In an ever-evolving digital world, metaverse is the latest buzzword, and it’s not surprising that the retail industry has been the most eager to take advantage of this burgeoning ecosystem. Last year, McKinsey predicted the metaverse market to surpass a $5 trillion valuation by 2030, with e-commerce capturing upwards of $2.6 trillion. Capgemini’s industry analysis report echoes this prediction by mapping tremendous upstream and downstream uses of this nascent virtual medium for retailers. In
In fact, at Capgemini Invent, we are helping our clients define their strategic entry into the metaverse by identifying future value pools that help build a more compelling future-proofed growth narrative. Even as retailers globally clamour to keep up with the times and identify new ways of engaging customers and building loyalty – we’re confident the metaverse can help. Watching the era of metaverse unfold The concept of a metaverse arguably is at least a century-old. Be it the 1935 Weinbaum classic Pygmalion’s Spectacles, or the 2011 sci-fi thriller Ready Player One, this is not our first dig at building experiences that blur lines between real and virtual. The only reason this wave of metaverse-inspired products and experiences is taking centre-stage is because of a glorious trinity of favourable technological advancements (including wide-spread internet access), global adoption of social media and digital footprints and development of some promising XR (extended reality) equipment like AR (augmented reality) headsets and digital sunglasses. What we know Unlike existing mediums of customer engagement, the metaverse marries the virtual with the physical offerings of a business. This year my eight -year-old nephew politely asked (although it felt more like demanded) a hundred “Robux” for his birthday. My nephew, just like his three closests friends, are among the 50 million daily users of Roblox – one of a number of growing metaverse platforms that are inspiring a generation of creatives with blocky graphic characters and a dizzying array of games collectively valued at $1.9 billion. Whilst this scenario might suggest the metaverse is only a children’s gaming platform, we’re seeing the foundations being laid for so much more. Game development has come a long way, but we’re now seeing significant pollination across digitally inspired retail destinations, next-gen shopping experiences, cross-institution classrooms and virtual real estate. We are on the cusp of something truly massive. How are brands leveraging the metaverse? A well-designed digital experience uses a combination of modalities like flat UI, XR and natural interfaces to create rich, multi-sensory customer experiences that can evoke a sense of joy, wonder or freedom. In the metaverse, content is king and this mindset is what creates powerful and meaningful experiences. Some brands have already derived significant value via the metaverse-channel as a new direct form of customer engagement. Fashion giant Tommy Hilfiger partnered with Capgemini’s Applied Innovation Exchange team in São Paulo to create a meta-universe from scratch to host a completely virtual national sales convention. Taking the idea of immersive virtual events to the next level, Samsung hosted a sustainability themed fashion show in partnership with the New York Fashion Week in September last year. Commemorating the brand’s extensive e-waste recycling efforts in the US, the show featured a virtual runway that was projected for a live audience leaving many awestruck. Retailers have seen incredible value in the metaverse because not only does it merge numerous channels seamlessly, it also stitches the physical with the virtual for unique experiences that create even more customer stickiness. Treading lockstep, retail giants like Amazon and Walmart have ventured into the virtual space to enhance shopping experiences. Walmart recently revealed plans of creating its own cryptocurrency and collection of NFTs (non-fungible tokens) with the intent to make and sell virtual goods directly. What we are observing is that the metaverse is creating opportunities for virtual economies. ‘Direct-2-Avatar’ is one of the fastest emerging business models, allowing retailers to create fully virtual products for avatars of users (a bit like a digital representation of one’s identity). Balenciaga’s campaign with Fortnite where fans can buy the brand’s virtual assets for real money is a fantastic example of this. How many customers view ‘real-world’ fashion as an extension of identity, digital identity is becoming just as important. Lastly, the metaverse is demonstrating potential to be an effective tool of brand premiumisation and loyalty programming. Many brands are venturing out even without a clear metaverse-enabled product, but are conscious of the importance of being present and building brands where the next-gen consumers are (think Coca-Cola in Decentraland, Netflix in Roblox or Cinnabon in Pokemon Go). Additionally, metaverse platforms are capitulating the creator economy – it’s why platforms like Roblox, Decentraland of The Sandbox have seen success because anyone can use their design tools and create their own environments and mini-games. Best of all, they can even be monetised quite easily within these platforms. Nike is another fantastic example of a brand capitalising on community-sourced design by partnering with Web3 communities to build and launch digital collections. SWOOSH – Nike’s Web3 enabled digital platform, is a culmination of the brand’s vision to expand the definition of sport by making it more collaborative and inclusive by giving patrons a chance to share the brand’s equity. The signature asset, currently live in the US and select European countries, demonstrates how the virtual world can be a safe space for democratic collaboration between brands, as well as a lucrative playing ground to capitalise ideas and expressions. Envisioning your potential in the metaverse While jumping in on this virtual bandwagon might seem the natural succession for brands already engaging in omnichannel retail, it’s important to assess pathways to reap sustainable benefits and long-term growth. We’ve identified a three-fold strategy to help brands find the right footing with their metaverse journey: Ask What if you could build an intimate one-to-one connection with millions of individual fans by creating the next generation of AI influencers, or personalise product experiences and offerings for every single individual—making your portfolio even more inclusive? What if you could drive team member performance and satisfaction through virtual reality and immersive simulation, and create immersive experiences that nudge customer behaviour and help people live more sustainably? Imagine creating a virtual space where team members could collaborate with 3D models, explore solutions in real time in an immersive virtual environment beyond global boundaries while saving resources. Align It would be ideal for brands to bridge gaps between current business goals and futuristic visions before making a virtual shift. Right now, metaverse-enabled offerings mostly only enhance or add on to existing physical retail experience. Think of it this way, if you already love going to a particular shopping mall due to its impeccable on-site servicing, loyalty programs, relationship management and/or availability of your preferred brands, you would be open to extended virtual experiences curated by the mall. For instance – a virtual Black Friday bonanza sale that would take the edge off the otherwise inconvenient and frenzied experience! How we approach this is by collaboratively analysing macro, category trends, consumer needs, alignment of campaign to company strategy, partner priorities and assessing existing assets to leverage. Only once we can define the problem, can we think about how metaverse-related technologies empower us to shape a solution of long-lasting value. Approach Think long term and probe how the metaverse can lead to the creation of new revenue streams and business models that align to the enterprise strategy. For example, immersive technology in the automobile space provides incredible insights. An automobile brand can use the metaverse to enlarge and transform its test environments both at an operational R&D and customer levels. Not only can this help optimise production and marketing costs for the brand, but also build a better connection with the end customer by offering truly unique, brand specific, personalised experiences. What does the future of the metaverse hold? Like all emerging technologies, the metaverse is rife with growing pains and logistical challenges. As these virtual universes grow and diversify, there are a number of hurdles already surfacing including technological inaccessibility, client computing and ability to host immersive environments, social and regulatory challenges and of course data security concerns. There have also been many criticisms that the metaverse may not live up to the high promises and valuations it’s been given, however we disagree. We are at a threshold of the fourth technological innovation wave and the metaverse holds key solutions to elevate and reimagine the retail experience.