despite the ongoing trade dispute between the United States and China, experts say that the Chinese market will be necessary for brands and retailers in the long term. However, to be successful there, Western companies need to rethink the way in which they market to and service Chinese shoppers. And that begins with reaching Chinese consumers through trusted platforms like Tmall.

Tmall's value proposition

Tmall, , former founded in 2008 and headquartered in Hangzhou, China, says it is the largest business to consumer retail platform in Asia. More than 500 million Chinese consumers shop across Alibaba's suite of online commerce platforms, according to a 2018 Retail Dive op-ed from Jack Ma executive chairman of Alibaba Group.

For Chinese consumers, Tmall offers a reliable marketplace where shoppers can purchase authentic goods, which is essential in a market where shoppers can unwittingly buy fake eggs, milk and fish, said AKQA​ Managing Director of Greater China and Japan​

Beyond providing literal authenticity for Chinese shoppers , the site also acts as a conduit between foreign brands and Chinese shoppers. Before these platforms existed, Chinese shoppers had to travel or pay a premium to have foreign merchandise they purchased sent to them as part of a practice called daigou, said Allen Adamson, co-founder of Metaforce and New York University adjunct associate professor.

Before allowing merchants into the marketplace, Tmall evaluates retailers based on multiple factors such as business volume, existing distribution, presence on other online marketplaces and licensing and authorization to sell in the Chinese market, said Syama Meagher, CEO of retail consultancy firm Scaling Retail.

"Tmall is doing kind of a thorough analysis of the brands that they are expecting onto the platform. So I think that because this kind of new upper-middle-class consumer is primarily shopping on these marketplaces, aligning with a company like Tmall adds that brand validation," Meagher said.

Though Alibaba has had a problem with fake items in the past , the company is using new tech to find and crackdown on counterfeit goods and also sues sellers with counterfeit issues, Charlie Poon, a Hong Kong-based analyst at Coresight Research, a global research and advisory firm, wrote in an email to Retail Dive. The company's practice of authenticating merchants before adding them to the platform has been a critical strategy for addressing the problem, Poon added.

Meeting Chinese consumer expectations

Though Western brands once set the standard for quality products, it's important for outsiders to market to Chinese consumers in a way that resonates with them, multiple experts said in interviews with Retail Dive.

"Historically ... China was still very much in the position where it looked to the Western world for a barometer of what extraordinary was. ... Increasingly, though, we're ending up in a position where China has a national pride that's coming back to the forefront."

Sam Sterling

Managing Director, Greater China and Japan, AKQA

Simply arriving in China and translating marketing copy to Chinese and not bothering to change the imagery for the local market will no longer work, AKQA's Sterling said. Chinese consumers want to see themselves reflected in brands' marketing efforts. Now she sees foreign brands creating more of their campaigns, content materials and products within the Chinese market.

"Historically ... China was still very much in the position where it looked to the Western world for a barometer of what extraordinary was," Sterling said. "We saw this massive period when foreign luxury brands and foreign brands generally were considered in very high regard. ... Increasingly, though, we're ending up in a position where China has a national pride that's coming back to the forefront."

Sterling said brands and retailers should work to understand how the subsets of Chinese consumers shop and whether the successful strategies used where they are based will yield the same results in China.

For example, while foreign retailers may be interested in reaching 1.5 billion people, they should note that only about half of China's population has internet access. They also need to understand Chinese consumers' income and where they live, Sterling said.

"The shape of our population and the shape of our market is very different from the rest of the world," Sterling said. "Really taking the time to understand the difference between an upwardly mobile consumer in the middle of a tier-one city versus someone in a tier-three city is wildly different."

Tailoring marketing aesthetics to fit Chinese consumer tastes is also a smart move in an era when brands have repeatedly made culturally inappropriate product and marketing decisions in recent years, said Meagher of Scaling Retail. She cited and Dolce & Gabbana as brands that have drawn criticism for controversial Chinese marketing campaigns.

When it comes to deliveries and payments, Chinese consumer expectations differ vastly from those in the U.S. Payments platforms like American Express, Visa and Mastercard are not the primary payments tools for Chinese consumers; instead, consumers typically use Alipay, Unipay or WeChatPay, she said.

Chinese consumers are accustomed to one-touch payments, tracking their deliveries and receiving deliveries within an hour. Sterling, who spoke to Retail Dive from China, said that she could order her groceries and have them delivered to her within 30 minutes.

U.S. consumers will probably have to wait for a few years before they get faster shipping. A 2018 survey conducted by Zebra Technologies found that 40% of logistics, retail and transportation professionals anticipate offering two-hour delivery by 2028.

Looking beyond trade tensions

While the U.S. and China continue to be in a high tension situation regarding tariffs, American consumers and the financial sector are watching for signs of another economic recession. Brands that want to be successful in the long term know that they'll have to do business in China and that the economy will always fluctuate, Meagher said, adding that brands will likely need to adjust their pricing and resource allocation.

Unfortunately, consumers will bear the brunt of any increased costs brought on by the tariffs, not the companies, Meagher added. On the other hand, there could be opportunities for brands who already produce and sell their merchandise in China, but that may require a change in distribution strategy, she said.

Just as forward-thinking American brands are looking beyond the current trade dispute between the U.S. and China political leaders, Alibaba has shown signs of its openness to doing business with American companies. In June, Alibaba launched an English-language portal in hopes of attracting more global merchants to the platform. In his 2018 op-ed for Retail Dive, Ma wrote that the trade tensions between the two countries would hurt millions of American small businesses.

Ma ended his op-ed by saying, "If we encounter trade barriers, we will have to work harder. While we may face setbacks in the current protectionist environment, I remain confident and look forward to the next 20 years."

Both countries have enough demand for each other's products that the trade dispute won't dissuade American retailers and brands from entering the Chinese market, Adamson said.

"It's such a huge market that ... I think they're petrified that they won't be able to access the Chinese market. Because if you can't, many companies are going to be in far worse shape tomorrow than they are today."

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Brands and retailers like Fenty Beauty, Chanel, Tory Burch and are selling goods via Tmall, the online marketplace owned by e-commerce giant . Even Amazon closed down its Amazon China marketplace in April but has maintained its presence in Tmall.

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Need to gage an understanding of Chinese platforms (Tmall, Wechat, Weibo, Red).

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Internalization Theory: Is it best to set up multinational enterprises in the market we are targeting or do we handle everything from a UK office?

- FDI (Foreign Direct Investment).
- MNES (Multinational exterprises).

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Who would have thought one day that video games would become an essential showcase for the fashion world?

Designers and luxury brands have made it their new playground for presenting their collections and shaking up the public's buying habits. And it's a gambit that seems to be paying off, given the impact of these new technologies on a target group that is nevertheless difficult to win over: Gen Z.

