Reimagining Luxury Brands in the Metaverse.

Luxury brands have always relied on physical visibility (and the status that it delivers) as the core value proposition.  For a high-class watch brand, the devotees wear those watches with pride as it says something about who they are and who they aspire to be.  It’s for this reason that the current shift towards virtual worlds is setting off alarm bells for luxury brands who potentially need to reimagine their role in a hybrid ecosystem.

How do they compete and thrive in the metaverse?  In this article, we’ll explore just that and see if we can get to the bottom of the paradigm shift that brands need to make.

What is the Metaverse? And Why Does It Matter?

Besides being a tech buzzword, the metaverse actually represents a large swath of different opportunities.  The core idea is a virtual world through which we can interact with each other without having to be in physical proximity.  The most futuristic version of this is when we don’t virtual reality goggles and escape the physical realm entirely, but it also encompasses more passive virtual interactions such as video games, video conferencing, and even the social media ecosystem that has come to dominate global discourse.

The current iteration of the metaverse seems to coalesce around 5 key pillars:

  • Gaming.  Large-scale, multiplayer online games that are fully immersive.
  • Workplace Interaction.  VR / AR meetings with colleagues around the world.
  • E-Learning.  Immersive learning environments that transcend traditional models.
  • Marketplaces.  Buying and selling of digital assets.
  • Events.  Virtual events where the physical location is not a barrier to entry.

The metaverse represents potentially the most disruptive new technology in the last couple of years and there is a feeling that, for the first time, it’s ready to transform the world as we know it.  The luxury brands that survive are going to be the ones who can transfer their value into these digital worlds in a way that aligns with consumer demand and the native characteristics of the technology.

1. ‘The Technology of the Metaverse, It’s Not Just VR’ by Doug Antin.

2. ‘Apparently, it’s the next big thing.  What is the metaverse?’ from BBC News.

How Will Digital Goods Play a Role?

On first glance, it may seem that physical luxury items might disappear in the metaverse because of the lack of tangible reality – however that couldn’t be further from the case.  It’s already been demonstrated that digital goods will play a major role in the future of the metaverse because the status and signaling are what these items are actually about.  If you look at massively popular video games, players are already spending lots of money buying digital assets to adorn their character and achieve the same sort of social response as someone might get with a luxury item in the real world.

Emboldened by the promise of cryptocurrency, digital assets will become the currency of status in these digital worlds and they will carry the reputation and values of the brands that stand behind them.  It’s for this reason that luxury brands must take this shift very seriously and start transitioning into this new paradigm.

Opportunities for Innovation

Some of the opportunities that are available to luxury brands include the following:

  • Hybrid Models.  You might offer people the opportunity to purchase a virtual good through these emerging infrastructures, but to bundle this with a physical good in the real world.  These hybrid models are a great way to dip your toe in the water, while still using the existing channels that you have running.
  • Virtual Fittings.  Instead of having to come into a store to try on a piece of clothing, a consumer can experience the piece in VR or AR, so they can see what it will look like from wherever they are in the world.  This completely changes the shopping experience and it can vastly expand your capabilities as a luxury brand.
  • Lower Cost Aspirational Items.  Luxury brands are necessarily expensive but that limits the size of your audience.  In the metaverse, you could sell virtual replicas at a lower cost to promote aspirational purchases from consumers who will one day become your mainstay customers.  The functionality can be limited to maintain exclusivity but it opens opportunities that don’t cannibalize your cultural cache.
  • Fight Against Counterfeits.  Blockchain technology enables brands to control their supply and verify the authenticity of any item – helping to fight against cheap counterfeits that muddy the water.  Every authentic piece can be tied to a digital token that is encrypted and secured – so that a buyer can prove that it is what it says it is.

These are just a few of the opportunities that abound in this new world for those who are willing to adapt and move with the times.  Of course, there are challenges that come with this as well.  Brands will have to deal with privacy concerns, online safety issues, social inclusivity and adoption, and others – but these pale in comparison to the potential.

Luxury brands must take heed of these changing circumstances and start to reimagine themselves in first a hybrid world, and then a fully virtual metaverse.  This sort of forward-thinking is going to be paramount for long-term relevance and to reach the new generation who will grow up in this paradigm.

There are exciting times ahead, that is for sure.  The world as we know it is about to be disrupted.  Where will your brand be?  And what will it look like?

Credit: Terry Wong

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