Bitcoin’s soaring value has caught the attention of high-end fashion brands and retailers, prompting further interest in offering cryptocurrencies as a means of payment to tap in to fresh pockets of wealth and build loyalty with crypto investors.
Until recently, only a handful of luxury brands including LVMH watch labels Hublot and Tag Heuer as well as Kering-owned fashion brands Gucci and Balenciaga have experimented with crypto payment offers.
In recent weeks, upscale French luxury department store Printemps announced it was teaming up with the world's largest crypto exchange, Binance, and French financial tech company Lyzi to accept cryptocurrencies including bitcoin and ethereum in its stores in France - becoming the first European department store to do so. The move, coming as bitcoin rises, has been noticed by other brands and retailers who are showing interest in joining in.
"There have been quite a few calls - it's generated interest," said David Princay, president of Binance France, who said the company is in talks with other luxury labels.
Luxury lighter and pen maker S.T. Dupont told Reuters it aims to accept cryptocurrency payments in two Paris stores before the holidays.
In the realm of experiences, cruise company Virgin Voyages began this month offering its first product accepting bitcoin as a payment option - a $120,000 annual pass for up to a year of sailing on its cruise ships.
Regulators have long warned that cryptocurrencies like bitcoin are high-risk assets, with limited uses in the real world. High volatility has been another barrier to wide adoption as a means of payment.
But pledges of support from U.S. President-elect Donald Trump, who is expected to bring in more friendly e-currency regulation, have fueled record-breaking rises for bitcoin. S&P analysts say the narrative is starting to shift, noting that blockchain innovation in financial markets could increase predictability for cryptocurrencies.
SEEKING INNOVATIVE BRANDING
Luxury labels have long sought to cater to affluent shoppers from the tech industry by opening stores in upscale Silicon Valley malls and issuing products like the Hermes Apple (NASDAQ:AAPL) Watch, for example, which combines signature, stitched leather straps of the French Birkin bag maker with tech giant Apple’s connected timepiece.
Now, new wealth generated by bitcoin's recent highs - topping $107,000 on Monday - comes as the luxury industry faces its biggest slump in years and searches for new sources of growth.
Offering cryptocurrency payments can be a way for companies to brand themselves as innovative rather than “a stuffy old brand that's only selling to the boomers,” said Andrew O’Neill, digital assets lead analyst at S&P Global Ratings.
The payment option remains largely symbolic. Retailers usually reconvert the funds to euros or dollars to offset risks of volatility, while for most shoppers, payment methods are seen overall as “something that’s been solved” already by such transaction platforms as PayPal (NASDAQ:PYPL) or Venmo, said O'Neill.
But for bitcoin investors who have seen a strong rise in the value of their investment, luxury goods - a designer handbag or high-end watch - are an obvious choice for diversifying one's portfolio, analysts say.