It's a phenomenon that is impossible to miss. Presented on catwalks just a few months ago, the collections of top fashion houses are now being unveiled - at least some of them - within video games, while some brands are even collaborating directly with industry giants to allow gamers to dress their avatars in looks from the latest on-trend collections. And the success of these operations suggests that the trend will continue to spread at high speed in the world of ready-to-wear.

According to global shopping platform Lyst's Digital Fashion Report, conducted in partnership with virtual fashion house The Fabricant, the impact of these new technologies has been significant on searches conducted by internet users in recent months. For example, searches for Balenciaga pieces increased by 41% on Lyst just 48 hours after the presentation of the house's Fall-Winter 2021 collection via the video game "Afterworld: The Age of Tomorrow."

The same is true for searches for Burberry's TB Monogram collection (+32%), which jumped after the presentation of the "B Surf" game featuring pieces designed by the British house. Consumers also seem to have appreciated the presentation of Gucci's circular fashion line, Off The Grid, in "Sims 4," as searches for pieces from the Italian house took off by 82% in the following days.

In mainland China, players of a mobile game called Honor of Kings can dress the game's heroine Yao in two Burberry skins exclusively designed by Riccardo Tischi himself.

The advent of virtual influencers

Another trend not to be overlooked is the spectacular success that virtual models and influencers are enjoying. They may just be avatars, but they manage to draw crowds and accumulate up to several million followers on social networks. It's a phenomenon that isn't exactly new as the brand Forever 21 was already experimenting with hologram models in 2011, while Olivier Rousteing, creative director of Balmain, presented a campaign worn by virtual models Margot, Zhi, and Shudu Gram in 2018.

Virtual influencer Lil Miquela is now leading the way with her 3 million followers on Instagram. The Digital Fashion Report tells us that searches for the Moncler x Rick Owens Tonopah down jacket increased by 43% in December following the release of the digital magazine Euphoria where she appeared on the cover. But she's not the only one, influencers like Noonoouri (374,000 followers) and Imma Gram (331,000 followers) can also boast of being highly sought after among the fashion crowd. A real achievement for these virtual girls.

Can new technologies help boost sustainability?

As fashion is currently undergoing a major transformation, one might wonder how virtual reality, avatars, or even video games can be used to reduce the impact of one of the most polluting industries on the planet. The frontier between real and digital could play a part, and allow consumers to wear the most extravagant outfits without harming the environment for a second.

"From The Fabricant's perspective, we are building our business for a future where physical fashion becomes utilitarian in response to our planetary circumstances and the need to preserve natural resources, but the digital environment is where we will let our fashion imaginations run wild. In a non-physical world where all things are possible, we can boldly express ourselves without limitations or boundaries," outlines Michaela Larosse, Head of Content & Strategy, The Fabricant.

Between science fiction and reality, there seems to be just a thin line.
The Digital Fashion Report combines quantitative data - including search data from more than 100 million annual shoppers on Lyst, Google data, social media and press mentions over a 12-month period - with qualitative information, obtained through commentary and short interviews with industry experts at Lyst and The Fabricant. Consult the full report here. (Main and featured image: Gucci) This story was published via AFP Relaxnews.

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Virtual Influencers and Video Games: The New Tech in Fashion

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Who would have thought one day that video games would become an essential showcase for the fashion world? Designers and luxury brands have made it their new playground for presenting their collections and shaking up the public's buying habits.

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China wants to be a $150 billion world leader in AI in less than 15 years

https://www.cnbc.com/2017/07/21/china-ai-world-leader-by-2030.html

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These platforms want to be the Farfetch of digital fashion

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New marketplaces are establishing avenues for digital fashion designers to sell their designs, and for customers to wear them, outside of games or marketing moments.

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Imma - The Japanese Virtual Model Taking Over the Digital World

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Imma - The Japanese Virtual Model Taking Over the Digital World

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Focus on launching in lower-tier cities in China?

- Tier-1 cities are approaching saturation.

https://www.wgsn.com/insight/article/90756

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- The brand has suffered a total of £46m in losses.

- Staff at VB were cut by nearly 1/5 after the effects of the pandemic.

- The people around her have said the bottom line is that it's probably time to admit defeat
(https://www.ok.co.uk/celebrity-news/victoria-beckham-marriage-david-tension-23584996)

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https://www.wgsn.com/insight/article/91209

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Steps to make humans and the VR community no longer mutually exclusive are also well underway. "CGI could become a massive benefit to real-life models, because there will be the potential for them to make very detailed scans of themselves," Wilson explains. Their avatar can then be sent on multiple jobs around the globe without the model being there in the flesh. "Once someone is scanned, they are, in a way, immortalised. A person's career could last decades, centuries," Wilson chimes back in. "If the technology to scan and capture Marilyn Monroe had been around then, her career could very much be still going today."

Wilson's career trajectory has allowed him to dream on this scale, but, for the rest of us, tens of questions around the ethics of this arise. Whose intellectual property are these scans? How can an individual, who is no longer alive, protect themselves from identity theft? The human rights standards the industry is struggling to maintain now would surely go out of the window, and the problem of counterfeiting in fashion would reach new heights.

For now, though, humans, Wilson believes, have nothing to worry about. With product development will come a greater understanding of how to license data securely. And, going back to the basics, CGI beings are native to their virtual world. A 3D model can't walk down a catwalk, or embrace a fan. And, crucially, humans crave this real emotion. "People like watching their favourite celebrity go out and get drunk - and be, well, human," he laughs.
Read more: Why Our Faces Are The New Social Currency
First and foremost, CGI "explores new realms of creativity and creates new opportunities in an industry which is inherently inclusive," Wilson surmises. "Instead of being a certain height, or a certain this, or a certain that, what if all you needed was imagination and a basic understanding of 3D to have a shot in fashion?" Let the debate continue to swirl.

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The Numerous Questions Around The Rise Of CGI Models And Influencers

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Steps to make humans and the VR community no longer mutually exclusive are also well underway. "CGI could become a massive benefit to real-life models, because there will be the potential for them to make very detailed scans of themselves," Wilson explains.

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Celeb Name: Rebranding to 'VB' to minimise effect of celebrity name. Although we will use David in intital marketing to capture audience.

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Budgets: How much this is all going to cost and how the price will benefit the brand.

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The Pros & Cons: The benefits and disadvantages of this strategy. Look into the effects of virtual influencers.

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Stores: How AI tech will correspond in stores.

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Marketing: Virtual models/influencers, launch.

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In April last year, the online luxury retailer Farfetch announced a partnership with Gucci to launch " The Store of the Future". Combining in-store retail technology and online fashion tech, Farfetch helped Gucci collect data on its customers online and offline.

With "The Store of the Future", Farfetch showcased in-store technology that enables luxury shoppers to use their smartphone to log in when they enter a store in order to receive personalised recommendations from the retail staff. The staff themselves would be able to access their affluent customers' profile, including purchase history and product wish lists.

In this last report of our series on the future of online luxury retail, we explore how the digital transformation in retail technology is redefining affluent consumers shopping experiences. We'll look, in particular, at the opportunities that artificial intelligence (AI), voice-controlled commerce, and augmented reality (AR) can bring to the avant-garde luxury brands that are ready to embrace them.

