Aristotle said, “A common enemy unites the bitterest of enemies,” and that age-old maxim is once again proving true. This week the fiercest competitors in the luxury market – LVMH, the Richemont-owned Cartier and Prada Group – have joined forces to fight a common enemy: counterfeiting.
Together they formed the non-profit Aura Blockchain Consortium to put blockchain technology to work assuring customers of the authenticity of luxury goods.
Developed by Microsoft MSFT -0.9% and ConsenSys, the Aura blockchain system uses a similar distributed platform that controls cryptocurrencies. Through it, consumers will be able to access a product’s history and proof of authenticity based upona a digital certificate they will receive electronically upon purchase. Each item will include a unique identifier, such as an NFC chip for bags or a serial number for watches, which will be linked to the certificate on the blockchain.
“Consumers can easily and transparently follow a product’s lifecycle, from conception through distribution, with trusted data throughout, and thus strengthen their relationship with their favorite luxury brands,” Aura said in a statement.
And Cyrille Vigneron, president of Cartier and a member of Richemont’s Board and Senior Executive Committee, added, “We invite the entire profession to join this consortium to design a new luxury era enabled by blockchain technology.”
The New York Times reports that Bulgari, Cartier, Hublot, Louis Vuitton and Prada are already using the system and the Aura release indicates “several advanced conversations” are being held with other luxury brands to join the Consortium.
Luxury brands will pay an annual licensing fee and a volume fee to participate in the system, which is sure to be money well spent considering the $2.7 to $3.2 trillion dollars taken in by luxury counterfeiters, according to Harvard Business Review.
Counterfeiter’s growing sophistication has weakened the traditional levers of luxury brand authentication, like logos and distinctive style. The Aura Blockchain Consortium will add an unbreachable level of security.
Reflecting on what this blockchain initiative means to luxury brands, Dr. Martina Olbert, founder of Meaning.Global, says, “This alliance can be a game changer for the future of luxury,” as she sees the future of luxury as collaborative, not competitive:
“The alliance of three big players signals something important about the future of the luxury market dynamic. Luxury isn’t a game of competition. Luxury is a game of value creation. It is based on embracing the unique identity, authenticity and inner essence of brands. To function that way again, the luxury industry needs to become collective and tackle challenges as a whole.”
In effect, this initiative looks back to the traditional foundation and heritage of luxury brands – the timeless pillars of luxury, such as provenance, uniqueness, scarcity and sancity of the brand – and brings it forward with a 21st technology-based solution.
“The move signals a greater connection and acknowledgement of the roots of luxury – where luxury came from and the need to protect its long-term value – as well as where it’s going,” Olbert continues.
Not only does it protect the brands, it also adds a layer of protection for consumers who pay a premium for ownership.
“In a world full of counterfeiters and poseurs, protecting clients is vital to protecting the luxury brand,” notes Chris Ramey, founder of Affluent Insights. “Aura will secure the traditional pillars of luxury which define luxury brands and protect their wealthy clients.”
The Aura Blockchain Consortium will be win-win for both luxury brands and their customers. It restores trust in a system that desperately needs it.
“Brands can take back control over the customer relationships and focus on creating long-term value for themselves by putting the customers first and giving the customers transparent access to the luxury brands for communication, traceability and purchase,” concludes Olbert. “This is a great step in the right direction.”
Source - https://www.forbes.com/sites/pamdanziger/2021/04/22/lvmh-cartier-and-prada-partner-to-fight-counterfeits-and-invite-other-luxury-brands-to-join/?sh=51e1750b3072
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