Fashion’s Take On The Metaverse Trends
Recovery from Covid-19-related economic shocks will be uneven across consumer markets, as countries with strong healthcare systems and economic resilience outperform. In this patchy environment, fashion players with global footprints will need to look at investment decisions with precision, reassessing local conditions regularly while mitigating market-specific risks.
Digital and sustainability will offer fashion’s biggest opportunities for growth, while supply chain pressures will challenge the industry in 2022
Top players in the global fashion industry are carefully optimistic about the year ahead, fueling the new and ongoing disruptions that are beginning to erode that mood in some quarters. While some global markets are starting to recover after 18 to 20 months of pandemic-related turbulence, driven by surging e-commerce adoption and domestic spending, challenges relating to supply chain bottlenecks and uneven consumer demand continue to hang over the fashion industry, undermining growth prospects.
As hopeful consumers unleash pent-up buying power, refreshing their wardrobes as social life begins to resume in many key markets around the world, the overall global fashion sales are set to pick up momentum in 2022. Since the luxury sector is expected to achieve a full recovery by the end of 2021, the wider fashion industry is not set to return to pre-pandemic performance levels until early 2022.
The industry’s recent emergence from a sustained period of stagnation is still weighing heavily on the minds of industry experts. There were the top three words to describe such business conditions as per a survey conducted by McKinsey. 59% of them cited “recovery” while 50% said it was “challenging” and another 42% embraced the word “changing.” But this has been a development from 2021 where most of them described the situation is “uncertain.”
While both digital and sustainability opportunities are long-term themes that are highlighted by industry experts year on year, alongside sustainability, executives are also looking into opportunities for 2022. Where 32% are looking into “digital” transformation and 11% are strictly considering “consumer engagement.”
Embracing the Metaverse
The term ‘metaverse’ has been coined to facilitate digital transformation in every aspect of our physical lives. At the core of the metaverse stands the vision of an immersive Internet as a gigantic shared realm.
As consumers spend more time online and the hype around the metaverse continues to cascade into virtual goods, fashion leaders will unlock new ways of engaging with high-value younger cohorts aka GenZ. To capture untapped value streams, players should explore the potential of nonfungible tokens (NFTs), gaming, and virtual fashion — all of which offer fresh routes to creativity, community-building, and commerce.
Much of the excitement around virtual environments is directed towards NFTs, which have seen an explosion of interest over the past year.
Hyper-interactive and creative digital environments are a natural evolution of how people use technology and reflect the ever-growing amount of time consumers are online.
“Gen-Z spent an average of eight hours per day on screens in 2020.”
Brands see the emerging “metaverse,” as a place in which people work, play, socialize and shop, as an opportunity to engage more deeply and creatively with their customers and unlock new value streams.
Artificial intelligence (AI) and augmented reality (AR) technologies present additional opportunities for new business models leveraging virtual fashion. Online fashion wholesale platform Ordre uses 360-degree view technology to present seasonal collections through online showrooms, offering a complementary channel to facilitate the management of luxury wholesale networks.
Elite World Group and Tommy Hilfiger have recently partnered on various virtual ventures, including avatars of models walking 3D virtual runways.
The crypto fashion opportunity will demand significant investment, experimentation, and a new playbook. Flexibility will be key, and brands should remain cautious in deploying their capital. To do this, it may be necessary to take a new lens on ROI, focusing on less measurable benefits such as brand awareness and marketing impact, as well as setting flexible targets that are calibrated to potential, rather than focusing exclusively on the bottom line. However, the risks should not deter them from engaging with this rapidly growing digital universe.