How technology is accelerating the digital transformation of luxury

As discussed in our introduction to this series on the future of luxury retail, Millennials and Generation Z consumers are driving 85% of the global luxury sales growth. While older shoppers have traditionally been the growth engine of luxury sales, affluent Millennials and Generation Z customers now represent over 30 percent of all luxury spending.

These younger affluent shoppers have different expectations when it comes to retailing. They want an experience that is personalised and seamlessly integrated both online and offline.

This generational shift leads to a notable acceleration of sales through connective technology as the internet becomes an integral part of purchasing habits.

In parallel, developments in technologies such as voice commerce and Internet of Things (IoT) are reshaping luxury retail to become more customer-centric and personalised in a scalable fashion.

Luxe Digital has identified three major technological accelerators that will radically influence the future of luxury retail:

1. Augmented reality enhances luxury retail experience

Augmented reality is defined as a technology that layers digital enhancements atop a consumer's view of the real world and enables its user to interact with these enhancements. Luxury brands are using augmented reality in combination with their physical retail stores to elevate the shopping experience.

New AR technology, such as smart mirrors, is allowing affluent customers to naturally interact with luxury products and rapidly gather relevant information such as price, components, or origin.

Augmented reality is also expanding the reach of brands, by enabling consumers to visualise and "try" new products at home before making a purchase. Design app Morpholio Board, for example, created an AR platform for designers and shoppers to easily create new home interior models and share their work with a vibrant community.

Our hope is that AR doesn't just present a novel reality but that it allows shoppers or designers to reimagine home design in new and exciting ways.
Anna Kenoff, Co-Founder of MorpholiO

The app developer now works with Dyson, Herman Miller, and Knoll, among other brands, to help its users create mood boards and visualise how certain objects would fit into their living room. Morpholio is democratising the interior design process, enabling more people to create and visualise their home interior ideas in glorious details.

Morpholio's board helps users experience products in their space with advanced AR technology.

2. Artificial intelligence: personalised high-end shopping recommendations

Artificial intelligence assistants such as Amazon's Alexa, Google's Assistant, and Apple's Siri are seeing their market penetration accelerating drastically over the past two years. This is driven by both new smartphone sales - latest smartphone models often come with personal assistants pre-installed - and smart home speakers adoption. Devices such as Amazon Echo, Google Home, and Apple HomePod are indeed bringing their AI-based assistant into consumers' living room.

A study by Verto Analytics found that 98.6 percent of consumers in the US with access to a smartphone-based AI assistant used it an average of 10 times per month. And this trend is expected to accelerate as customers upgrade their smartphone over the coming years.

In addition, a study by NPR and Edison Research found that the adoption of voice-activated speakers is now outpacing that of smartphones in the US. Indeed, one in six adults in the US now owns a voice-activated smart speaker. Those smart speaker owners are using their AI assistant nearly nine times more frequently than on smartphones.

Luxury brands who are able to successfully position themselves as reliable sources for AI-driven recommendations will see their consumer engagement improve over time.

AI-powered subscription models are, in particular, emerging as a major sales accelerator for online retailing. Brands, such as Gillette and Nestlé are experimenting with initiatives that allow consumers to subscribe to ongoing refill purchases that are automatically managed by their AI personal assistant. Subscription models remove the human memory element entirely as consumers don't need to remember to purchase their regular products.

By 2025, it is predicted that 5 percent of all US eCommerce transactions will consist of some form of auto-replenish or subscription model. As predictive-replenishment technology advances, we can expect a decline in the purchasing of non-experienced products over products that are self-replenishing.

Consumer preference for simplicity and ease will indeed outweigh the desire to experience with new products. The growth of AI adoption may also lead to consumers increasingly relying on the suggestions and advice of their devices, rather than making decisions based on personal experience, thus significantly affecting how luxury brands should engage with their affluent consumers.

3. Voice commerce: conversational luxury retailing

Closely intertwined with the market penetration of artificial intelligence, the adoption of voice-controlled eCommerce is enabling consumers to make ad-hoc and spontaneous purchase decisions in a new shopping environment.

Voice commerce means that a customer's voice is used as a new user interface. This is a new platform for interacting with services.

Half of all online searches use voice or image search rather than text. " More efficient and often more convenient than typing, voice-based interfaces are ramping quickly and creating a new paradigm for human-computer interaction, " says Mary Meeker of KPCB, a venture capital firm that specialises in tech investments. Voice commerce is indeed providing a frictionless customer experience, with purchase completed as a single conversational stream rather than multiple clicks on a website.

With Google Home, Amazon Echo, and Apple HomePod, affluent customers are now buying luxury products without the need to visit a website or a retail store. As voice commerce becomes more sophisticated, we expect these devices to take an increasingly more influencing role in purchase behaviours. It is indeed likely that machine learning software will enable voice-based devices to provide purchase recommendations.

Affluent consumers increasingly expect frictionless and instant luxury experiences. With voice-controlled eCommerce, luxury brands are able to deliver services rapidly while also building trust to increases the likelihood for consumers to return in the future. As a retail channel, voice assistance provides exceptionally fast and convenient service at a minimal cost and with the capacity to scale effectively.

1. Luxury Emergency? Now You Can Get Gucci Delivered in 90 Minutes, by Jeremy Kahn and Robert Williams, Bloomberg, April 2017.

2. The Smart Audio Report, by NPR and Edison Research, Fall-Winter 2017.

3. 42 Percent of US Smartphone Owners Use AI Personal Assistant Monthly, by Bret Kinsella, Voicebot, July 2017.

4. The future of e-commerce in FMCG, by Kantar World Panel, November 2017.

Cover photo by Max Ostrozhinskiy.

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3 Inspiring Retail Technology Trends Transforming Luxury

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In April last year, the online luxury retailer Farfetch announced a partnership with Gucci to launch " The Store of the Future". Combining in-store retail technology and online fashion tech, Farfetch helped Gucci collect data on its customers online and offline.

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How to Benefit from AI in Retail Optimization | RELEX Solutions

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Artificial intelligence (AI) is attracting a lot of attention in retail. The reason is obvious: today's retailers can collect massive amounts of data on transactions and interactions with consumers both online and in brick-and-mortar stores. At the same time, they have to make billions of decisions to align their inventories, capacity, and staffing with ever-changing consumer demand.

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- AI Tech
- Virtual Sale Assistants

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Are Virtual Influencers Coming to China’s Luxury Market?

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Are Virtual Influencers Coming to China’s Luxury Market?

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"The curiosity factor also makes virtual influencers appealing to luxury marketers."

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Top 15 virtual influencers.

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Discover The Top 12 Virtual Influencers for 2024 - Listed and Ranked!

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Without further ado, let us introduce you to the virtual influencers of 2024, you are bound to hear a lot more about them in the future.

