Experts predict that global retail sales will grow to nearly $30 trillion by 2023. This means that not only will the industry continue to grow, but also the challenges for retailers. What does the industry expect in the future? What do retail companies need to pay attention to in order not to be left behind? Looking at innovation within retail, three trends are grabbing the industry's attention: the metaverse, C2M (consumer-2-manufacturer), and drone deliveries. In this article, we focus on the metaverse, explaining what it is and its impact on the retail business, as well as the great opportunities that its use represents.
Many retailers are failing to meet consumers' increasingly high expectations: they want to identify with the brand, use more personal touch points and shop seamlessly across channels. At the same time, consumers increasingly value sustainability and social awareness in any area, including when choosing where and from whom to shop. In our last article on digitalization in retail, we discussed the extent to which these demands are influencing retail.
But that's not all: due to the rapid spread of digital technologies, competition in retail is greater than ever. As a consequence, companies that are not up to speed and make digitization a core aspect of their business will quickly fall behind. So what can retailers do to stay competitive?
Trends such as C2M (consumer-2-manufacturer) and the use of drones for deliveries are capturing the industry’s attention because of the benefits they bring to retailers in terms of both efficiency and customer experience. But one trend stands out above all else, and that is the metaverse, which we discuss now.
Metaverse: new opportunities to sell
A McKinsey & Company study shows that the metaverse has the potential to reach a global market value of up to $5 trillion by 2030. The e-commerce branch has the largest share, at $2.6 trillion. The data is very clear:
- 79% of active consumers in the metaverse have made a purchase.
- More than 15% of company revenues will come from the metaverse in the next five years, according to 25% of executives.
- So far, the investment in the Metaverse in 2022 exceeds $120 billion.
But what is the metaverse?
The term "metaverse" became really popular in October 2021, when Facebook changed its company name to Meta, although it has been around much earlier. Metaverses are 3D virtual worlds in which people use avatars of themselves to communicate with others or to play games, for example. In fact, in the video game world, these virtual spaces have existed since the 1990s. In the metaverse, digital currency (cryptocurrency) is used to buy clothes or other goods.
The retail metaverse
The metaverse is reinventing the way large retailers interact with their customers. There are endless opportunities to offer new shopping experiences in this virtual world. In fashion, for example, metaverse stores can be created where customers can try on clothes virtually before deciding to buy them.
Pioneering Use Cases: Nike and Samsung in the Metaverse and a Virtual Fashion Week
Some fashion brands have already ventured into the metaverse. The fashion giant Nike created in late 2021 NIKELAND where users can not only participate in gaming competitions but also dress their avatars in Nike products and make real purchases.
The concept brings enormous added value. Nike addresses several target groups at the same time: sports fans, gamers, fashionists, and, above all and in general, the younger audience. The user behavior can be monitored to conduct valuable market research: Which sneakers are most often chosen for the avatars? Which colors are most popular?
Samsung also unveiled a virtual store in 2021, modeled after an original New York store. The brand lets consumers try new products and colors in it, thus determining virtually and playfully what is most popular, and then physically manufactures the products based on the analyzed data.
Another relevant case is that of the New York Fashion Week, which in its last 2 editions has entered the metaverse with virtual fashion shows, opening the world of high fashion to a much wider audience through avatars that can, in addition to attending these shows, buy clothes or even attend the famous after-parties that are held in this digital universe. This initiative is of great importance because it becomes a reference and encourages the entry of other brands and companies in the fashion world to the metaverse.
Advantages of the metaverse
This merging of the physical and digital worlds provides a whole new shopping experience for customers and many opportunities for retailers:
- Easier and more effective market research
- Satisfy customers' wishes more precisely
- Faster order fulfillment
- Reducing surplus inventories
- Improving customer experience across all channels
- Attracting attention
Disadvantages of the metaverse
Since the metaverse has just taken off, any retailer who wants to apply it is entering uncharted territory. There are especially 2 dangers that are a real threat in the metaverse:
- Cybercrime: fraudsters can create multiple identities and fake profiles to make false product offers.
- Automated bots generate unnecessary digital traffic that slows everything down.
We are therefore witnessing the first commercial experiences in the metaverse, and we will have to be attentive to how they evolve and what repercussions they have, and also to see how the disadvantages of the metaverse we mentioned evolve. For the moment, expectations are high.
Will the metaverse make shopping in general easier?
Will we reach a world where there are no physical stores and we only shop in virtual shops? Only time will tell what role the metaverse will play in the future of retail, and it will be important for retailers to proactively prepare and team up with expert partners in this venture. Discuss these and other questions related to the metaverse together with our experts at mimacom.