Sources: RTFKT
Why did Nike buy a crypto collectables studio?
Nike said on Monday that it acquired RTFKT, a London-based studio for non-fungible tokens (NFTs), in another sign that management believes the metaverse will be about much more than engaging with online gamers.
RTFKT (pronounced “artifact”), founded in 2020, has quickly become known for NFT partnerships with crypto artists that quickly sell out. Some virtual sneakers sell for up to $10,000 a pair. NFTs, utilizing blockchain technology to verify authenticity and ownership, can be traded, sold or worn by digital avatars on social media and in virtual reality.
Nike in recent months has applied for several trademarks for “downloadable virtual goods” and became one of the first brands to create a virtual world on the Roblox online gaming platform. The brand recently established a goal to have owned digital reach 40 percent of sales by 2025, up from 25 percent currently.
“This acquisition is another step that accelerates Nike’s digital transformation,” said Nike’s CEO John Donahoe in the statement.
In a note, Piper Sandler’s Erinn Murphy said the RTFKT acquisition could be a major revenue opportunity “if Nike is able to somehow connect the digital and physical realms and successfully tie their most collectible and rare sneakers to NFTs, which allow for royalty structures to provide recurring revenue in the aftermarket — especially with the growth of sneakers as social currency as spotlighted by the immense and accelerating popularity of rare Jordan silhouettes on secondary market platforms.”
Adidas, Vans, Ralph Lauren, Gucci and Burberry are among other fashion behemoths exploring the alternate reality space.
In a note from early December, BTIG analyst Camilo Lyon predicted continued strong interest in NFTs within fashion in 2022. He wrote, “Ownership in fashion apparel or sneakers, like in the art world, would create the ability to port that purchased good from platform to platform or on social media with the intent of personalizing your style in the metaverse. What’s more, we believe brands are on the path to marrying the digital sale with a physical sale of the same goods, which would have the benefit of cementing an experiential connection between brand and consumer in a new and unique way with ownership qualities.”
- NIKE, Inc. Acquires RTFKT – Nike
- NIKE, inc (NKE) Q1 2022 Earnings Call Transcript – The Motley Fool
- With Rtfkt acquisition, Nike invests in the metaverse – Vogue Business
- Nike acquires NFT collectibles studio RTFKT – TechCrunch
- Nike buys virtual sneaker maker RTFKT – whose digital shoes fetch up to $10,000 a PAIR – for undisclosed sum to make wearable NFTs in the metaverse – Daily Mail
- Nike just bought a virtual shoe company that makes NFTs and sneakers ‘for the metaverse’ – The Verge
- Will fans visit Nike in the metaverse? – RetailWire
- Is retail ready to enter the metaverse? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What do you think is behind Nike’s acquisition of RTFKT? Where do you see the retail opportunities with NFTs and the metaverse?
Poll
Loading …BrainTrust
Melissa Minkow
Director, Retail Strategy, CI&T
Ryan Mathews
Founder, CEO, Black Monk Consulting
Why, selling REAL shoes, of course! The whole meta thing; I get it but don’t get it — kind of like crypto, avatars on Zoom and TikTok retail. At the end of the day Nike, and anyone else selling goods for that matter, has to sell actual product or their meta-world is going to hang up a big virtual “out-of-business” sign. (I know, “OK Boomer.”)
It strikes me that this will be an entirely separate profit center for Nike. Nike’s collectable sneakers are hugely popular at outlandish prices. As my grandson, who is not getting one for Christmas, said, “Oh, I won’t wear them.”
So here is the choice. Buy a collectable pair of Nikes and put it in the closet and no one sees it. Or buy a virtual collectable that you can share (boast) to others.
These are the baseball cards of the new world.
I hope that Nike, in its wealth, is simply buying this as a possible risk prevention in the unlikely event that the metaverse lives up to some of the sci-fi hype. Despite Facebook’s metaverse move looking shallow, I’m seeing a lot of companies try to ride the hype. If retail experience tells us anything, it’s the importance of the real world despite lots of virtual hype.
Sneakers are a perfect product for virtual purchase because the value is maintained by not actually wearing them and by keeping them pristine. I expect many more brands with product types that sit closer to art than they do wearable/useable to go this route. Nike, as usual, is towards the forefront of an industry movement.
Sneakers are the Holy Grail of any collector. Nike’s acquisition of RTFKT is timed right and this is only the tip of the iceberg as Nike leads the rest of the industry on the future of retail.
Disruptors like digital closets, the concept of wear-to-earn, connecting physical and digital retail, product exclusivity AND most importantly, brand and customer loyalty is exactly why Nike bought a crypto collectables studio.
Forward thinking, innovative and meeting the customer where they are should be the only strategy if you want to win.
Trend, Gen Z, Gary Vee – these are reasons they are getting into Web 3.0. Their clients are there and they are keeping up with them.