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How Brands Can Thrive In The Direct To Avatar Economy

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How Brands Can Thrive In The Direct To Avatar Economy

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Kerry Murphy explains in Vogue Business, "the real value of 3D is that it enables us to be way more creative and to create situations that we haven't previously seen, which allows for this new aesthetic language; a new way of expressing our creativity that really speaks to young, digitally savvy audiences".

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Shopify: "products with 3D/AR content showed a 94% higher conversion rate than for products without 3D/AR."

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"Designers are shifting their focus back to creativity with technology at the heart of it. "Let's sell creativity, not more clothes. We need to change the system. Be brave and reimagine it," said Leanne Elliott Young, founder of CommuneEAST in Verdict. The creativity spawned from designers is more than the technology to make clothes. It's turning clothes into technology."

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The world's next Coco Chanel is probably a 10-year-old girl who is currently designing avatar skins in Roblox. This idea stems from the changing world of fashion and digital identity. Since the invention of the Internet and video games, it was only a matter of time until people wanted to play as their favorite characters. To be someone else in digital form or expand on who they are as digital avatars.

For years the fashion cycle has been stuck in a cycle of overproduction and waste. The industry was at a tipping point, pushed over the edge by the global pandemic. But it's given fashion houses and designers a chance to step back, slow down, re-evaluate, and create for the future.

Designers are shifting their focus back to creativity with technology at the heart of it. "Let's sell creativity, not more clothes. We need to change the system. Be brave and reimagine it," said Leanne Elliott Young, founder of CommuneEAST in Verdict. The creativity spawned from designers is more than the technology to make clothes. It's turning clothes into technology.

Designers, brands, and celebrities alike realize that future consumers are online. They have digital identities in games and virtual hangouts. In order to market to future customers, they need to meet them where they are at - in the metaverse (or Fortnite or Roblox).

Enter the Direct-to-Avatar economy.

The World Will Embrace The Metaverse As A Fashion Capital

"Direct-to-Avatar (D2A) refers to an emerging business model selling products directly to avatars (D2A) - or digital identities - bypassing any supply chain management like dropshipping, logistics of how to get a physical product to a consumer's door," said Ryan Gill, co-founder and CEO of Crucible. "D2A brands are being sold in social or competitive virtual environments like games or open worlds where consumers project themselves as an avatar." This means reimagining the world of atoms into a world of bits and pixels.

Kerry Murphy, founder of The Fabricant, a digital-only fashion house, describes the D2A economy as made up by "Digi-sapiens." He said in Mission Mag, "they comprise around 3.5 billion individuals globally, with more than 55% of the total spending power. They are made up of Gen Zs and young millennials, who have grown up blurring reality and fantasy, with the virtual world becoming their second home." Digi-sapiens are "are trendsetters, trend chasers, and early adopters of any technology that upgrades and frees up their existence."

They also care about the environment, scarcity, authenticity, and exclusivity. Digital fashion houses and clothing brands solve this problem. Kerry Murphy explains in Vogue Business, "the real value of 3D is that it enables us to be way more creative and to create situations that we haven't previously seen, which allows for this new aesthetic language; a new way of expressing our creativity that really speaks to young, digitally savvy audiences". Other fashion design collectives like New Industrial Order (N.I.O) use technology to design unique looks within a circular fashion system. N.I.O uses 3D knitting to make seamless garments. New Industrial Order doesn't start orders until they are placed. They're able to do this because of 3D knitting, which results in reducing stock overages.

Yes, digital clothing is sustainable, unique, and a new frontier. But this new frontier is one ripe for exploration and creativity for designers and avatars. As people's lives blend more into the metaverse, they will have a better understanding of what the metaverse can do for them. That understanding will lead to demand for fashion that keeps up with digital identities and even digital people.

"Wearable technology really groomed people to think beyond our wildest dreams to envision what the future of fashion can be, but many early examples of wearables failed to meet the hype or expectation," says Amanda Cosco, Fashion Futurist, and Founder of Electric Runway. "The Metaverse doesn't have the same constraints as our physical world, and neither does what we wear in it."

Thomas Webb, a digital artist, was tasked with creating an art installation for luxury car brand Mercedes-Benz. He wanted to show people with no programming knowledge what the artificial intelligence in the car meant. The Mercedes EQC understands empathetically what its driver is doing and why. This sort of AI can be programmed into fashion as well. Why simply wear a garment when it can understand how you feel as you play Pokemon Go or roam the world of Roblox? The clothing can change shape, color, and even dimension, based on the emotion and possibly even the intention of its wearer.

This idea of virtual goods as virtual items are another emerging area in augmented retail. One to the benefit of brands hoping to be noticed by the younger generations. A McKinsey study noticed Gen Z view "consumption as access rather than possession." Consumption is "an expression of individual identity" and a matter of ethical concern. The shift in consumption mentality is what leads brands to virtual goods as commodities in the emerging area of augmented retail. Brands tuned into young and upcoming generations can start thinking now about their product strategy. Fashion is one example of how an outdated industry is reinventing itself.

"Gen Z considers their digital avatars an extension of themselves," says Samantha G. Wolfe, founder of PitchFWD and Adjunct Professor at NYU. "This generation loves individuality and challenges social constructs. So it makes sense that as they spend more time in virtual worlds, they want to represent themselves uniquely. This might start as buying branded goods and clothing, especially ones that connect to them authentically. However, it offers a huge opportunity for a new kind of fashionable expression and a new kind of designer that's only possible in the metaverse."

Streetwear in 2025

Norwegian retailer, Carlings, launched a digital collection of futuristic streetwear. Customers bought the streetwear online and then it was e-fitted to their photos. The goal is to counter the "wear once and throw it away" mentality of online influencers. And as influencers become more digital, they won't need the latest fashions in person to show off new and creative designs.

Streetwear in 2025 will be hyper-personalized products, designed by consumers empowered with technology. Consumers will 3D print shoes at home. Hence, 3D knitting shoes can be deconstructed and rebuilt, so consumers always have a pair of shoes that's unique and individualized to their own personal style.

Nike's auto-lacing technology will be part of all shoes. Possibly shoes won't have laces in 2025 as the fashion industry continues to cut down on waste. Shoes will be made out of alternate material like "biocouture, cellulosic fiber, cork sheeting, or mycelium." Shoes will be made out of material that can sense changes in the environment. They will become waterproof when it rains or vented if it reaches a certain temperature outside.

Mano ten Napel, founder of digital magazine FashNerd, said in BBC, "In the future, with the roll-out of 5G, clothes will function as a new interface, impacting on the way we communicate with the connected world and with each other." Smart shoes track their wearer's workout, analyze foot position to improve stride, and even detect falls. Sensors in clothing communicate with the environment around it, tugging its wearer back from the crosswalk if a car drives by unexpectedly or magnetically connects a parent and their child in a crowded shopping center.

