Today’s headlines might lull luxury brand stewards into thinking that Web 3.0 was over before it even got started. Meta (META: Nasdaq) the company formerly known as Facebook and the single biggest proponent of wider Metaverse adoption, has laid off thousands of employees. The price of cryptocurrencies drops daily, and NFTs that were all the rage just a year ago are crashing to new lows. However, despite these somewhat dire economic indicators, it would be foolish for luxury marketers to believe that the Metaverse is simply a passing fad. The Metaverse is coming, and it will be Millennial and Gen Z consumers who indelibly alter the luxury shopping landscape by forming deeper connections to brands through their interactions in the Metaverse.
The Metaverse is a playground critical to capturing the loyalty of younger consumers who, in turn, offer brands a very lucrative lifetime value. For younger consumers who have never known a non-digitized world, the Metaverse isn’t a nebulous construct—it’s a place where they feel very comfortable interacting and purchasing. In fact, a recent Global Voices report reveals that approximately one quarter of Millennials and Gen Z surveyed are not only aware of the Metaverse, but also want to shop in it. About one-fifth of Gen Z and Millennials have shopped in a virtual store, and 22% say they would purchase an item in an online game. Fifteen percent have bought an NFT or digital item already. When digging deeper into luxury-crazed developing countries, the numbers are more staggering. Nearly 47% of China’s shoppers under the age of 34 have used the Metaverse for product discovery. Half of India’s consumers of the same age have made purchases in a virtual store. Nearly 42% of the UAE’s Gen Z and Millennial consumers have purchased an NFT. These consumers are tomorrow’s power shoppers that luxury brands must court today, in the Metaverse, to ensure their relevance in the coming decades.
The right time to develop a Metaverse strategy is…now. The strength of Gen Z consumers will increase year over year as more of these young people born between 1996 and 2012 enter the workforce. By 2030, Bank of America predicts that Gen Z, with $33 Trillion in income, will control more than a quarter of global income. Perhaps not coincidentally, by 2030 Morgan Stanley estimates that the Metaverse will contribute $50B in sales to the luxury and fashion industries.
It’s not too late to become a Metaverse pioneer in the luxury world. Few luxury brands have fully tapped into the Metaverse’s potential or experimented, although the most innovative ones to date have been Gucci and Dolce & Gabbana. Gaming so far is the top way to collaborate and experiment simply because of the ability to sell virtual product and NFTs to a captive audience. They have also created virtual luxury stores that serve as a gateway to greater Metaverse interaction. Dolce and Gabbana went a step further and auctioned a nine-piece collection of NFTs along with physical couture pieces, which sold for 1,885.719 Ether, then valued at $5.7 million (now worth approximately $2.3 million).
Gucci, however, has gone a step further to ensure that its brand retains an edge in the Metaverse. In September, the company announced that luxury marketing veteran Robert Triefus would head its new Vault and Metaverse Ventures as CEO. Both the role and the division are new to Gucci and serve as a testament to the company’s wider commitment to the growing importance gaming and Web3 will play in their overarching business goals.
The lines will continue to blur between virtual and physical for all consumers—and even more so for the next generation born after 2016. The time is right to develop a Metaverse strategy that will pay dividends well into the future with new customer acquisition, greater brand affinity, and deeper loyalty. The only way to understand it is to be in it.