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THE LUXURY MARKET

VIRTUAL REALITIES OF THE METAVERSE COULD INITIATE
TRANSFORMATION OF LUXURY MARKET AS WE KNOW IT

 

If Mark Zuckerberg is to be believed, the next great technical leap will soon be upon us, and it is likely to be as transformational as the social media revolution that he helped engineer with Facebook a mere 18 years ago. For those who have not been following the tech media, we’re talking about the metaverse.

What is the metaverse? It’s essentially a virtual space on the Internet into which you may enter, which is persistent, immersive and three-dimensional. Once inside it, you’ll feel that you’ve been removed from the physical world. You will be able to play, work, seemingly travel, interact with others and buy products, which may be virtual or real.

How will it change things? Today we mostly operate in a “flat” Internet setting, where people interact digitally via the medium of a two-dimensional screen, but consciously remain in an analog environment. In the metaverse they will enter a digital dimension, where space, distance and physical barriers are non-existent, and virtually any environment can be conjured up electronically.

This not science fiction. Gaming companies are already enabling clients to play with one another in digitally immersive worlds. Doctors wearing a virtual-reality helmets and manipulating hand-held controllers, appear to themselves to be conducting surgery on an avatar, but actually are treating a flesh and blood patient lying in an operating theater, sometimes thousands of kilometers away.

The metaverse will change the way will sell, whom we will sell and sometimes what we sell. Companies, and particularly luxury brands, will be a required to invest in the technologies required to create metaverse experiences, where the virtual version of a physical product is positioned, presented and sold. Only at the end of the process will the actual product be delivered, and that is assuming that the real item is still relevant. For in the virtual world, when you buy a piece of jewelry for your avatar to wear, a  real item of jewelry may not be as important as its digital counterpart.

In the digital realities of the  metaverse one enters a digital dimension, where virtually any environment can be conjured up electronically.

REQUIRING SUPERCHARGED CREATIVITY

Like the Internet we know, from the marketing perspective the metaverse will be content driven, but it will require supercharged creativity because a simple narrative will not not sufficient.

Writing in the Harvard Business Review, Janet Balis of Ernst & Young referred to the challenges that await. “Most importantly, people in brand marketing or leadership roles should start thinking about how to unleash their creativity and their storytelling,” she stated. “If the creative palette expands dimensions in the metaverse, we should be excited to create experiences at any point in the customer journey, from acquisition, to engagement, to transaction, to customer support, which have the potential to be both spectacular and stickier than before.”

“Brands should always be in a test-and-learn mode, and the digital landscape in particular requires intellectual curiosity,” she stated. “The metaverse is potentially the next iteration of how humans use the internet to connect, communicate and transact — sitting on the sidelines too long is not likely to be an option.”

And don’t assume this will happen far off into the future. If the past 25 years have taught us anything, successful disruptive technologies in the modern era take off quickly, and, like the Omicron virus, their influence expands exponentially.

BRANDS GETTING THEIR VIRTUAL FEET WET

There are luxury companies that already are well advanced it setting themselves up for the metaverse. The French-Spanish fashion house Balenciaga, which is owned by the Kering Group, is one of them. In December it announced it was establishing dedicated business unit to explore opportunities for marketing and commerce in the metaverse.

Balenciaga had already gotten its feet wet. Last year it released its Fall 2021 collection via a video game, collaborating on the project with the with gaming platform Fortnite, with which it developed a collection of digital skins for players.

“The use-ability [of digital fashion] is the point that’s missing, but that’s making gigantic steps every day,” said Cédric Charbit, Balenciaga’s chief executive, at a conference organized by Business of Fashion.

“Right now the climax of interaction with a luxury brand is that you click like, or comment or buy something,” he added. “I think we can get to a next level.”

Other luxury or fashion brands already taking real steps in the metaverse. The high-end Italian fashion brand Gucci has been working with Roblox, a gaming platform popular with pre-teens, while the American sportwear company Nike has filed trademarks that indicate its intent to make and sell virtual sneaker and apparel NFTs.

 

In the metaverse, consumers may have the option of  buying real products, like diamond jewelry, or NFTs, which are unique and unchangeable units of data on a blockchain, which may approximate the real thing.

For metaverse rookies, a NFT is a non-fungible token, which is a unit of data stored on a blockchain that may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, like a work of art NFTs differ from blockchain cryptocurrencies, such as Bitcoin. Nike and other companies are betting that in the metaverse, NFT sneakers will have real value. And if a digital running shoe has value, why not a digital diamond?

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