Amber Jae Slooten, digital fashion designer at The Fabricant, said of their first collection: "We didn't have to ship any collection, we didn't have to hire any photographers, we didn't need any models," Slooten said. "We didn't even need to fly to the desert to photograph it." In 2025, virtual fashion, arriving at someone's door as if physical, real-world apparel will be the norm. It's the frictionless approach to e-commerce that companies have been striving towards for decades.

Startups like Aglet have raised $4.5 million for their augmented reality location-based sneaker game and app that records steps traveled by sneaker collectors, earning virtual currency to buy virtual sneakers, including one virtual pair that sold for $850.

Gaming As the New Social Network

A switch has happened in online gaming where it went from being a game with others to being with others in a game. Online games like Fortnite, Roblox, and Grand Theft Auto are examples of games where players go to hang out, not just play.

Fortnite has Party Royale mode and hosts concerts. Travis Scott made $20 million dollars for his concert in Fortnite that lasted 12 minutes compared to the $345 million Taylor Swift made in 2018 from her Reputation Tour, which included 43 stops worldwide. Without touring, Swift only made $185 million in 2019.

Games aren't just for teenagers. Roblox is a massive multiplayer online game aimed at younger users. Roblox has 36.2 million users a day, 54 percent of them under the age of 13. What's more telling is that "455,000 of those young gamers purchased Robux, the platform's virtual currency-handing over real-world cash that totaled nearly $700 million in the first nine months of 2020."

And that's in one game. Combined, gaming is a whole economy ripe for digital goods. "In 2017, consumers spent around 30 billion U.S. dollars on gaming loot boxes and skins, and this figure is said to grow to 50 billion by the end of 2022."

Kids growing up learning and socializing via games through avatars have that experience as part of life. Like kids of the past chatting on phones, to instant messaging on AOL Messenger, those habits didn't fade. They morphed and evolved as the technology allowed that instant connection with people in more natural ways. That way happens to be gaming.

Gaming being the new social means that gamers, young and old, are ready to differentiate themselves from other avatars and default fashion choices. Glu Mobile created "Covet Fashion." A game that allows players to style models with digitally rendered designer clothing. It generated $53.4 million in 2018.

Burberry developed a multi-player game: B Surf. In B Surf, players race solo or with their friends while dressed in the latest Burberry garb. Hitting the TB Summer Monogram on the race track gives players a boost. The game was developed in-house by Burberry's digital teams. It was the fashion houses' third online game since 2019.

The FIFA video game started off as a soccer game in 1993. People could play as their favorite soccer stars from around the world. In 2019, FIFA 20 reached 10 million players. Nowadays, gamers can play as Dua Lipa, David Beckham, or DJ Snake. FIFA avatars aren't just for the gamers. David Beckham will make more from his 2021 FIFA Avatar than what he made playing at Manchester United.

Celebrities And Brands Need To Have a Virtualization Strategy

Dr. Helen Papagiannis describes the shift to virtual goods as the "digital lipstick effect". The original definition of the term applies when people buy small indulgences, like lipstick, during a recession or economic downturn. "Lipstick as a potentially accessible product becomes a metaphor in today's times, analogous to digital lipstick, or any virtual good," said Papagiannis.

Celebrities and brands can use this metaphor as the entryway to their virtualization strategy. Starting with small AR/VR indulgences is good for both consumers and brands. Shopify revealed that "products with 3D/AR content showed a 94% higher conversion rate than for products without 3D/AR."

Consumers don't just indulge in small items. They also shop in "micro moments", whenever the mood strikes them. Mobile has rewired the way consumers think about shopping. Virtual strategies should incorporate these two patterns. Small indulgences in quick, bite-sized chunks. Define the type of virtual strategy to go after, whether it's digital clothing in a game, virtual accessories on a digital influencer, or micro-moments via WebAR on a mobile phone.

As the AR/VR technology becomes more widely adopted, consumers will be more immersed in virtual spaces. It's where celebrities and brands can stretch their virtual imagination as to what digital goods they can provide and how to best do it. Fashion is a lot about looks. But it's also about how it makes us feel.

How Brands Can Start Preparing

Balenciaga, a luxury goods and jewelry company, partnered with Sketchfab to power their Fall 21 Lookbook. The 3D clothing and models are part of Balenciaga's video game fashion show, " Afterworld: The Age of Tomorrow." The video game is a walkthrough of the 2021 Fall line where people walk past models and clothes floating on the wall.

The Ralph Lauren brand has become a fashion innovator in the augmented reality space and has launched several campaigns with Snapchat. Their latest one allows users to scan the highly-recognizable polo player logo through Snapchat and unlock some interesting AR features just in time for the Holidays.

Levi is branching out across virtual platforms. Besides being featured in Kohl's virtual store, Levi's is "complementing its AR retail strategy with digital tools like Squad, an online co-watching video app where friends can shop together." Levi's is a good example for brands to follow because they partnered up, started small, and are experimenting across platforms and experiences. What may work today for AR might not tomorrow. It's still a shifting landscape, and brands need to be agile to go where their target market is.

Brands can learn from these examples or start exploring what their brand's virtual identity will be in these evolving virtual worlds.

Three things brands can do to start preparing are:

● Examine creating their own branded video game could translate into more than brand awareness and actually lead to sales of virtual goods that, in turn, arrive at a consumer's home in their physical form.

● Partner with up and coming in-platform game creators in Roblox or similar platforms and create a campaign that is led by that creator and that can generate results in the platform's digital currency.

● Explore creating their own virtual influencer like Ikea and other brands have done and have that next iteration of what a brand's voice is to inhabit those virtual spaces.

Making Virtual Goods Work Across Platforms and Trackable

Part of the circular fashion system is tracking garments and fabric. Fashion houses use Non-fungible tokens (NFTs) to design transparency and traceability into apparel production and distribution. They can do this because NFTs are built on the blockchain. Fashion houses can prove a garment is sustainable because its material, age, and the number of wearers are tracked. This helps customers choose what to buy with confidence.

NFTs also reveal counterfeit products or ones that come from ethically questionable production sites. "The total trade in fakes is estimated at around $4.5 trillion, and fake luxury merchandise accounts for 60% to 70% of that amount," according to the Harvard Business Review. The counterfeit industry may start to see its decline as Gen Z "tend to inform themselves about how the products they wish to purchase are made."

The study from McKinsey found that, "Gen Z behaviors, all anchored in one element: this generation's search for truth." Non-fungible tokens are a step towards the truth in fashion, not just to ensure the source of the garment, but makeup and value as something in this world. The digital identity of an item "gets transferred through Blockchain technology, which in turn makes it impossible to counterfeit the design." Thus, creating uniqueness and desirability.

Another major question that arises is how a user can use their avatar or their unique virtual identity across platforms, which would have major implications for fashion brands selling virtual goods.

Crucible has a consortium called BluePrints for the metaverse with the goal of allowing people to use the same avatar and virtual identities across platforms. They have tools for builders and creators so they can be part of building the open metaverse, and understand that the Direct-to-Avatar market as "digital property market for skins, avatars, digital fashion, and collectibles is predicted to be the largest digital economy in history, topping $1T this decade."

