Metaverse & Luxury
The metaverse, while still in its early stages, is right on our doorstep. There is arguably potential for great rewards and a front seat to the tech revolution that is unfolding before us. Currently, the developments and trends are very fragmented with many individual players experimenting on their own and no market leaders emerging just yet.
However, without a doubt, this is a watershed moment in the development of the internet supported by the fact that so many technologies, including AR, VR, LIDAR and AI are developing at lightning speed. Many brands are still reeling from sitting on the sidelines when e-commerce took over, so there is tremendous awareness around the metaverse, and an eagerness to participate. In this kick-off report, which will be the first in a series of reports on the metaverse, we endeavor to address some key topics: the definition and evolution of the metaverse, its core drivers and the business rationale for participating in the metaverse, specifically as it pertains to luxury – and, last but not least, key recommendations.
What is the mysterious metaverse? It is the place where a multitude of virtual worlds co-exist and interact with each other. It is not one single digital experience, but a continuum of many different immersive digital experiences executed across a variety of platforms. In the broadest sense, it is the meeting place of blockchain technologies, augmented and virtual realities, gaming and social media. To understand what the metaverse is and the opportunities it brings, we need to understand what has been driving it. We need to look back, in order to understand how the metaverse future might be shaped.
While social media/community and gaming platforms are an established and essential part of our daily interactions and transactions, the advances in blockchain and various technologies as well as the changes in demographics are pushing gaming and social media to new frontiers. It goes without saying that the pandemic has helped to turbocharge this digital revolution. An understanding of the core drivers and accelerators of the metaverse combined with an analysis of the rationale for luxury companies to participate, is key to understanding how brands can benefit.
The metaverse shares some key characteristic with luxury: exclusivity, individuality, tradability and status signaling. Engagement in the metaverse can expand the reach of brands by drawing in new target groups, especially Gen Z and Gen Alpha through emotional connection and better connectivity, by piggybacking on existing sales and adding new revenue channels. NFTs are an example of such a revenue channel and their exclusivity is inherent to them; just like other luxury goods, their desirability and uniqueness drive marketability and reinforce tradability. The circular and interconnected relationship between the product and the consumer and the application of embedded blockchain technology, allows for data about consumer preferences to be passed along, as well as to be used to enhance security, traceability, and authenticity of products. Thus, many facets of the metaverse can support customer engagement and revenue growth, as well as guard brand equity and authenticity in the luxury industry.
In our kick-off metaverse report, we also examine key ingredients for a metaverse execution strategy. How luxury brands should approach the metaverse includes first and foremost experimentation, which is strategic and deliberate and dovetails with the brand’s messaging, but also an ability to remain nimble in the face of rapid changes in this space.
For more in-depth reading, we invite you to read the full-length report, which provides an overview on the metaverse and its impact on luxury. We also invite you to share with us any metaverse topics of specific interest to you, which we will be happy to examine and include in our subsequent reports on the metaverse.