TFL 2022

Fashion Digital ID System Could Boost Resale, Counter Greenwashing

by TFL, June 7, 2022

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Photography by Vestiaire

A new alliance between two tech-focused industry initiatives is slated to bring some of the biggest names in fashion and luxury together in what is being likened to a “United Nations” of fashion industry occupants. In a statement on Monday, the Aura Blockchain Consortium revealed that it will join His Royal Highness the Prince of Wales’ Sustainable Markets Initiative Fashion Task Force, aligning the blockchain solution entity launched last year by LVMH, Prada Group and Richemont-owned Cartier with the Fashion Task Force, whose members consist of executives from companies like Burberry, Chloé, Stella McCartney, Giorgio Armani, Brunello Cucinelli, Vestiaire Collective, Zalando, Noon.com, and Moda Operandi, among others.

In addition to putting some of the most notable names in fashion and luxury in the same camp on a specific sustainability agenda, the announcement about Aura’s decision to join the Fashion Task Force is significant, as the LVMH, Prada, and Cartier-led consortium brings blockchain technology to the table that can enable members of the Task Force to “achieve their sustainability goals and enhance traceability.” This makes for the last piece of the Digital ID puzzle, Task Force chairman Federico Marchetti told TFL on Monday, rounding out the tech component for future users, who can now implement the Digital ID with the help of cloud-based and/or blockchain-based providers. (Aura – which boasts a global blockchain solution that is open to all luxury brands to capture and track “important and desired events in products’ lifecycles” in furtherance of a larger “transition to a circular business model, trust and transparency for customers, innovation and sustainability” – falls into the latter group, along with other blockchain-based providers like Arianee.)

First announced at the Group of Twenty (G20) Leaders’ Summit in October 2021 in Rome and aimed at enabling “key participants in the fashion value chain, including manufacturers, brands, retailers, resellers and recyclers, to provide unprecedented transparency and traceability of the products they sell,” the Fashion Task Force’s Digital ID system is “a transformational technology that uses data to inform customers of the sustainability credentials of their purchases and facilitate the delivery of circularity at scale.”

The Digital ID tech dates back further than 2021, seemingly foreshadowing a growing number of efforts by big players – ranging from venture capital firms like Natalie Massenet’s Imaginary Ventures, which led a $10 million round for connected product cloud firm EON in February, to the European Commission, which proposed the introduction of Digital Product Passports this spring to help cut down on rampant greenwashing and “make it easier [for consumers] to repair or recycle products” – that have since begun to place their bets on product tracing as a key to circularity (and thus, sustainability) in the apparel space.

The first iteration of what is now the Task Force’s Digital ID came in the form of the “Modern Artisan” collaboration that Yoox Net-a-Porter and the Prince’s Foundation introduced in 2020. Consisting of a sustainable luxury capsule collection of menswear and womenswear, the “Modern Artisan” wares were equipped with digital IDs that were accessible via QR codes. At the time, the then-Marchetti-led YNAP and the Prince’s Foundation revealed that the tracking tech would grant consumers access to the story behind each product, including the materials at play and the artisans who designed and made it, as well as care and repair recommendations.

The notion of traceability as a way to facilitate a broad embrace of circularity has also become a core tenet of the Task Force’s Digital ID, which is “completely technology agnostic,” according to Marchetti, meaning that brands that want to implement the Digital ID can do so in a cloud-based capacity or using blockchain thanks to an array of different providers. Regardless of the tech they choose, by bringing Digital ID technology into their stores by the end of 2022, Marchetti says that the Task Force’s members will be “ahead of probably anybody else” in the fashion industry when it comes to large-scale product lifecycle tracing efforts.

As for the extent of the impact that the Digital ID will have once it is implemented by the Task Force member brands this year and any other companies that opt to utilize the system, Marchetti expects that it will be a game-changer. “It is about the power of information,” he says, noting that the fashion industry, which is rampant with vague and often-unsubstantiated sustainability marketing, and its occupants are still lagging in terms of providing customers with information about the sustainability credentials and the lifecycle of garments and accessories.

However, where the Digital ID system could potentially have the biggest impact is in the secondary market.

The luxury resale segment was valued at $37.45 billion at the end of 2021, and has the potential to continue to outpace the market for new garments and accessories, according to Bain & Co. Enduring growth of resale, which has been touted as part of a larger remedy for the escalating consumption of new products, is not without hurdles, though, including issues of authenticity that have been highlighted in a number of ongoing lawsuits. The implementation of the Digital ID system could prove particularly useful in tracking products and helping to show authenticity, which could, in turn, bolster consumer confidence and prompt greater engagement in the cycle of buying and selling pre-owned fashion and luxury goods. (Not only could valuable, resale-specific insight be garnered from Vestiaire Collective, whose CEO Maximillian Bittner is a member of the Task Force, but new member Aura is focused in large part on both upstream and downstream traceability and authentication of luxury goods.)

While it is too soon to quantify the effect of the Task Force’s impending Digital ID on the resale space, it is not difficult to envision an increase in consumer trust that could be garnered from the use of authenticity-centric elements of the product tracing system. There is also the potential for an increase in repair/refurbishment of authentic, pre-owned goods to improve their quality (and thus, their resale value) following years of wear. This has already proven to be a recurring practice in connection with products offered up in the secondary market, and corresponding tracking of any major repairs or product modifications could help resale platforms to avoid conflicts with brands.

Ultimately, “By making customers aware of what is – and is not sustainable” when it comes to what they are buying, including by delivering information on provenance and product authenticity, Marchetti says that the Digital ID “could be the best antidote to greenwashing” that we have seen to date.

Originally published in TFL