Once the infrastructure is more developed (blockchain, mixed reality, Cryptography, and Self Sovereign Identity) companies like Crucible Network (currently in Alpha) will be the go-to for brands. Instead of building multiple experiences across apps and platforms, they can build their product once and evenly distribute it across the metaverse.

The Future of Virtual Fashion and Retail is Now

Humans are constantly evolving and creating. Our desire to explore the unknown and live out our dreams or other worlds leads us into the digital expanse. Our identities become split and enhanced by digital mediums. Online, people can tune into the sort of person they want to be. It's an escape, a place of wonder, and an opportunity for brands and celebrities to expand their vision and goods. No longer being held to reality is a good thing when it means reaching more customers by creating new and innovative products. This is the Direct-to-Avatar economy. The future of digital goods has arrived. The future has arrived sooner than many brands expected and this part of fashion will only continue to move forward.

It's Game On! Moving forward, brands will need to level up the phygital fashion landscape and meet the consumer of tomorrow where they are today!

... Read More

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How Brands Can Thrive In The Direct To Avatar Economy

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The world's next Coco Chanel is probably a 10-year-old girl who is currently designing avatar skins in Roblox. Fashion houses and designers have a chance to re-evaluate strategies and create for the future. That future includes virtual dresses, NFTs, and limitless possibilities.

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Virtual influencers - computer generated brand ambassadors programmed with their own styles and opinions - aren't new to luxury brands in China, especially ones that are wary of the erratic behavior and hefty price tags associated with flesh-and-blood celebrity influencers. But what if the thousands of fans of these luxury labels could all become virtual influencers for them? Thanks to a hugely popular new 3D avatar app called Zepeto, that kind of consumer engagement (and the free marketing that comes with it) is no longer simply a fantasy.

Zepeto is the latest product from South Korea's Snow Corporation (whose parent company Naver also owns the Snapchat-like app Snow and the popular Asian messaging app Line), and it has become an overnight sensation in China this December. Zepeto lets you customize avatars with different virtual outfits, hairstyles, down to the user's shape of freckles, keeping the app's users infinitely entertained.

A few luxury brands saw Zepeto's marketing potential almost immediately and have created content around the app. On December 20, Gucci collaborated with the WeChat KOL Liaobuqi Daily (了不起日报) by showing her Zepeto avatar traveling around the globe: from an art museum in Los Angeles to the new Gucci bookstore in New York City, and other locations listed on the brand's travel guide, Gucci Places.

Virtual avatars aren't a new concept for post-'90s Chinese netizens, many of whom still recall the QQ avatar that Tencent Qzone introduced back in the early 2000s. But Zepeto's use of AI technology, which takes a headshot and automatically regenerates the user's facial features in avatar form, has taken the avatar game to a new level of precision.

The app also utilizes Photoshop-like features to further blur the boundaries between reality and virtual reality. Users can put their avatars into real background photos or substitute their actual heads in photographs with their avatar heads (a slightly creepy yet fun feature). Because of these innovations, many app users have become inspired to post their own fashion shoots where they dress in beloved brands like Chanel or Balenciaga.

So far, difficulty opening Zepeto has been the biggest complaint about the app in China, mostly because there isn't a localized Chinese version of the app available yet. Zepeto is becoming popular in the U.S. as well, but Westerners are concerned about privacy issues since the app appears to track user locations (although the privacy policy listed on the company's site states that this isn't the case).

Local companies that have witnessed the zooming popularity of Zepeto first-hand have been quick to copy it. Meitu, a China-based selfie-enhancing app, released an AI feature similar to Zepeto's three days ago, and the Tencent-backed video app, Kuaishou, is now releasing their own AR avatar feature dubbed "Kmoji."

But for brands, an even more interesting application of Zepeto could involve its potential for user-generated content. On Instagram, tons of users have already created their own Zepeto-styled fashion posts, and they're forming communities around popular hashtags that publicize their favorite brands like #Zepetochanel (307 posts) and #Zepetogucci (193 posts). Meanwhile, the social feature "Discover tab" on Zepeto can amplify a brand's message since users can virtually "meet up with" other Zepeto characters and initiate a chat, play games, or take virtual selfies together.

The app is currently free to download, but users must spend money to unlock the more customizable options. But exactly how deep are luxury houses willing to dive into the virtual avatar craze? It's not a stretch to imagine brands peddling their virtual products on Zepeto, thanks to generations of virtually-obsessed netizens in China.

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Can Luxury Brands Tap Into China's 'Virtual Avatar' Fever? | Jing Daily

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Virtual influencers - computer generated brand ambassadors programmed with their own styles and opinions - aren't new to luxury brands in China, especially ones that are wary of the erratic behavior and hefty price tags associated with flesh-and-blood celebrity influencers. But what if the thousands of fans of these luxury labels could all become virtual influencers for them?

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VB Avatar Collection: Launching the S/S22 collection virtually using avatar models and influencers. Really relevant to Chinese market and also ties into sustainablity. Will tie in Beckham name more featuring avatars of David and kids.

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It seems weird to say that, but not all influencers go on holiday. Some of them can work 24 hours a day, every day of the week, without the need for social distancing and, most important, they are staying young forever. Magic? No, technology.

We're talking about particular "digital" influencers and celebrities who are establishing themselves in the luxury market and could change the rules of the fashion world, already in full revolution. In China and Japan, playing with real and virtual has long been the normality, so much that a famous digital pop star, Hatsune Miku - to be honest she looks more like an anime than a real person - has been on the scene since 2007, also signing collaborations with Google and Toyota and later with Louis Vuitton and Givenchy.

The online platform Vsinger, managed by Yamaha, keeps pushing singers (Yanhe, Yuezheng Ling and Yuezheng Longya to mention a few) that are able to conquer the Generation Z with Instagram directs followed by millions of users, sometimes adding the participation of "human" influencers. The " gaming" element is also very strong in this case, so much so that virtual bands are often created starting from video game characters, as in the case of League of Legends, whose co-branded collaboration with Louis Vuitton went sold out in few minutes.

The world of video games has also started to blend with the one of beauty thanks to sponsorship contracts with popular brands like Mac Cosmetics and Head & Shoulders. Now even the brands of the fashion world are starting to create their own virtual testimonials. In the beginning were the mascots, like Fendidi, the panda created by Fendi and Jackson Wang, Bape Milo of Bape, the Kaws doll by Dior and the limited edition doll Tokidoki x Karl Lagerfeld, now are the other inanimate testimonials. Just think also of the successful boom during the quarantine of Animal Crossing, whose lovely avatars started to dress Prada, Gucci and Supreme, up to a virtual Fashion Show organized on the platform - going beyond the boundaries of traditional gaming as we know it.

