The internet has been around for a long long time now and internet shopping has also been around for nearly as long. However, it is only after Apple introduced the smartphones that the mobile penetration increased as a result of which all kinds of consumption (from content to products) on the internet increased drastically. Why? Accessibility and trust.
Every time a new innovation disrupts the market, retailers go into panic-mode in order to make sure they don’t repeat the same mistake of lagging behind as they did with the dotcom or e-commerce boom. Today, Metaverse and NFT are the potential market disruptors, keeping the industry on its toes. However, considering these channels are in its very early stages of evolution, not many are able to predict its full potential or even understand its utilities completely.
However, when the industry big guns decide to enter the space, curiosity among both customers as well as competitors piques, making the transition to the metaverse that much more real.
Chalhoub Group recently announced its entry into the metaverse with its Parisian Silverware brand, Christofle’s NFT launch. The retailer revealed that it is dropping its first NFT collection “925 Genesis MOOD” referring to a fantastic imaginary city, named: Christofle Aurifaber Citatis in Latin, or The City of Christofle Silversmithing. Christofle entering Web 3.0 is a result of a collaboration between Christofle, and Exclusible, the market leader in the development and sale of NFTs and luxury digital real estate, powered by Chalhoub Group’s Innovation unit.
Now, Chalhoub Group – one of the biggest retailers in the region – entering the Metaverse is big, as it just makes this immersive virtual world more than a marketing gimmick. Nick Vinckier, Head of Corporate Innovation at Chalhoub said, “We tried to focus on three elements while creating this NFT – beautiful art (the imaginary city), creating unique benefits for the NFT holders, and long-term ownership.”
At this stage, there are seven key drivers of the metaverse: identity, community, property, transparency, interoperability, utility, and interactivity. Most people and businesses are fixated on the ‘utility’ aspect as they are trying to calculate the ROI, which is very difficult.
Retailers today have realised the importance of being where their customer is and serving them at the touchpoints that they want to be served at. The very definition of omnichannel retailing has evolved to become ‘being where your customer wants you to be’. The perception is that the digital native generation i.e. Gen Z and even millennials are organically going to find their place in the metaverse soon. But how many of Chalhoub’s luxury-loving sophisticated customers are in it today?
“It is very difficult to get numbers of the people who are in the metaverse,” said Nick. “However, I must mention that the recently held Metaverse Fashion Week had over 100,000 unique users. For us, it was important to bring the existing customers of Christofle (who aren’t part of the metaverse) into the metaverse. And then looking at the existing metaverse audience and guiding them step-by-step.”
The Metaverse Fashion Week that took place in March this year may or may not have been a success in terms of execution, but it most definitely created hype and saw participation from some major brands including Estée Lauder, Philipp Plein, DKNY, Karl Lagerfeld, Dolce & Gabbana, Selfridges, Forever 21, Perry Ellis America and so on.
Selfridges and Forever 21 even purchased real estate in the metaverse, debuting their flagship stores during the fashion week, featuring NFT wearables and exclusive online collections. Other brands, like Tommy Hilfiger, were offering physical products as NFTs, which could be purchased using an Etherium wallet.
From the region, premium power suit brand, Briar Prestidge – The Label was seen at the Metaverse Fashion Week, unveiling a virtual suit collection for avatars, which were represented by iconic and successful entrepreneurial businesswomen.
“For our Briar Prestidge power suits for avatars, we used one of the biggest VR platforms called Decentraland as that’s where the Metaverse Fashion Week was held. In the past year, Decentraland has grown its users by 3,300% and reached a peak market cap of $12 billion,” said Briar Prestidge, CEO and Founder of Briar Prestidge – The Label.
Along with running her power suite label and agency, Briar has invested a lot of her time in the last two years to learn more about AR, VR, XR and sees tremendous potential for her business in the metaverse. “I didn’t think avatar clothing customisation would be such a big deal to me, but I got annoyed when I was limited to wearing basic t-shirts on VR platforms,” she laughed. “It was important to me, especially attending events like the Metaverse Fashion Week that I was able to wear something that I liked as an avatar.”
