Is the metaverse a bandwagon worth jumping on? It’s tempting. A Bloomberg headline from 2021 screamed ‘Luxury brands are already making millions in the metaverse’. According to research by DappRadar, nearly $2bn (£1.75bn) was spent on virtual land grab during 2022, as companies hedged their bets on platforms including Roblox, Sandbox, Epic Games, and Decentraland.
Global sportswear and luxury brands with hefty development budgets at their disposal elbowed in first. From Balenciaga selling character skins on Fortnite, to Ralph Lauren launching a digital clothing line on South Korean platform Zepeto, luxury players have given us a glimpse of what’s possible. When a virtual Gucci Dionysus handbag sold online for $4,115 in 2021, it wasn’t the resale price tag alone that set retailers’ hearts racing, it was the fact the real thing sold for $700 less.
Meanwhile adidas unveiled its first NFT (non-fungible tokens) collection of wearables, adidas Virtual Gear last November. Described as “a new, interoperable product category”, we’re told owners of adidas Virtual Gear can style their metaverse profile pictures (PFPs) with the unique digital assets they’ve invested in.
Could digital wardrobes be the future? Should digital storefronts be launched before all the virtual real estate gets snapped up? Rightly, retail clients ask us these questions frequently.
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The metaverse is not yet fit for retail purpose
‘Woah there’, is our response. First, the technology isn’t ready yet. The user experience is very basic and glitchy. Meta spaces are clearly at an early stage, tailored more to tech fanatics and gamers than regular web-users. Some virtual worlds look stark and unwelcoming, and sadly issues like sexual harassment and grooming of minors is casting a shadow over this brave new world. A lot more work is needed regarding cyber security, and the regulations required to protect both retailer and consumer.
Even Mark Zukerberg has conceded the transition to a more immersive online experience will take years. We tell retailers, wait for all the bugs to be sorted out by others, and adopt the technologies that work, when they work. In a few years’ time, protocols and codes of practice will be properly mapped out.
Cost is another sticking point. It’s incredibly expensive to develop the 3D technology required for decent VR experiences – say, a virtual fashion show – and in an economic downturn, only the best-off brands have that kind of cash to spare. There is also a low level of interoperability across the platforms, so if you design for Decentraland, you’ll have to start from scratch for Sandbox. In time, cross-functionality between platforms will bed in, but again, we’re talking five years at least for that to happen.
Who’s your customer in the metaverse?
Take-up by consumers has also proved slower than expected. According to the Wall Street Journal, Meta (formally Facebook) dramatically revised down its target of monthly active users for its virtual reality Horizon Worlds platform in the autumn of 2022. Globally, household budgets are stretched to breaking point, so expensive VR headsets probably aren’t a priority for many.
User-intent is sketchy too. It’s still not clear whether people will want to engage solely with virtual wearables, which bear no relation to real-world garments, shoes and homewares, or if the content should reflect physical inventory. If it’s the former, most retail brands surely question the value of creating all this new virtual content, distinct from their mainstream business.
We also point out to retailers thinking of opening a virtual store front, that the target demographic (Gen Z and Gen Alpha) tend not to have much disposable income, and will be restricted financially for most of their lives. Will they seriously want to spend on NFTs and wearables in the virtual world above other real-life items and leisure pursuits?
What does the metaverse offer a retail brand?
Despite all the negatives, it’s too risky for retailers to completely ignore the metaverse. It’s worth keeping an eye on platform developments, and your competitors’ activities. The most obvious foray for a retailer would be a virtual store front. Here you might sell NFTs, or market real product in immersive ways. You could provide enriching or entertaining experiences for loyal customers; perhaps facilitating the personalisation of items, or loyalty-point gathering through gamification.
Community activity could take off. A retail brand might showcase how to recycle its jeans or support an environmental charity in the virtual space, opening up a host of social marketing opportunities. There may be tech advances around avatars and digital twins, so that virtual fitting rooms become sophisticated and accurate enough to help shoppers find the perfect fit, and allow retailers to address e-commerce returns and textile waste.
The metaverse could be used internally too, so that VR enhances staff onboarding and customer service training.
The reality though, is that so much of this can be achieved with what we have today: e-commerce websites and digital apps. For now, our advice to retailers is to focus on the UX of your website, loyalty schemes, payment options, order processing and after-sales interfaces, before venturing into the metaverse.
Most retail companies are acutely impacted by cost constraints right now. The majority cannot justify spending more than an hour a week researching the metaverse, and monitoring who’s setting up shop, where. This is still a fringe technology. If Mr Zuckerburg and the other big tech boys can’t make it work yet, it’s too early to jump on the bandwagon.