Mnay brands and magazines are starting to implement their campaigns and editorial contents with virtual figures, from models to settings and clothing and accessories, entirely designed through codes and numbers. It seems that the audience is getting used to dealing with this type of digital image. For example, we all remember Calvin Klein's campaign last year where Bella Hadid was kissing Lil Miquela, the pioneer of virtual models, now managed by a real agency and influencer with more than 2.5 million followers; a year later the beautiful black digital model arrived; and again the Dior FW 2019 collection, was inspired by the futuristic works and robotic-human figures of the artist Hajime Sorayama. The "humanoids" also had the chance to visit Milan with the editorial by nss magazine for the Louis Vuitton SS19 collection, and lake Como where they were wearing the Dior x Stüssy collection.

More recently, the Dutch brand Daily Paper presented its SS20 collection with alien models, and the latest SS21 collection with a 3D campaign created by the artist @samylacrapule, who also collaborated with nss magazine on the occasion of the latest digital cover. Moreover, the Italian brand Sunnei presented the first part of the SS21 collection with Sunnei Canvas, a platform populated by a series of male and female avatars with a human appearance and created by the brand in collaboration with the Milanese studio @pezzodistudio.

Not only Lil Miquela. The turnover around these "special" models keeps growing and agencies specialized in representing this category of models also appeared, like the British The Diigitals, able to create not only digital versions of real models, making them wear the items of famous brands, but also beautiful and completely virtual girls. Another example is IMG Sims, a digital agency worldwide that deals with virtual models, inspired by the Sims of the famous simulation game "The Sims", like those of @skinnycleo.

Who knows what these "virtual celebrities" will hold for us in the future and how much they will be able to give voice to the topics of diversity and equality that the industry is focusing on. Being able to transcend ethnicity, geographic position, tastes and desires, we could even imagine models and influencers with alien features, doing photoshootings in space.

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Are avatars and digital influencers the future of fashion?

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It seems weird to say that, but not all influencers go on holiday. Some of them can work 24 hours a day, every day of the week, without the need for social distancing and, most important, they are staying young forever. Magic? No, technology.

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The British company will lower average prices for dresses by 40 percent and merge its main Victoria Beckham collection with its diffusion line to appeal to a wider audience, it told BoF.

Though the brand plans on retaining its luxury positioning and aesthetic, its eponymous designer and CEO Marie Leblanc are betting on accessible prices and pared-back designs to draw in new shoppers. "We've seen a huge opportunity in the market, which is a space for an affordable luxury brand," Leblanc wrote in an email. "It's about maintaining our elevated DNA, but providing an ease - and making sure our consumer can relate to the brand both in terms of use and price point."

The new brand direction, which will see Victoria Beckham and Victoria, Victoria Beckham merge into a single label, will launch with a Pre-Spring 2022 collection that debuts in stores this November.

Victoria Beckham reported losses for 11 years in a row until 2018, but saw sales return to growth before the pandemic hit, according to accounts published in January. While the brand is still working towards profitability, Covid-19 has redrawn the fashion landscape, prompting many businesses to rethink their offerings.

"None of the collection feels like a compromise to me," Beckham said in an email. The new direction is a "rebirth," she said. "We have worked hard on fabrication and production to deliver the same quality for our community."

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Victoria Beckham Cuts Prices in Brand Restructure

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The British company will lower average prices for dresses by 40 percent and merge its main Victoria Beckham collection with its diffusion line to

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The Beckham Programme: A programme run by the brand to recognise and potentionally collab with a series of fashion brands from the Middle-East. (Similar to 'Love Bloomingdales'). Will create global connections for VB and the opportunity to establish a reputation in that region. It will also establish VB from a business POV rather than Victoria's celeb image.

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08 June 2021

Trade wars and Brexit also creating challenges for luxury sector, Hogan Lovells web seminar hears

The Covid-19 pandemic has forced luxury brands to embrace e-commerce more rapidly and rethink how they can provide an exclusive and personalised experience online, according to entertainment and fashion law expert Pamela Weinstock.

Weinstock - speaking at a web seminar hosted by the Luxury Law Alliance and Hogan Lovells - said that brands should take note of developments in China, where e-commerce retailers have focused on engaging consumers through apps, gamification elements, rewards, and innovations such as augmented reality, digital mirrors and virtual try-ons.

"The shopping experience in Asia has always tended towards a focus on interactivity and their tech often has live chat as a very central element before you make any purchasing decision," said Weinstock. "That lends very well to the luxury experience because you're providing the personalised, bespoke service that luxury is seeking."

The panel, which was moderated by Sahira Khwaja, head of the London brands practice and co-head of the fashion and luxury brands group, agreed that luxury brands were already using technology to change the way they sell goods online.

LVMH, for example, has co-developed a system using blockchain tech that helps to combat counterfeiting by allowing customers to check if their products are genuine, with brands including Prada and Cartier also signing up to the project.

Uncertain future

While the pandemic has accelerated the shift to online, traditional brick-and-mortar stores were already facing an uncertain future before the virus hit with many shopping malls and large department stores closing down in recent years.

"Brands are moving to an omni-channel approach, with more activity moving online," said Weinstock. "Stores might have a smaller footprint, they may be more of a showroom, more of a brand experience where there is 'retailtainment'. Often there may be cafes or partnerships not necessarily traditionally associated with apparel retail luxury channels."

The shift to online is also changing how luxury brands need to approach advertising, with many starting to use influencers to promote their products via social media.

"That has been a little bit of a challenge because you may give up some creative control when you have influencers creating content, so what we're seeing in that space is more use of micro influencers who may have an audience in the arts, whose aesthetic is in keeping with the brand positioning and there's more a feeling of authenticity," said Weinstock. "There are a lot of interesting developments in China where we're seeing virtual influencers as well as KOLs [key opinion leaders], who are starting to have their own product lines or actually sharing in profits as opposed to just receiving a flat fee."

In this new world, there are a number of things luxury brand GCs should be doing to protect their businesses, said Weinstock. For those that might have started producing masks or other protective clothing during the pandemic, brands need to be on top of what IP protections they have in place. Brands also need to review their contingency policies, such as looking at supply chains and vendors for potential disruptions, as well as beefing up IT security to handle the growth in e-commerce and to protect against cyber hackers.

Trade wars

It is not just the pandemic that is causing luxury brand GCs headaches. Ongoing trade tensions between the US and China and to a lesser extent the US and the European Union, as well as the uncertainty around Brexit, is weighing on the global luxury sector, said Aline Doussin, head of the UK trade team at Hogan Lovells.

"The trade wars and the ratcheting up of both rhetoric and retaliatory tariffs is restricting imports and exports and has significantly impacted all sellers and buyers, and e-commerce as well," said Doussin. "The US has imposed tariffs on more than $360bn of Chinese goods and China has retaliated with tariffs on more than $110bn worth of US products. Luxury brands have been heavily impacted as well, especially on the European side for EU exports to the US."

To mitigate the additional costs of these trade wrangles, e-commerce retailers need to identify which parties bear the financial burden - is it the seller, the buyer or the e-commerce platform itself, said Doussin.

