Luxury and the Metaverse – Why luxury companies are exploring its potential

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LVMH’s Bulgari has recently announced that they have opened an exclusive virtual world on South Korean social media platform Zepeto1. The news came as expected, after its CEO, Jean-Christophe Babin announced in Viva Tech 2022 that Bulgari will enter the Metaverse2. But, what is the metaverse? Bulgari is one of many luxury companies exploring the Metaverse and its potential. These projects have ranged from creating digital assets (e.g. clothes, jewelry, art works, collectibles, and sneakers) as NFTs, to creating new experiences with virtual and augmented reality (AR/VR). The metaverse, exists in many different shapes and forms. They can be a mass multiplayer online game such as Fortnite or Roblox, social media platforms like Zepeto or Meta’s Horizon Worlds, they can virtual lands  built on blockchain networks such as Decentraland or Otherside, or more commonly, the use of web-based augmented reality.

Fashion Metaverse: Its Impact on Luxury’s Digital Transformation

In the last decade, the luxury industry has experienced a seismic shift to become more technologically innovative. First, it started with the rush to launch their brand.com ecommerce platforms. Next, it was their visibility and responsiveness on social media. And over the last five years, it was their ability to create a truly omnichannel environment. Even laggard and reluctant brands like Prada, Celine and Chanel have all invested heavily to become more accessible, albeit still tightly controlling their distribution channels. The pressures to become more digitally native comes from both internal and external directions. Internally, it allows the brand to reach more audiences and touchpoints throughout the customer journey. And externally, the market demands for more convenience and access. Moreover, when main luxury hubs like Milan, Paris and Shanghai continued their lockdowns, brands were challenged to be more digitally present, whilst providing the same luxury experience. While some brands, namely Chanel and Hermes remained steadfast in shutting their stores, other companies such as Cartier, Fendi and Dolce & Gabbana offered alternative solutions like virtual appointments or visiting an augmented reality store. The metaverse was near in sight.

The potential of the Metaverse: avatars and digital assets

To understand the potential of the metaverse, it is crucial to first understand how game developers have paved the way to live in new realities. Take The Sims for example. It is a simulation of real life, where the player can create an avatar, either in their own likeness or of a person or family they have envisioned for themselves. In the game, they can make friends, pursue a career, and build their dream home. Throughout the years, the game developer has collaborated with fashion brands such as H&M and Moschino allowing The Sims to be dressed in clothes that are also available to be purchased in real life. The only thing missing is the integration of in-game economy and real life. However, this is now present on all massively multiplayer online (MMO) games such as Fortnite, League of Legends and Roblox, each having in-game currencies which can either be earned in-game or purchasing them with cash. These currencies are used to buy skins (weapon decals, outfits, and accessories) or to enhance your character. The very first luxury brand to venture into gaming skins is Louis Vuitton, where Nicolas Ghesquière, the Women’s RTW creative director, designed a range of skins for True Damage a music ensemble on League of Legends back in 20193. This paved the way for other luxury brands to explore the possibility of crossing boundaries, namely Balenciaga, Burberry, and Prada, with Fortnite, Honor of Kings and Riders Republic, respectively.

One of the main problems with gaming, is that it is niche and often not accessible for the masses. While some games like Fortnite and Roblox are available on smartphones, the adoption rate is still relatively niche. This cannot be said for social media platforms, which explains why brands like Gucci and Bvlgari have opted for Zepeto, Off-White and Ralph Lauren with Snapchat, and brands such as Thom Browne, Balenciaga and Prada are looking to make their collection available on Meta’s Horizon Worlds. Each of these three metaverse platforms have avatar builders, where users can create a digital self to their own likeness and would also be given the option to purchase and be dressed in digital fashion. For luxury brands, these activities are not going to be a substantial revenue stream, but rather a form of communication, which allows the brand to be precipitated through the masses and hopefully catch the attention of a potential consumer to make in-real-life purchases. Furthermore, it also opens up the opportunities for brands to better understand the market demand for digital assets. As these can then pave the way for NFTs, which are unique cryptographic tokens built on the blockchain.

Fashion NFTs and Digital Fashion: Success Stories from International Luxury Brands

As of present, many luxury brands have experimented with NFTs, and very few have succeeded. The four most successful companies are Dolce & Gabbana, Gucci, Tiffany & co. and Mclaren, with a total revenue generation that amounts to over $50 million. While Tiffany & co. and Mclaren’s NFT projects have little to no involvement into the metaverse – Tiffany & co. created bejeweled pendants of popular NFT project Cryptopunks, and Mclaren’s Genesis collection gives you membership access to its MSO Labs, which is based on a community of enthusiasts. This is not the same for Dolce & Gabbana and its a special fashion collection as digital assets have been created to be used on Blockchain based metaverse Decentraland, where they also showcased in the first ever metaverse fashion show in May 2022. Similarly, Gucci’s collaboration with 10KFT Shop, a virtual store where Wagmi-san, the shopkeeper, was able to gift NFTs designed by Alessandro Michele4, to its most loyal customers. The Gucci Grail had an expiry date coded in its smart contract, and if they were not minted by March 18th, 2022, they would expire and be null and void. The concept was to prevent the reselling and profiteering from secondary markets – nonetheless, it still made it to platforms like Opensea, where the average price was around $2000 USD for the Gucci NFTs. The Gucci Grail turn out to be 2 iconic looks from the Gucci 100-year anniversary fashion show. These were turned into outfits for their Profile NFTs, such as Bored Apes, World of Women or Cryptopunks, which can potentially be used on the metaverse world Otherside, built by the creators of Bored Ape Yacht Club5.

What about the Metaverse in the real world? AR, VR, and Mixed Reality

While there has been a lot of emphasis on transporting ourselves into a virtual world, the metaverse is not only about creating avatars and playing these characters. It also opens the opportunity for enhancing the retail experience such as virtual, augmented, and mixed reality. These experiences can be either partially or fully immersive. For luxury brands that are not ready to completely immerse themselves in the metaverse could try features on web-based augmented reality like generating an Instagram filter or Snap lens. Brands such as Dior and Prada6 have tried their hand in these, albeit garnering very little attention. One of the most prominent AR developers 8thWall, have created countless AR experiences for brands such as Khaite7 and Möet & Chandon8, where the latter involves creating a personalized wish that would animate the moment your phone camera is pointed at the champagne. Alternatively, brands have also invested in new VR experiences such are VR headsets to attend fashion shows, or even experience the craftmanship of artisans in rural Italy, as what Fendi’s Hand in Hand project showcased at Viva Tech 20229.

The metaverse in an inevitable force, whether in gaming, social media, blockchain or through augmented reality lenses. Luxury brands are already investing heavily to understand how they can leverage on such technologies to not only reach their consumers, but also enhance the luxury experience further.
We delve deeper into the various strategies luxury companies are exploring to enter the metaverse, as well as the adoption of new technologies at the EMILUX program.


by Laura Pan
Coordinator of Emilux Executive Master in Luxury Management

 

EMiLUX

The Executive Master in Luxury Management EMiLUX is a post-experience modular program, taught over 12 months in Paris, Dubai, Milano, London, Lausanne and Roma. The EMiLUX is a unique opportunity to empower your career in the luxury business, also looking at it from different cultural perspectives and in different markets. Without having to leave your job, you have the opportunity to open doors you didn't even knew existed, and you'll be able to reach new goals.

 


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