Consider the ‘real-estate’ market in the metaverse. Last year, sales across the top four emerging metaverse platforms – Sandbox, Decentraland, Cryptovoxels, and Somnium Space – topped a staggering US$501 million, MetaMetric Solutions data shows. A piece of ‘land’ in Decentraland was recently marketed via non-fungible token (NFT) auction house OpenSea as “the cheapest land in the fashion street area”, with a price tag of US$10 milion.
Numerous consumer brands have been blinded by the dazzling lights of meta-Vegas, entering the fray via various collaborations with various offerings and fanfare and experiencing various levels of trepidation, success, and failure. Examples include Nike’s Nikeland, Zara x fashion collective Ader Error via Zepeto, Gucci (Roblox), Adidas (Bored Ape Yacht Club NFTs), Forever 21 creator stores (Roblox), Balenciaga x Fortnite, and Balenciaga Meta Avatar store skins – to name a few.
What is it? Can I trust it?
So plenty of retailers have made early forays, but are customers ready for a CX paradigm shift? For many, there are some obstacles in the way.
When it comes to the metaverse, retailers who are looking to make a mark in the new virtual frontier will have a major consumer problem to attend to first. Gartner found that 94 per cent of consumers have either not heard about the metaverse or, if they have, they don’t understand what it is. Worse still, of those who do understand it and who also feel comfortable enough to hold a conversation about it, only 18 per cent are excited. If those stats weren’t sobering enough, a recent report by Productsup found that 60 per cent of consumers have zero to little interest in buying virtual goods.
Alongside this lacklustre anticipation of the metaverse is a parallel challenge for retailers that is far more insidious. There is a consumer trust deficit. Ipsos reports that 21 per cent of consumers who are familiar with the metaverse don’t trust it and a further 25 per cent of consumers who are still grappling with what the metaverse is are highly suspicious of it.
One-in-four consumers dismiss it as a platform built for tech companies to find a way to make a quick, exploitative buck. Critics have labelled it a fantasy world created to control our lives and drive us further into a ‘blackhole of consumption’.
‘Houston, we have a problem,’ I hear you say.
The metaverse, it seems, is as much a trust-sucking vortex as it is a brave new world of opportunity. Retail certainly has its work cut out for it when it comes to getting consumers onboard the meta-train.
Before we can talk about the world of innovative tech options – along with Bloomberg’s glittering expected revenue target of US$800 billion by the year 2024 – we first need to bridge the consumer attitude chasm.
Attitudes matter. They are one of the most important drivers of purchase behaviour and given their cognitive, emotional, and behavioural basis, metaverse consumers’ heads, hearts and avatars – oops, I mean wallets – have to be aligned.
Attitudes are the panacea for unlocking the potential of CX (customer experience) in the metaverse, as well as profitability and loyalty. In innovation adoption terms, attitudes are the key to getting the majority of consumers (not just the innovators and early adopters) onboard.
Luxury and the long game
Changing consumer attitudes is a daunting task but hope is on the horizon – and Gen Z are the prophets. Whereas 45 per cent of those over 35 reportedly hate the idea of the metaverse, Gen Z are hooked on the idea of virtual stores. A third of Gen Z-ers say they want their brands with them in the metaverse.
Some brands have already latched on. Nikeland is proof positive of the latent desire for metaverse clothing. Five months into launch it had already enticed 6.7 million unique visitors across 224 countries. Balenciaga’s Gen Z meta-playbook is another case in point. An oversized Balenciaga jumper will set you back $2000 IRL (in real life), whereas the Meta Avatars Store version will be around US$8.99. That allows younger, less wealthy consumers to start buying luxury labels for their digi-selves.
Damaging discounting of a luxury brand? Passing fad for those game enough to spend money on intangible products? Gimmick?
Maybe to the meta-deniers. But definitely not to the converted.
The luxury labels taking the meta-bull by the horns – Balenciaga, Gucci, Burberry, Prada, Thom Browne and LV – are onto a genius identity-marketing ploy. Consumers want brands to extend their offerings 24/7 across all the ‘worlds’ they inhabit. For Gen Z, and the Generation Alphas that follow, that’s an unmet need. When a brand becomes a part of a consumer’s identity, that’s a powerful emotional connection no matter the realm. Those brand-aware consumers will go on to buy the product IRL when they can afford it.
Brands like Balenciaga aren’t looking at a low-price, one-off, digital sale. They’re looking at long-term conversion – hooking Gen Z (and Alpha) while they are young and impressionable, and integrating the brand into the very core of their identity. It’s cradle-to-grave marketing and it’s a smart move. Gen Z alone numbers 72 million people globally and has a purchasing power of over US$143 billion. By 2025, this cohort is set to account for 40 per cent of the global luxury fashion market.
For Gen Z, the metaverse is the new playground.
For retail, Gen Z is the key to bridging the chasm.
Fundamentals first for the meta-CX
If physical in-store CX was retail 1.0, and online and the shift to omni-CX was retail 2.0, then meta-CX appears simply to be retail 3.0.
The difference? In one sense, not much.
Consumers expect stores to be digital-first and outstanding in terms of their ability to deliver on speed, convenience, and community. They expect the same from their meta-CX.
Research by Productsup found that 27 per cent of consumers think the metaverse will offer the same retail experience as in-store. Despite the majority of consumers not knowing what the metaverse is, they seem to want everything from it. Expectations of the metaverse CX include faster transaction speeds (24 per cent), meta-only brand collaborations and products (23 per cent), greater personalisation (25 per cent) and customisation, and enriched dynamic information when shopping (26 per cent).
Sound familiar? That’s probably because it is.
The problem is that brands haven’t yet figured out how to synthesise the CX across retail 1.0 and 2.0, let alone across 3.0 as well. The CX across retail realms is often glitchy, inconsistent and anything but integrated in terms of achieving a singular unified brand experience at every touch point. Consumers expect great service in-store and formats that excite, and they expect retail to understand their customer journey and how it is evolving. Yet the CX frequently falls short.
The fundamentals need to be right in retail 1.0 and 2.0 before we start thinking about extension to the metaverse as our ‘third canvas’ for retail storytelling. The biggest challenge for retailers is creating a cohesive customer journey across physical and virtual platforms, to deliver a unified experience.
The big opportunity for retail
The metaverse gives brands the opportunity to deeply and multidimensionally embed themselves in consumers’ lives. New tech enables expansion of the digital campfire in ways that were previously unimaginable. The lines between social community building, entertainment, and consumption are increasingly more interactive, immersive, and blurred.
If we want to influence emerging consumer behaviour in the metaverse, we need to get back to our retail basics and deliver on the fundamentals. That involves understanding the consumer mindset, matching emerging habits with new offerings, shaping and reinforcing emerging positive beliefs, reinforcing positive emotional responses to experiences and then analysing all that at a granular level.
Whilst the concept of the metaverse might bewilder some, the principles of marketing in the metaverse are, in essence, relatively simple. Retail should always use the same three key CX components of empathy, personalisation, and efficiency. The look and feel of the branded metaverse ecosystem should mimic its physical corollary. Consumers learn through familiarity, and analogical learning will be a powerful tool for facilitating comfort with this new realm. In addition, the inherent interactivity of the meta-canvas brands should ensure that their offerings are replete with value. That means instilling the CX with enriching physical, digital, and emotional incentives.
Deceptively simple. The only fly in the ointment for meta-success?
Getting retail 1.0 and 2.0 right first.