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How Luxury Brands Are Leveraging Blockchain and AI For Business Impact

How Luxury Brands Are Leveraging Blockchain and AI For Business Impact

When it comes to blockchain, luxury brands from watches to jewelry and leather goods are doubling down on utility, leveraging the technology to bring real impact to their businesses.

One provider of such solutions is luxury fintech Vaultik. The platform combines Digital Product Passports with certificates of ownership and on-chain insurance (generally against theft, loss and damage)—tying together ownership and authenticity via its proprietary triple factor authentication.

It operates both directly and via blockchain protocols including Swiss based Hedera. Working with insurtech firm Avata, it provides certificates of ownership and integrated insurance protection at both B2B and B2C level. Premiums are paid by the partner brand rather than the purchaser with more cost efficient ‘like for like’ or store credit replacing the traditional payout. It amounts to “a new revenue stream for brands,” says Vaultik co-founder and Meta alum Pietro Novelli of the closed loop set-up.

Such on-chain correlation of ownership and insurance generates “increased customer loyalty and increased customer retention alongside new customer acquisition,” says Novelli. “When ownership is transferred on the secondary market the insurance policy travels with it.”

Following proofs of concept with luxury hard hitters like Burberry, Vaultik has announced its first wave of client partnerships spanning verticals of luxury watches, gemstones and fine jewelry, leather goods, and even furniture, with focus both on primary and secondary markets—the latter leveraging artificial intelligence (AI)

While 2024 will bring the announcement of at least one major global fashion player, the first projects to come to fruition are those with small to medium concerns.

“They are more agile when it comes to implementation,” Novelli told Forbes. “They are the ones converting super fast because I can speak directly to CEO of the company.” He added that these also represent a good way of demonstrating that the technology can scale.

Maximizing on business impact and addressing some of the industry’s biggest challenges, key areas of focus are theft and counterfeiting alongside traceability, transparency and sustainability.

Luxury Timepieces

An important use case for Vaultik’s technology is the luxury watch market. It is partnering with London based start-up NIX Time which customizes watches by established luxury brands like Rolex—stripping back detail on the dials or skeletonizing the interior mechanics.

For NIX, Vaultik is powering Digital Product Passports with integrated insurance. The passports also feature the original serial number of each watch alongside authentication via the established London dealers from which they have been sourced plus an additional warranty.

According to NIX founder Jess O’Brien, the technology addresses a major client facing challenge—the epidemic of luxury watch theft rife across major cities. Novelli himself was a victim last year and revealed on Ashley McDonnell’s Tech Powered Luxury podcast that the experience prompted him to incorporate the insurance element into his product.

BBC journalist Tir Dhondy recently made the documentary Hunting the Rolex Rippers exposing the modus operandi of organized gangs in London where, according to data collected by The Watch Register and shared with Dhondy, over $63M worth of watches were stolen in 2022 with 3190 reported stolen in the first six months of 2023.

Dhondy hopes her film will raise awareness about the issue. “There will always be a risk if you are wearing an expensive watch walking around on the streets,” she told Forbes, “so if you do have an expensive timepiece, you can be slightly more vigilant.”

O’Brien agrees. “Often people are too scared to use their more expensive pieces and end up going out wearing an Apple watch,” she told Forbes. “The processes involved with traditional insurance policies can be quite archaic, but in that they can be supported and enhanced by technologies like blockchain, this gives our clients the opportunity to wear and enjoy their pieces.”

In the future, O’Brien is looking at evolving the partnership with Vaultik, enhancing client experience via NFTs to make it “more exciting.”

The Secondary Market

Blockchain has signifcant implications when it comes to the secondary market and Vaultik has built an AI powered algorithm effecting real time valuations of luxury assets for resale.

It is entering the secondary market powering certificates of ownership and authenticity for central London luxury consignment store Luxe Dressing. These feature integrated anti-damage insurance with repairs executed by specialist partners.

“We believe that luxury is timeless,” French entrepreneur and founder of Luxe Dressing Leina Kaddouri told Forbes, adding that the partnership represents “the evolution of luxury where elegance meets innovation.”

By integrating the technology into her business model she is able to deliver an “unparalleled experience in the consignment space,” she says, “grounding each unique find in our collection with a digital promise of authenticity.”

Fine Jewelry

Transparency of provenance is significant where fine jewelry is concerned.

Veteran jeweler Amedeo Scognamiglio dropped a sell-out NFT collection with Exclusible in 2022 transforming his namesake brand’s whimsical cameos into digital collectibles. Now he’s also partnering with Vaultik for Digital Product Passports and insurance for both his namesake Amedeo brand and fine jewelry brand Faraone Mennella. Rihanna and Jennifer Lopez are fans respectively.

The partnership addresses the need to secure the provenance and quality of his pieces, he told Forbes—”the ability to monitor the entire life cycle of our jewelry so that its integrity and originality can never be questioned.” For him, it’s the insurance element integrated into the digital product passports represents “the real gamechanger.”

As for the blockchain element, this offers a new guarantee of security for his brands’ wealthy international clientele, he added. “It Immutably records the authenticity of our products both for the primary market and also at resale.”

Furniture and Leather Goods

Italian designer furniture and custom upholstery brand Superevo works with patented material Polimex— developed in-house. Superevo is using Vaultik’s technology to document the life cycle of its products on the blockchain, to enhance transparency and assure its customers of their provenance and uniqueness.

The information will be accessible via NFC chips while e-certificates will also include insurance on certain products. Likewise sustainably minded leather goods outfit Ghisò. The boutique direct-to-consumer brand sources all of its materials within a radius of 8km of its factory in Italy’s Tuscan region.

The Wider Ecosystem

Of course, other more established blockchain platforms already operate in the space—most prolific being Aura Blockchain Consortium and Arianee Protocol.

However, as Novelli contends, Vaultik’s integrated insurance component is a significant differentiator, so he sees such platforms as potential partners rather than competitors. “We can all play our part in the wider ecosystem,” he says.

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