However, the use case for fashion in the metaverse isn’t just limited to dressing up avatars. There are huge opportunities for branding and immersive ad experiences in virtual worlds due to the mass audiences available. As with the current generation of social media companies, advertising is the model that many platforms use to generate revenue. Another one of the great possibilities of the metaverse is that it will massively expand access to the marketplace for consumers from emerging and frontier economies. For businesses, instead of having stores in every city, a major retailer might build a global hub in the metaverse that is able to serve millions of customers.
“Our younger generation has grown up as digital natives, their brains will be wired differently, so brands need to consider how we will cater to them in the future. For many teens these days, how they appear online on social media can sometimes mean even more to them than real life,” she said.
For brands looking to enter this new frontier, knowing where to start can be daunting. It’s important for each brand to find its place, and doing so requires grasping what might be possible. Brands should always be in a test-and-learn mode, and this new landscape requires digital curiosity.
Briar’s advice? “Recognise where your target market is focusing their time in the metaverse. Brands focusing on younger generations or fashion-conscious clientele don’t have the luxury of waiting to join. As an example, Nike are really leading the charge, filing patents for virtual goods and building retail stores to sell these goods.”
She added, “Plan what your goals are as this will influence your strategy. Are you wanting to get involved in the metaverse as a PR stunt, to create a space to meet and educate your team or prospect clients? Reach and engage new audiences or create new revenue streams for the business? To integrate the virtual world with the physical? Once the strategy is in place, only then should you consider what tech, software, platforms, etc to use.”
For the retailers who don’t want to miss out on this wave, as an additional channel for engaging with their customers, the simplest way to be on the metaverse would be to recreate their store for people to either shop real items or digital assets. Carrefour bought a significant plot of land in the metaverse (The Sandbox), by owning parcel number 33,147. Retail giant Walmart filed multiple trademarks, indicating a metaverse move. Based on the filings, it is planning to sell virtual goods, including toys, apparel, electronics, and sporting equipment, among others.
“Brands like Gucci and Balenciaga are also doing amazing activations in the metaverse. However, I don’t want to call them anything more (than an activation) as it’s not linked to any commercial aspects. There are a lot of investments in the space but the ROI is limited as you need to have more penetration in the metaverse to get those returns,” said Jeremy Denisty, Managing Director at Scopernia MENA. “But it is a great platform to start conversations with the young customers, and communicate what the brand stands for and create digital universes where there are no limits to be whoever you want to be.”
The phenomenon of localisation of content, especially in videogames, presents ripe opportunities for regional retailers to capitalise on by having a strong virtual presence. “Before, Pub-G was a global game and it was difficult for a local brand to do specific activations or create a skin on a local level. All of the game developers now see a huge potential to localise their strategies to create an opportunity for Middle Eastern brands and are tailoring their content to the region. This will open the doors for local creators, brands and retailers,” he said.
The digital era has dissolved borders and boundaries to make the world a well-connected community, where brands are able to reach their customers in any part of the world directly, personalise products and content for them, and cater to their changing needs almost instantaneously. While this is brilliant for consumers, this realisation among brands could potentially lead them to go direct to consumer, without relying on local partners, distributors or retailers. Not to scare-monger with the prediction of a huge ‘brand exodus’, but it is a possibility that retailers need to be prepared for.
So what’s the solution for retailers to stay relevant and what does it have to do with the metaverse? “Those conglomerates would need to fully buy those brands or create new brands that they can own. Otherwise, in the future they will have no business,” said Jeremy. “There are retailers that are interested in considering the opportunity of using Web 3.0 and metaverse to create a private label brand that doesn’t exist in the real world, but for a limited investment can gauge if there is interest in the digital world. And if there is, they can probably translate that into something in the real world,” he added.
The components of the metaverse are constantly evolving and so are the dynamics of regional retail. At the end of the day, the metaverse is an additional channel for retailers to reach their customers and if the investment and returns makes sense, and your customers are there already, then start dipping your toes. There is a robust affinity towards an ownership economy propelled by Web 3.0, NFTs, and the metaverse. That coupled with the development of more immersive virtual experiences that are helping people to build communities based on shared values to express themselves in more authentic ways, seems like a good reason to place your bets.
Consumers, investors, and other key stakeholders of fashion retail are at aMay 11, 2022 | By Zubina Ahmed
The eight edition of the Retail Leaders Circle MENA, convened more thatMay 5, 2022 | By Zubina Ahmed
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