The metaverse fits seamlessly into the new era of virtualization and digitalization, but what does this ultra-interactive world without physical boundaries mean for fashion brands and fashion industry professionals? As consumers spend more and more time online, a digital presence and omnichannel strategy is mandatory for brands in order to stay relevant and keep the momentum of brand awareness going. According to McKinsey, the Gen Z generation spent an average of eight hours per day on screens in 2020, and fashion is one of the top three categories in which they are looking to spend. The integration of fashion into this new digital and immersive world can offer new opportunities to engage consumers, build a community, and also create a whole new channel for revenue and conversion. What do business professionals need to know in order to tap into this emerging world?
What Is the Metaverse?
The metaverse is defined as a 3D virtual-reality space, where users can interact with a computer-generated environment as well as with each other. This simulated digital world combines aspects of social media, augmented reality (AR) and virtual reality (VR), and users can exist without any tangible limitations and take part in activities like shopping, playing and networking.
In March 2022, the first Metaverse Fashion Week (MWFW) was held in the metaverse on the virtual social platform Decentraland, and it received far more industry attention than any other virtual-reality event before. The lineup of brands featured many already established ones, like Etro, Dolce & Gabbana, Elie Saab and Tommy Hilfiger, as well as newer brands like Auroboros.
In many ways, this event marked the peak of the democratization of digital fashion. The metaverse and everything surrounding it (like NFTs, Roblox and cryptocurrency) is now becoming an everyday occurrence on the fashion stage, rather than an anomaly. While it remains in its start-up phase, the potential within it is evident. Unlike traditional offline fashion weeks, tickets weren’t required for MVFW, meaning that anyone could view and attend the shows and also purchase digital fashion pieces. In the metaverse, there’s no space limit and therefore endless opportunities for exposure, marketing and sales. Over 4 days, MVFW week had 108,000 unique attendees, and physical sales saw a measurable effect following it. As the metaverse evolves, so could revenue streams for fashion brands and retailers who have a presence in it.
Non-fungible tokens, NFTs, play a big role in the metaverse and have seen an explosion of interest from consumers lately. These digital assets are bought, sold and exist solely online, and represent things like art objects, music, clothing and accessories. What do they mean for fashion? NFTs can be used for reliable authentication of products, or serve as standalone collectible pieces. Limited edition NFTs can cater to luxury consumers who thrive on scarcity and exclusivity, and can generate significant revenue. In late 2021, Dolce & Gabbana auctioned off a nine-piece collection of digital NFTs, for a total of nearly $5.7 million. Program director for Virtual Reality and Immersive Media at Drexel University, Nick Jushchyshyn, claims that the prices are not surprising, “You have world-renowned designers creating something absolutely unique, with attention to detail — it is beyond what you expect to see in a typical digital rendering — and it’s a one of one. It makes perfect sense that there would be an NFT collector in the world who would value it.”
Not lacking any sort of marketing hype or social media buzz, NFTs seem to be the wave to invest in right now. Recently joining the aforementioned Dolce & Gabbana and other luxury brands like Louis Vuitton and Givenchy in the NFT world is supermodel Bella Hadid, who just this week landed in the metaverse. On her platform CY-B3LLA, she is releasing a wide range (11,111 ones to be specific) of shoppable online art pieces. As a buyer you get more than just the digital asset, but also a digital record of the purchase that functions as proof of authenticity. The collection is based on 10 different countries, speaking to the themes of embracing and celebrating inclusive globalization. One new location will be revealed every 7 days, and so far only the first one has been disclosed; Tokyo.
Looking at the immense buzz around them and how they have permeated the digital fashion space since their launch, NFTs are not going anywhere anytime soon. For brands, they serve as an opportunity to capitalize on younger consumers who are tech-savvy and eager to curate and collect digital novelties.
Cryptocurrency or crypto is a digital currency that can be used as investments or digital purchases. As luxury brands have embraced digital experiences like virtual runway shows, and infused online shopping with technology like AR and VR, crypto is important to tap into. By using a distributed ledger such as blockchain, brands can digitize and keep track of the entire life and ownership of a product.
Crypto technology can also significantly reduce operating costs, amplify logistics and supply chains, as well as reduce the risk of counterfeit products, and luxury brands seem to have caught on. In May this year, Gucci tapped into crypto and announced that they would accept payments made in the currency in some of their US stores. This marked a major confirmation of crypto’s worthiness on the luxury market, and not long after Gucci’s announcement, Balenciaga followed suit. It is clear that Kering’s crypto strategy speaks of fashion and tech uniting in its advancement into the metaverse.
Aside from shopping and purchasing collectibles, the metaverse is also a platform for pure fun and play. Roblox, a global gaming platform that has gained much attention as of late, is another channel that speaks of the opportunities of the digital world. It is a playground for younger users, mainly pre-teens, and with that an opportunity for fashion brands to capitalize on this gaming trend. The key to success? Digital craftsmanship and storytelling. If a brand can manage to portray an elevated level of craft and tell their story through a fun and engaging game, this can incentivize gamers to purchase digital skins and outfits for their avatars.
Earlier this year, Gucci Town landed on Roblox, where users can participate in branded competitions, visit the Power-up Place cafe to interact with other users, and of course purchase digital items for their avatars. Tommy Hilfiger is another brand that recently expanded their presence in the gaming space with the launch of Tommy Play. Inspired by New York borough Brooklyn, Tommy Play is essentially a playground, even featuring a subway system with graffiti covered walls created by Brooklyn based artists. Avatars are a main part of the Roblox community, and other social platforms as well. Not to be left out, Meta just launched a new digital marketplace, where users can invest in digital fashion from luxury brands like Prada, Thom Browne and Balenciaga to dress their avatars in. If Roblox’s popularity is any indication, people will be willing to pay to dress the avatars that are essentially a reflection of one’s self in designer clothing.
As fun and glamorous as the metaverse is, it does evoke a number of ominous thoughts. As we grow increasingly connected, so does the need for privacy and cyber security, and data being collected and sold to third parties can be cause for concern. Meanwhile, one could also argue that the fashion industry has larger concerns to focus on, like the lingering industry problem of sustainability and environmental issues. It is clear that the metaverse can serve as a disruptive marketing channel and sales funnel, but as one starts to think of green gas emissions and water pollution, spending millions on digital content seems trivial. Givenchy is on the right track, by letting all proceeds of NFT sales go to charity to clean our oceans.