Who could have thought that the first email sent on the Internet would soon become a universe of its own in which people can interact freely with each other? The evolution of the Internet, since Web 1.0, consists of static websites and personal sites with very little user interaction or content generation. Then came Web 2.0, commonly referred to as the “Social Web”. User-generated content increased and a community of network users was born. Social media reigns like royalty during this internet age.
Our society is on the verge of a new beginning, Web 3.0, in which a whole new world is being created. People in the tech industry call it the metaverse, and its appearance even prompted Facebook to change its name to “Meta”. There are good points for brands to enter the web, because it can connect with a giant pool of people. Fashion brands, however, have not been receptive to this idea of selling their products online as it could be seen as belittling their brand.
While it is in the brand’s interest to protect their prestige, what these brands are missing out on is another avenue to profits. During the height of the pandemic, luxury brands closed brick-and-mortar stores, which essentially disrupts any brand’s profit flow. For brands that have devoted resources to creating an easy-to-use website where customers can easily make their purchases, it has certainly helped cushion the impact of closed stores.
Investing in the virtual world
Fashion brands are investing in the virtual world, realizing the importance of keeping up with the times and not wanting to lose the first-mover advantage. The recently concluded Metaverse Fashion Week, hosted on the browser-based platform Decentraland, is a testament to a growing interest in digital apparel. According to a Nasdaq report, he cites sources from Morgan Stanley who estimate the virtual fashion market will be valued at $ 55 billion by 2030. This proves to be a profitable venture that can reap long-term benefits as the company becomes more rooted in the metaverse.
The metaverse is a whole new universe waiting to be explored; the potential it holds is enormous. Just like in the real world we would need clothes, our realistic avatars also require clothes as they traverse cyberspace. Digital fashion is not a new concept as it has already appeared in the gaming world as a “skin”. But to take the idea to the next step are the luxury fashion brands, which Balenciaga embodies. The Paris-based fashion house has teamed up with gaming giant Fortnight to create outfits for users’ online characters.
In addition to creating online clothing that users can virtually wear, fashion brands build their world within the metaverse. Luxury fashion brands like Gucci and Louis Vuitton have already begun to extend their reach into the online world. The former hosted a virtual exhibition in the Roblox online game to celebrate its centennial. Players can explore the universe conceived by Alessandro Michele of Gucci, such as his key models for the brand, and even purchase rare collectibles. From Louis Vuitton, the brand celebrated its 200th anniversary with a mobile game that allows users to search for hidden NFTs from artist Beeple.
Creating a brand universe will support creative branding strategies, enable engaging consumer experiences, and generate excitement among highly sought after consumer groups. Another critical point to note is the creative freedom that brands (especially designers) can achieve is the erasing of the constraints of the physical world. It is said to be less harmful to the environment and help preserve our limited natural resources. Furthermore, brands do not face supply chain problems.
Luxury fashion brands need to consider the opportunity
According to Caroline Rush, CEO of the British Fashion Council, said in an interview with Forbes that around 10-15% of our wardrobes could go digital in the future. This growing market will see even more competitors as our lives become more and more integrated with the virtual world. The youngest cohort in the world are digital natives who feel comfortable spending real money on items that only exist in the digital realm. This consumer group will form a significant portion of the market for years to come.
In a special report of the Fashion business and McKinsey, State of Fashion 2022, the publication highlighted what fashion brands need to do to make it through this highly competitive arena. “Brands will need a strategic mindset and a willingness to develop partnerships and leverage a variety of talent to deliver high-quality content, both internally and through third-party collaborations. In an arena filled with a great deal of hype, it will pay to look for business cases that spark excitement but remain loyal to the brand. “
“To do this, it may be necessary to adopt a new ROI goal, focusing on less measurable benefits such as brand awareness and marketing impact, as well as setting flexible goals that are calibrated on potential, rather than focusing solely on profits. The flexibility it will be critical and brands should remain cautious in using their capital. However, the risks should not deter them from engaging in this rapidly growing digital universe. “
For now, the sky is the limit for fashion brands interested in the metaverse, and as previously mentioned, the world will only integrate more with the online universe. This means that demand for virtual fashion is likely to remain, but currently brands should also be cautious with their metaverse venture at this nascent stage.
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