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Fashion trend: Luxury labels seduced by the metaverse

20/04/2022 10:38 AM
Would you pay hundreds of dollars for a purse, coat, or shirt that you never get to wear in the real world?
Gamers already have a long history of using clothes and accessories to establish their virtual identities, and there’s every indication that metaverse users will do the same. Executives of luxury brands are taking the trend seriously and moving quickly to capitalize on the opportunity to sell virtual versions of their products to people in the metaverse.

In the new frontier of the metaverse – a persistent, shared virtual world that users can access through different devices and platforms – avatars are everything. And that means some users will pay big bucks to outfit their avatar with luxury goods.

Meta CEO Mark Zuckerberg expects this niche to be big in the metaverse. Zuckerberg says, “Avatars will be as common as profile pictures today, but instead of a static image, they're going to be living 3D representations of you, your expressions, your gestures that are going to make interactions much richer than anything that's possible online today. You'll probably have a photorealistic avatar for work, a stylized one for hanging out, and maybe even a fantasy one for gaming. You're going to have a wardrobe of virtual clothes for different occasions designed by different creators and from different apps and experiences.”

Analysts at Morgan Stanley say the market for virtual luxury goods could be as large as $50 billion by 2030.

Most virtual luxury goods are released in limited quantities, and users who purchase them receive an NFT (non-fungible token) as a virtual certification of ownership.

In the metaverse, users will be able to carry items like clothing, accessories, and home decor from one platform to another (for example, from the game world of Fortnite to Meta’s universe).

The Benefits of Virtual Goods for Luxury Brands

Eliminate Overstock. Gonçalo Cruz, the co-founder, and CEO of Platform E, a tech provider that helps conventional brands create and launch 3D renderings of things like clothing, says that virtual goods can solve the problem of oversupply for luxury brands.

“Every single brand has overproduction, has over inventory, and obviously has end-of-season stock,” he says of the fashion industry at large. “So you start discounting, and that’s a never-ending story.” With virtual goods, brands won’t have to run sales with deep discounts to unload their overstock.

Big margins. Creating luxury goods doesn't take up any raw materials, and labor is minimal. That means selling virtual clothes and accessories equals almost all profit. Designers also have a huge amount of creative leeway in creating virtual goods because the limitations normally imposed by market practicalities don’t apply.

Companies can bring old designs back. Most luxury brands have decades of archival designs that they can convert into virtual assets, providing a new revenue stream with minimal investment.

Luxury brands are competing fiercely in the metaverse market

 Philipp Plein recently forked out the equivalent of €1.2 million to buy a huge tract of virtual real estate in the Decentraland metaverse, while Gucci has bought digital space on Hong Kong video-gaming site The Sandbox, where it plans to offer “immersive experiences.”

Louis Vuitton, Balenciaga and Gucci paved the way for this virtual spree by digitally outfitting characters in various videogames, and the majority of luxury houses have since followed their lead. The latest is Prada: this week, the label’s sportswear line Linea Rossa is launching a series of virtual outfits and equipment (from skis to snowmobiles and fast bikes) on extreme sports videogame Riders Republic.

Balenciaga with a collection of “skins” collab in cross-platform game 'Fortnite'

In the last twelve months, labels have been tapping the craze for NFTs, non-fungible tokens that are certified as unique, non-exchangeable virtual assets by means of blockchain technology. NFTs are akin to certificates of authenticity, they cannot be falsified and enable brands to create unique, exclusive digital models, sometimes matched with physical originals. Though the existence of NFTs has not stopped other operators from virtually replicating products by renowned brands, like Hermès handbags and Nike sneakers, and selling them online.

Despite this, luxury labels have entered the digital fray with gusto. At the end of 2021, Dolce & Gabbana, AZ Factory and Givenchy in association with graphic designer Chito have each developed their own NFTs, followed by Balmain, which teamed up with Barbie. In January 2022, Prada launched a collective project to create art NFTs with Adidas. More recently, it was Kenzo's turn. In parallel with the first capsule collection designed by new Creative Director Nigo, inspired by Japanese ‘boke’ flowers, the label has created 100 NFTs, which will be assigned by lottery draw among customers who own a physical item from the collection and are registered on the Kenzo site. The lucky winners will also have access to exclusive content “in the world of Kenzo".

NFT Gold Class Dress designed by Dolce & Gabbana and constructed by UNXD

Ambush, the Japanese label by Korean-American designer Yoon Ahn, about to show in Milan, is premièring on the virtual stage too. In early February, Gucci successfully launched SuperGucci, a series of NFTs sold on the Kering-owned label’s Vault site and created in partnership with US art-toy specialist Superplastic.

Other luxury names are active too. OTB, the group that owns Jil Sander, Maison Margiela and Marni, has created BVX (Brave Virtual Xperience), a company whose sole aim is to focus on possible new metaverse developments. Balenciaga has announced it intends to create a dedicated virtual department. The metaverse game is just getting underway. Tommy Hilfiger’s venture capital arm announced a partnership with viral marketing agency EWG Virtual to focus on “v-commerce.” Burberry created a string of unique playable NFT creations called Sharky B that live in Blankos Block Party from Mythical Games. The characters include accessories like armbands, jetpacks, and pool shoes. The creation collection sold out quickly for almost $400,000. Dolce & Gabbana sold its nine-piece ‘Collezione Genesi’ collection on the digital luxury marketplace UNXD for 5.7 million dollars.

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