A New Habitat for Luxury Brands: The Metaverse

The internet is evolving into a new environment where digital human interactions are getting closer to reality: The Metaverse. This new, immersive, virtual world is disrupting almost all sectors, including the luxury fashion industry, which is starting to explore several collaborations with popular metaverse platforms.

Gucci is one of the first movers in the world of digital assets. Recently the fashion company announced it has bought some land on the digital world platform The Sandbox to create a virtual fashion experience for consumers. The Sandbox is a virtual Metaverse built on the Ethereum blockchain, where users can play and create games to monetize - as of November, The Sandbox had over 500,000 registered wallets and 12,000 unique virtual landowners. On the platform, Gucci launched its virtual concept store where users can purchase Gucci’s items through NFTs and wear them while playing games in VR.

Also, last year Gucci collaborated with Zepeto, a platform with over 260 million users - 80% of which are teenagers- to launch Gucci Villa, a 3D world map that allows users to buy IP-based fashion items. In Zepeto, it is possible to communicate and interact with others by creating avatars modeled on their own face.

Balenciaga also joined the Metaverse by opening a virtual store on gaming platform Fortnite, giving more than 350 million players across the globe the opportunity to buy new outfits that replicate the physical Balenciaga retail collection.

The reason why brands are inceasingly shifting into the Metaverse is not only to create digital versions of their flagship products. Metaverse is about connectivity and engagement: Users may find a new way to shop online, by browsing through digital showrooms and purchasing virtual/physical versions of products on display.

Brands are working closely with digital platforms and tech companies to leverage their digital presence and reach billions of potential metaverse users. Luxury brands plan to use their digitl tokens to connect with consumers, especially millennials and Gen Z, in a unique way, giving them access to items that would be impossible to buy in real life and creating a loyal fan base of buyers.

But the appeal of the Metaverse goes far beyond the consumer market. Tech giants such as Google, Meta, Apple, and Microsoft, are working on VR/AR headsets to make consumers’ virtual experience increasingly immersive. Also, investments in 5G network infrastructure, cloud, and IoT are required to shape new metaverse developments. This creates exciting, multi-year, secular investment opportunities.

The Metaverse is just part of the emerging and deeply transformative wave of innovation, the upcoming Fourth Industrial Revolution, that is blurring the line between the physical and digital worlds. As reported by Morgan Stanley, the luxury branded NFTs market could reach $56bn worth by 2030. The Metaverse is still an early user platform, but its growth potential is very significant.

---

The information in this article should not be regarded as a description of services provided by Delian Partners SA. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. The views reflected in this article are subject to change at any time without notice.