As somebody with a partner who is avidly into crypto, the metaverse is actually a more tangible, understandable extension for the average consumer. I have also been actively looking into metaverse options for my team as an alternative to Zoom/Meet fatigue. We miss working together in a space but the team is spread out everywhere now and we haven’t even met half of the people in person.
Wherever there is an opportunity for public display, there will be an opportunity for fashion. You only need to look at social media to see how much people are willing to do/spend to project a certain image of themselves. It will take time for critical mass but I wouldn’t bet against NFTs, especially since they can deliver authentic scarcity, the key component of exclusiveness. People said the same thing about the internet, cloud computing, e-commerce, etc. Nothing really changes, only the medium in the long-term.
The embrace and adoption of newfangled products and processes is always a head-scratcher for some people and an obvious step into the future for others. I may scratch my head when it comes to NFTs, but I’m also aware of the role of newfangled emerging products.
It’s clear that the digital future is now, as Nike just bought a virtual shoe company, RTFKT studios, that makes NFTs and sneakers “for the metaverse.” The adage is that retailers and brands should go to where the consumers are. If Gen Z is navigating real-life and metaverse experiences, this is a unique opportunity for Nike to extend its brand presence across this new digital universe.
RTFKT Studios is driving these metaverse experiences by leveraging cutting-edge innovation to deliver next-generation collectibles that merge culture and gaming. Nike’s acquisition enables the brand to extend into the third realm from a digital marketing perspective. The first realm is real life, the second is social media platforms, and the third is the metaverse.
For those members of older generations, it may be challenging to keep up with this accelerated rate of change. It’s just remarkable to see this relentless innovation. Our kids’ generation will be doing circles around us as we struggle to keep up with the rate of innovation.
Nike has been an active explorer of “virtual spaces” for years, pioneering VR, AR, and MR applications, so this move seems right in line with an overarching strategy of being present in every digital venue its customers are and leveraging emerging technologies to sell shoes. The “metaverse” may be a “place” in Mark Zuckerberg’s mind, but it seems to me at least it is more a way of rethinking “place” for Nike. NFTs aren’t for everyone, and if they ever are the influencers will have moved past them, but however the metaverse evolves it seems clear most retailers are going to have to — thoughtfully — figure out how they will participate in it.
Nike wants to be associated with fashion so getting involved in this is a good move for them. Nike wants to be associated with the youth and digital marketing — another reason getting involved is a good move. Fashion and technology move quickly so purchasing the company may or may not be a good move in the long term. However developing partnerships and experimenting with NFTs definitely seems relevant for this fashion space.
With the acquisition of RTFKT, the crypto collectible studio, Nike intends to bring its real-world dominance into the digital space. The metaverse future melds VR, AR, crypto, and gaming. Using blockchain authentication, NFT owners will have their artifact ownership verified for use in gaming and other V/A reality spaces to create unique experiences using virtual products. Managing the linkages between the physical and the virtual world will be crucial for brand success as we enter the early days of the next new hybrid retail experience that will leave omnichannel in the dust.
It is the next frontier of innovation and Nike has always held this in its DNA. Many others have pointed out that the brand is taking big steps to meet the customer where they play, and in this case it may mean meeting the artists and trend setters the customer follows.
Nike is a forward-thinking brand. This is a very forward-thinking move. The younger audience/customer is going to be into crypto and NFTs. Nike is the first major brand I’ve heard of that is diving into this. It’s still too soon to know if this is a successful move or not, but I don’t see much downside to the effort.
What’s behind it is that the RTFKT team is ahead of aspects of this techno-creative strategy and Nike likes that combination and believes it can add value to its business. The retail opportunities for NFTs and the metaverse are impossible not to see.
Retail opportunities today are around collectibles and for sure, some hype, and tomorrow, around wearing those collectibles that people can see thru A/R while walking down the street (for example). And the metaverse, exploratory stage that will work with the “physical” world, not against it. One of the biggest things the metaverse will bring is to enable or become an ecommerce experience worth experiencing.
Ecommerce has been the same 2D static experience for 20 years. This is the very early stages of another large evolution in the “web” and experience. Discount it at your own peril.
It’s about share of mind, share of voice, and ultimately share of wallet of digitally-minded consumers. Nike wants to be where people are spending their time and paying attention. If that forum is the metaverse, then they have a good start. Consumers may get digital NFT versions to show off in the digital world. Nike can also do new product testing via the metaverse to see which ones are trending which can inform their physical new product development plans. Lots of applications here, but it seems like it will be experimental for a while.
Nike and other brands, in my opinion, are trying to reach customers wherever they are, whether virtual or physical. The future of the metaverse is still mostly unknown. The greatest thing B2C firms can do right now is become acquainted with this new idea and have a meaningful presence on these platforms. And that is exactly what they are doing.
However, I believe it is premature to consider monetizing this opportunity. The metaverse is an entirely new dimension to the world that is only just getting started.