Exclusive: Why Balmain is betting big on NFTs

█ NFTs — digital assets that represent real-world objects — have recently become an obsession for luxury brands. It’s likely the pace of development will pick up further in the months ahead.

Some brands are moving quicker than others. For Balmain, development of the potential of NFTs is already a strategic pillar of its business. On 8 December, the brand launches its third NFT project — a pair of NFT trainers accompanied by VIP experiences, linked to its upcoming collaboration on a physical pair with celebrity gym Dogpound in New York and Los Angeles.

Balmain is the first luxury brand to pursue multiple NFT projects, previously releasing luxury NFTs focused on digital pieces of art or in-game items. Similarly, Gucci auctioned a video NFT at Christie’s for $20,000 in May; Burberry produced an in-game NFT for Blankos Block Party in August; and Givenchy launched its second collection of 15 NFTs with artist Chito in late November, traded on OpenSea.

Balmain’s latest NFTs include two pairs of trainers, a black and a white digital version of a BBold Dogpound collab and a digital membership card, launched in conjunction with the physical drop of the trainers, which retail at $1,069 and are signed by Balmain creative director Olivier Rousteing.

“The most important element about these projects is to really tie the NFT — tie everything that is digital — to a physical experience,” says Balmain CMO Txampi Diz. “This is a perfect example of how I see the future of NFTs.”

BALMAIN

The two NFTs come with special perks, depending on the final sale price. They will be auctioned on NFT marketplace Opensear, starting at 2.5 ETH each (the equivalent of about $11,200, at the time of writing), in tandem with the launch of the trainers. (Dogpound members were granted early access to the physical trainers, starting 17 November.) If the auction price reaches 6 ETH ($27,000), the buyers receive a personal training session with Dogpound founder and CEO Kirk Myers; for 10 ETH ($45,000), the buyers can tack on two tickets to an upcoming Balmain fashion show; 14 ETH, or $63,000, adds two entries backstage.

Owners of the NFTs can choose independently to resell at a price of their choice. The brand can also layer on additional perks over time, though this isn’t currently planned. In other words, the potential buyer of an NFT must evaluate the potential future value of having Balmain’s NFT access — and can weigh up the potential of transferring that access to a future buyer.

Diz says that the brand, and the industry at large, is still in the “very earliest stages of NFTs” and the gym partnership is another means of keeping the so-called “Balmain army” fully engaged. “For us, it's a very unexpected way to create an experience around a physical product,” he says. “It’s a way to connect a larger audience, and with a new audience, and maybe to an audience that has no access to the physical product.”

The overlap between digital and physical, he says, “makes this project, and future projects, so interesting. We are creating new exclusive but inclusive experiences”.

Balmain’s very first NFT was the digital Flame Dress, designed exclusively for Vogue Singapore in August, in collaboration with Singaporean games organisation Altava, which has partnered with Balmain on all three NFT projects. Diz says it was important for the brand to create something that isn’t possible in the physical world. The dress sold on NFT marketplace Binance in September for 23 BNB ($14,000 at the time of writing). A second NFT project in October translated four designs from the Spring/Summer 2022 collection into eight NFTs.

BALMAIN

Dogpound, founded by Myers, a celebrity trainer, charges $200-plus per 60-minute session. Myers attends fashion weeks and has previously worked with brands such as Christian Louboutin and Balenciaga as well as celebrities including Hugh Jackman, Justin Bieber and Addison Rae. Diz says many friends of Rousteing train at the gym.

Real world rewards linked to NFTs enable luxury brands to amplify and enrich physical experiences, says Diz. In October, Clinique launched a programme to give away three NFTs to loyal customers, tied to physical perks. The Bored Ape Yacht Club, a collection of NFTs known for ape profile pictures, invites NFT owners to private events. Animated celebrity company Superplastic is giving NFT owners access to stores and an in-progress restaurant.

Access has become a buzzword. “NFTs are being considered almost as access tokens, whether that's continuously to be part of a community and having your own membership card, or using the NFT to capture a moment in time,” says Karina Cha, Altava’s SVP of brand partnerships. “Or using NFTs to be able to have additional utilities that continuously will unlock. I think this is where it gets really fun across the board and how we're seeing the NFT space evolving.”

According to investment banking firm Morgan Stanley, metaverse gaming and NFTs could constitute 10 per cent of the luxury goods market by 2030, with a €50 billion revenue opportunity. “There are three consumer benefits of NFTs — the investment aspect, status and community,” says Morgan Stanley equity analyst Edouard Aubin. “Many [brands] are focused on the second part, but there are many other things you can leverage and do.”

Adding VIP perks to NFT ownership over time makes sense, he adds. “Brands really cherish the direct connection with consumers, and leveraging one of the great potential links to NFTs is very smart.”

Balmain’s second NFT project translated four designs from the SS22 runway into eight NFTs, auctioned on Binance. BALMAIN

The Balmain collaboration was irresistible, says Dogpound investor Hanoof Al-Thani. “The luxury industry has long grappled with loyalty and authentication challenges. NFTs can help solve that challenge and open up doors to a new audience that cares about proof of work and puts community first.”

Myers says he is inspired by Supreme in creating Dogpound fashion and has the goal of creating something "versatile and exclusive”. Dogpound CTO Jenny Wang says that with the VIP rewards element, prizes can continue to be added after the point of sale. Winners will receive a Balmain membership card via airdrop with the potential for additional access privileges and rewards. So Dogpound can hypothetically work with Balmain in perpetuity, Wang says.

Balmain’s rapid embrace of the metaverse gives the brand a leadership profile. “A luxury brand can't just rely on heritage and craftsmanship and provenance; they need that and they need to lead. And you lead with creativity; association with the art world; being a leader in sustainability; and now with tech and the metaverse,” Morgan Stanley’s Aubin says. “It’s a fine balance to keep desirability up.”

Balmain and Rousteing have 11 million and 7 million followers respectively on Instagram. The brand has built its large digital following organically, which is unusual for a luxury house, Diz says. “For us, the objective and the challenge is how to monetise that audience,” he says. “The way we can increase our business is really finding new, entertaining and more engaging ways to connect and communicate with them.”

Besides revenues from selling virtual membership cards, Balmain is ready to explore the potential for sales of digital couture. “This is something that we have discussed with Olivier [Rousteing],” Diz says. “The assumption is that when we work on our collection… we will be working on a digital NFT collection connected to that physical collection.”

A tech mindset is essential. “You have to think how a tech company would approach an NFT in a way that is innovative, entertaining and engaging. So that's how we challenge ourselves for every project we've done,” says Diz.

“The possibilities that the digital world offers to this industry are amazing, almost limitless,” he adds. “We're going through a major revolution.”