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Home Business A virtual world of opportunity: how luxury brands should approach the Metaverse

A virtual world of opportunity: how luxury brands should approach the Metaverse

by Staff GBAF Publications Ltd

By George Bennett, Metaverse expert and Head of Immersive at creative agency LOVE

The concept of the Metaverse continues to excite and confound people in equal measure, but there is no denying that it is has the potential to dramatically shift how we engage with technology, with each other, and with brands.

While conversations around the Metaverse are evolving so fast it’s hard to tell what this virtual world will eventually look like, it’s important that brands start thinking about what opportunities sit within it now.

Some luxury brands are already exploring the virtual world. In May 2021, Gucci launched its Gucci Garden in the gaming world Roblox. Based on a real exhibition show in Florence, players could immerse themselves in different Gucci themed rooms and try on and purchase clothes. In September that same year Balenciaga entered Fortnite, with virtual outfits and accessories available for players’ avatars. And this is just the beginning.

Recently, Morgan Stanley estimated that over the next decade, virtual sales – including in the Metaverse and through NFTs – could net $50 billion-plus for the luxury fashion industry.

So why is there such potential for brands whose essence is based on the quality of a product – the touch and feel of a leather bag or the taste of a fine wine – in entering the virtual world?

These spaces are increasingly where audiences are spending their time, socialising, playing games and buying virtual products. Roblox and Fortnite are prime examples of what a new virtual world will look like, but the Metaverse will be wider and more interconnected, not a closed-in platform. Once more and more people get their heads around these new ways of thinking, it will become an increasingly popular place to be and a new arena for brands to make themselves known.

The more comfortable brands can get with virtual assets, whether it be turning their products into 3D models, creating interactive clothing, or producing augmented reality and virtual reality experiences, the easier they will find navigating this virtual future.

New possibilities

For luxury brands, an element of scarcity will be important. If there is limited availability of a piece, it has an added desirability. That rings true in the virtual and “real” world.

The Metaverse, however, will allow a wider audience to access and interact with the brand. Gucci, for example, is an aspirational luxury label but by venturing into Roblox they were about to connect with younger audiences. A handbag sold in the Metaverse may still be a rare piece, but it costs considerably less than a physical Gucci bag, making it more accessible for younger generations. The brand brought its real-world reputation into the virtual one and found itself a host of new fans.

A whole new generation is growing up with access to these worlds, and how they look and express themselves in these virtual spaces can be just as important as in the real world.

The added benefit is that personalisation can go even further in the virtual world: not only could a person choose the colour of their luxury item, but they could add different visual effects or even alter the functionality of the item. There are almost endless options in the Metaverse for people to show their personality and find others who share their interests.

In this sense, creating a community will be vital if a brand enters the Metaverse. Much in the way that purchasing an NFT often gives buyers access to early releases of other NFTs or to private events, purchasing a virtual item from a brand could give a user access to an exclusive experience or to a certain area in the Metaverse. It’s like being part of an elite club where you can find like-minded people – and this fits perfectly with the spirit of luxury brands.

This doesn’t just apply to fashion. Premium wine or whisky brands can host virtual vineyard or distillery tours, for example. Wiv, a Norwegian wine NFT company, sells NFTs that correspond to specific vintages, which gives buyers access to an authenticated bottle of wine, and they can also take part in virtual tours. Similarly, in January 2022, Penfolds released 300 bottles of trading enabled “ultra-rare wine” via BlockBar, the world’s first direct-to-consumer NFT platform for wine and spirits.

Tread carefully

Brand experience is potentially more important in the Metaverse than in the real world, but it must feel genuine. If a brand enters the space without careful consideration of who they are, why they are there and what they are adding to it, it will seem like they are simply jumping on the bandwagon.

This is why Adidas chose to work with Bored Ape Yacht Club, a well-established name in the Metaverse community, for its NFT drop, and Vans built a whole world within Roblox that actually had new functionality and improved the game. Brands must spend time making sure their offering is meaningful. This way they will not only attract new customers but keep them too.

They also need to make sure their technology and security is up to scratch: a website crashing at the launch of NFTs or one user managing to purchase every item of a release (which has been known!) will not foster community spirit or trust for the brand.

It is also still a polarising subject. Gorillaz at one point were going to release NFTs but received backlash from their fans and cancelled the launch, as did Legendary Entertainment for the film Dune. In both cases the negative response was around the use of the Ethereum blockchain, which uses huge amounts of energy from the computers mining blockchain. Both brands could have avoided this by using a proof of stake blockchain which uses 99.9% less energy to maintain (incidentally Ethereum itself also has plans to switch to this method)

The road to the metaverse is still uncertain but, like the early days of social media, it can bring exciting new business opportunities to early adopters, while the late adopters will miss the opportunity to innovate and reach new audiences. Those pioneering brands must remember to always put community building at the forefront of their plans and be completely transparent about their intentions and future roadmap. If they do, they will be sure to reap the rewards.