Could Fashion’s New Pot of Gold be Found in the Metaverse?
As the physical world becomes more integrated with the virtual world, the future of fashion is found in the metaverse.
Who could have thought that the first email sent across the internet would soon become a universe on its own where people can freely interact with each other? The evolution of the internet, from Web 1.0, consists of static websites and personal sites with very little user interaction or content generation. Then came Web 2.0, commonly called the “Social Web”. User generated content surged, and a community of netizens was born. Social media reigns as king during this internet era.
Our society is at the edge of a new beginning, Web 3.0, where an entirely new world is being created. People in tech calls this the metaverse, and its emergence even prompted Facebook to change its name to “Meta”. There are good points for brands to join the web, for it can connect with a giant pool of people. Fashion brands, however, have not been receptive to this idea of selling their goods online as it may be seen as cheapening its brand.
While it is in the brand’s interest to protect its prestige, what these brands are losing is another avenue for profits. During the height of the pandemic, luxury brands shut physical stores, which essentially cuts off any brand’s stream of profit. For brands that have dedicated resources to building up a user-friendly website where customers can easily make their purchase, it definitely helped cushion the impact of closed stores.
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Investing Into the Virtual World
Fashion brands are investing in the virtual world, realising the importance of staying ahead of the curve and not wanting to lose out on the first-mover advantage. The recently concluded metaverse fashion week hosted on browser-based platform Decentraland, is a testament to an increased interest in digital clothing. According to a report by Nasdaq, it quotes sources from Morgan Stanley estimating that the virtual fashion market to be valued at US$55 billion by 2030. This proves to be a lucrative venture that can reap benefits in the long run as society becomes more entrenched in the metaverse.
The metaverse is a whole new universe that awaits exploration; the potential it holds is tremendous. Just like how in the real world we would need clothing, our lifelike avatars also require clothes while they traverse the cyberspace. Digital fashion is not a novel concept as it has already appeared in the gaming world as “skins”. But taking the idea to the next step are luxury fashion brands, which Balenciaga epitomises. The Paris-based fashion house partnered with gaming giant Fortnight to create dresses for users’ online personas.
Besides creating online clothing that users can don virtually, fashion brands build up their world within the metaverse. Luxury fashion brands like Gucci and Louis Vuitton have already started to extend its reach to the online world. The former hosted a virtual exhibition in the online game Roblox to mark its centenary. Gamers can explore the universe conceived by Gucci’s Alessandro Michele, like his key designs for the brand and also buy rare collectables. At Louis Vuitton, the brand celebrated its 200th anniversary with a mobile game that allows users to hunt for hidden NFTs by artist Beeple.
Creating a branded universe will support creative branding strategies, enable immersive consumer experiences and generate excitement among highly sought-after consumer groups. Another critical point to note is the creative freedom that brands (specifically designers) can obtain is the erasure of constraints of the physical world. It is said to be less disruptive to the environment and helps to conserve our finite natural resources. Furthermore, brands do not have to deal with problems associated with the supply chain.
Luxury Fashion Brands Need to Size The Opportunity
According to Caroline Rush, CEO of the British Fashion Council, she said in an interview with Forbes that about 10-15 per cent of our wardrobes could become digital in the future. This growing market will see even more contenders as our lives become ever more integrated with the virtual world. The younger cohort of the world is digital natives who are comfortable with spending real money on items that only exist in the digital realm. This group of consumers will make up a significant portion of the market in years to come.
In a special report by the Business of Fashion and McKinsey, State of Fashion 2022, the publication highlighted what fashion brands need to do to make it in this highly competitive arena. “Brands will need a strategic mindset and a willingness to develop partnerships and harness a variety of talent to deliver high-quality content, either in-house or via third-party collaborations. In an arena characterised by a large amount of hype, it will pay to seek out business cases that spark excitement but remain on-brand.”
“To do this, it may be necessary to take a new lens on ROI, focusing on less measurable benefits such a brand a3wareness and marketing impact, as well as setting flexible targets that are calibrated to potential, rather than focusing exclusively on the bottom line. Flexibility will be key, and brands should remain cautious in deploying their capital. However, the risks should not deter them from engaging with this rapidly growing digital universe.”
For now, the sky is the limit for fashion brands interested in the metaverse, and as mentioned earlier, the world will only get more integrated with the online universe. This means demand for virtual fashion is here to stay, but currently, brands should also be prudent with their venture into the metaverse at this nascent stage.
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