For Brexit, it is not only tariffs, but also additional paperwork processes that retailers need to factor in when determining who foots the bill. One way some brands are responding is to move manufacturing locally so they eliminate cross-border activity and avoid any tariffs, she said.

Brexit is also forcing luxury brands to consider storage issues such as whether they should open their own warehouses in the EU or use third-party owned and operated warehouses.

Tax implications

Supply chain changes and, more importantly, new ways of doing business, could potentially have tax implications, said Karen Hughes, co-head of Hogan Lovells' global tax practice.

"Since in tax terms profits follow value, new business models focused on data and technology may mean that where profits should be booked - transfer pricing - needs to change," she said.

"The good news is that quite a bit of the thinking has already been done. That's because of some striking similarities - perhaps surprisingly - between the luxury goods industry and the tech giants.

"Both have extremely valuable IP, high margins and, with e-commerce, are highly centralised. Of course, there are differences. But the key point is to learn the lessons: to acknowledge the role in value creation played by centrally held and developed IP, but also the significant contribution made locally."

The Acceleration of Digitalisation and Ecommerce: What Luxury GCs Must Know was held on 21 April in association with Hogan Lovells. Click here for more information about Hogan Lovells' fashion and luxury brands capabilities.

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The Global Legal Post's Anti-Counterfeiting World Law Summit takes place on 22 June. Click here to read the programme for this virtual event. For sponsorship enquiries email mariasunderland@globallegalpost.com and to enquire about delegate passes contact jasmindersoor@globallegalpost.com

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Luxury brands rethink e-commerce strategies as pandemic crimps in-store retail

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08 June 2021 Trade wars and Brexit also creating challenges for luxury sector, Hogan Lovells web seminar hears The Covid-19 pandemic has forced luxury brands to embrace e-commerce more rapidly and rethink how they can provide an exclusive and personalised experience online, according to entertainment and fashion law expert Pamela Weinstock.

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VB production is currently from Italy.

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Afterworld: The Age of Tomorrow

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Afterworld: The Age of Tomorrow | Balenciaga

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5 Things To Know About Balenciaga's Virtual Reality AW21 Show

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Balenciaga staged its dystopian autumn/winter 2021 collection as a virtual reality runway show presented through Oculus glasses, and released the video game, 'Afterworld: The Age of Tomorrow'.

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https://www.ft.com/content/17339e18-6039-4fd2-93c6-95fd7c87a191

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Bella Hadid opens Mugler's Spring/Summer 2021 film with a catwalk.

She struts forth, showing off a tank top and a pair of jeans. She even turns to look into the camera with her signature steely gaze. She does everything you would expect of a model in a fashion film - except when she turns into a winged centaur and takes flight. That's when you realise: she's not really Bella.

Instead, she's a virtual replica of the model.

When the real Bella couldn't fly to Paris where the film was being shot, Mugler designer Casey Cadwallader decided she could be represented by a CGI (computer-generated imagery) avatar instead.

He arranged for a "digitisation shoot" where she was scanned, almost in the nude, with body-mapping cameras. The images were then converted into her 3D form. Cadwallader and his team could do anything with it, like turn her into a Pegasus.

They're not the only ones toying with CGI technology. While Versace held a physical runway show this season, the fashion brand also scanned its models, including Irina Shayk, to create animated visuals for Instagram. The show finale even featured a digital octopus named "Churro", designed by 3D artist Alex Zabei.

In July, Burberry unveiled its TB Summer Monogram campaign starring Kendall Jenner - four virtual versions of her, at least. It was creative director Riccardo Tisci's idea to use CGI; he tapped on Nick Knight, known for his innovative approach to fashion photography and films, to shoot the campaign.

"You can do things in CGI that would be impossible to do otherwise," shared the British photographer to Showstudio. "For those calling for more reality, no one's saying it can only be this, but we should be embracing all new ways of making fashion imagery."

Knight has set many trends in the world of fashion imagery, so it's telling that he had predicted, five years ago, that virtual models would be the next big thing in fashion. However, even he couldn't have foreseen how 2020 would turn out.

In the last few months, fashion has reckoned with the restrictions of the pandemic. The industry has been forced to create solutions, often digital, to work around them. "The pandemic is accelerating a digital shift that is already upon us," said Knight.

FaceTime and Zoom photoshoots became a thing, as did the digital fashion show. If fashion is embracing virtual models now, it's mostly because it doesn't have much a choice - especially when models are unable to fly out to shoots, as were the cases of Bella and Kendall.

Still, it was inevitable for fashion and 3D technology to collide. CGI has been widely used in both gaming and film, which are just as powered by visuals as fashion is. The technology also opens up a world of creative possibilities that fashion would likely be exploring long after the pandemic.

More importantly, it cuts costs for fashion brands and magazines, who usually have to pay for flights, shoot locations and other real-life considerations to make a shoot happen. Instead, they can dream up a space on their own. Vogue Taiwan offered a glimpse of the future with its May issue, whose fantastical covers were created entirely using CGI.

It's worth noting that in all the above examples, the digital avatars that are featured were based on actual models. They are different from the many emerging virtual influencers that are constructed by creative agencies and are now getting the attention of brands. Some of these realistic avatars have already crossed over into the world of fashion, pre-pandemic, such as Lil Miquela, who modelled for Calvin Klein and was invited as a guest at a Prada show.

In these cases, there are no real models hired to work on the projects. This was a major point of criticism for Balmain after the brand picked Shudu, the "world's first digital supermodel", and other virtual models to front a campaign in 2018.

Not everyone in fashion is thrilled about these digital beauties. Some models, especially women of colour, believe that the rise of these virtual influencers will take even more job opportunities away from them. There are also designers like Michael Kors who prefer working with models that are made of flesh and blood, instead of pixels, saying, "I am not into a digital model. I am into real people with personalities and opinions." For now, so do most of us.

Fashion, for all the fantasy it sells, may be better off sticking with the real deal, like Bella and Kendall. But we also can expect to see their virtual versions more often - with or without wings.

Unlike virtual influencers, these avatars involve real models who often already have huge followings. That's something most fashion brands and magazines would definitely be on board with, especially when experimenting with a new technology.

It also takes a lot less time and money to generate a real-life model's 3D form, compared to creating a new virtual model from scratch. And soon there will be plenty of 3D designers to work with; according to Business of Fashion, CGI artists are one of the most in-demand jobs in fashion right now.

Supermodel Linda Evangelista once famously quipped that she wouldn't "wake up for less than $10,000 a day." Pretty soon, her successors won't even have to leave their beds to get paid.
Header photo credit: Mugler

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From Bella Hadid to Kendall Jenner, fashion's top models are going virtual

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Bella Hadid opens Mugler's Spring/Summer 2021 film with a catwalk. She struts forth, showing off a tank top and a pair of jeans. She even turns to look into the camera with her signature steely gaze. She does everything you would expect of a model in a fashion film - except when she turns into a winged centaur and takes flight.