The Metaverse: Transforming the Very Nature of RetailAstrid Svensson
Earlier this month, auction house Sotheby’s launched a digital replica of its London headquarters. Located on New Bond Street in real life, the digital version can be found in the Voltaire Art District in Decentraland, a decentralised virtual reality platform powered by the Ethereum blockchain that allows users to purchase plots of land which can then be navigated, built upon and monetised – so far seeing sales worth more than $50 million. The virtual gallery showcases digital art across five ground floor spaces and the launch came midway through Sotheby’s first curated NFT sale, which included the $11.8 million sale of the ‘CryptoPunk’ artwork – practically petty cash as far as virtual art goes, with a record $69 million artwork being sold by Christie’s in March. Purely digital, these artworks are authenticated by blockchain and sent to the buyer’s cryptocurrency wallet, with no physical artwork changing hands – rather, this all takes place in the so-called metaverse.
If you are unfamiliar with the term, a definition might be in place: according to Wikipedia, the Metaverse is a “collective virtual shared space, created by the convergence of virtually enhanced physical reality and physically persistent virtual space” – more specifically, “it is a fusion of both, while allowing users to experience it as either”. In other words, it is an always-on, parallel reality where users can interact in a synchronous way with people, places and things, whilst also pulling data and experiences out of the metaverse into the real world, much like we do with the internet today. In the context of real estate, it is useful to think of the metaverse simply as a new economy featuring commodities ranging from (virtual) land, buildings and avatars that can be bought and sold as non-fungible tokens, i.e. units stored on the blockchain that certifies that a digital asset is unique and non-interchangeable. These commodities often bank hundreds of thousands of dollars, with Reuters previously reporting that metaverse real estate plots can sell for over $500,000, and whilst some investors have warned of a price bubble, the market is currently hotter than ever. Experts believe that the metaverse will transform the very nature of life on earth, radically changing the way we work, play, shop and more, and that it will represent a shift in our lives as big as the telephone or the internet.
The latest addition to the metaverse came this week when it was announced that investment platform and (virtual) real estate developer Republic Realm had launched Metajuku, a shopping district on the Decentraland metaverse. Modelled on the real-life Harajuku district in Tokyo, the 16,000 sq. ft. Metajuku features two anchor tenants: Dress-X and Tribute Brand, both exclusively selling digital fashion (you know, like those digital sneakers that raised $3.1 million in seven minutes earlier this year), and another 24 brands expected to join before the end of the year.
Republic Realm’s MD Janine Yorio told Women’s Wear Daily in an interview this week that retail is “one of the most logical cases for virtual real estate” as consumers are already used to buying things online. The metaverse therefore has the ability to work as an extension of existing online stores, only on the metaverse, customers are able to try on and buy things in an immersive 3D environment rather than the 2D online stores of today. After all, many would agree that shopping on Web 2.0 is both counterintuitive and repetitive, hardly replicating a real-life shopping experience in any meaningful way. The lack of ability to touch, feel and try on clothes leads to disappointed customers, high return numbers and increased costs for retailers and far-reaching consequences for the environment. Shopping on the metaverse, on the other hand, could be so seamless and immersive that it is near-indistinguishable from a real life, in-store experience.
Furthermore, one of the most lucrative opportunities of the metaverse is the potential to attract a new customer base, namely digitally native Gen Z shoppers who, having grown up with video games, computers and social media, are more internet-savvy than any generation that came before them. This also happens to be a generation that expects more from life, and by extension retail, than earlier generations – constantly wanting to have new experiences and demanding more bang for their buck. International bestselling author & global advisor on the future of retail Doug Stephens argues that “simply [transporting] industrial age shopping concepts and conventions to the Metaverse would be both unimaginative and ineffective” – instead asserting that one of the benefits of the metaverse is that it allows us to break free from the limitations of physical stores and create a customer experience beyond even the best online store of today. He writes –
Why would one create a virtual replica of a Canada Goose store when in the Metaverse I could potentially shop for a new Canada Goose coat from inside an Arctic exploration experience led by Iditarod champion and Canada Goose spokesperson Lance Mackey? There I can gain first-hand, contextual knowledge of the garment’s technical quality and performance, order it and have it delivered to my real-world home. […] In a world where any experience is possible, why on earth would we use our industrial-era version of retail as a template for the future?
Smart brands, Doug Stephens argues, will acquire and develop virtual real estate and use it as a platform to showcase their digital and physical products to consumers seamlessly moving between worlds – whilst other brands and companies will remain stuck in the real world and “the ghetto that the legacy internet will become”. The metaverse is a project in the making, constantly evolving just like our real-world cities and countries have grown and evolved over thousands of years, and we may not be able to experience the full benefits of it for decades. But up until then, the metaverse commodity market will continue to flourish as an increasing number of companies will want to reap the benefits of the development of this parallel universe.
Astrid Svensson, Account Manager, Innesco