What the Metaverse Means for the Apparel Industry
In the metaverse, the apparel industry will find itself at the intersection of digital social interaction, online ecommerce and creative virtual expression.
We are currently finding ourselves steadily creeping towards the next iteration of the internet as we know it: Web 3.0. In this next version of the internet, the boundaries separating our digital lives from our physical ones will become increasingly blurred with the introduction of the metaverse, which will serve as a bridge between these two realms of reality. This melding of the real world and the digital online one will be further spurred as technologies like augmented and virtual reality (AR/VR) evolve to become more sophisticated and accessible.
Acting as a virtual space that people will be able to visit, the metaverse will undoubtedly find itself at the intersection of digital social interaction, online ecommerce and creative virtual expression. Fatefully enough, each of these aspects of the metaverse is at the heart of the global apparel industry — one expected to reach approximately $2.25 trillion in value by 2025. With this in mind, we have to ask ourselves what the emergence of the metaverse might mean for the apparel industry and its current outlook over the next decade.
How AR/VR tech in the metaverse will shift online retail
According to a report from McKinsey, the fashion and apparel industry suffered a 20% decline in revenues for the 2019-2020 fiscal year. As the pandemic began spreading globally in early 2020, this forced many apparel brands and retailers to rapidly adopt virtual sales channels and value offerings for their customers. One way this was accomplished was through the introduction of AR/VR-driven digital showrooms, granting customers the ability to see how a particular apparel product might look on them before purchasing it.
This integration of AR/VR within the apparel industry acts akin to Amazon's own AR "View in Your Room" feature. This feature allows customers to utilize AR technology through their mobile device's camera to see how a specific product like furniture will look before buying it. As an increasing number of apparel brands and retailers continue adopting AR/VR technology and integrating it into their digital stores, it can be assumed that features like these will become the new norm to meet heightened consumer demand on ecommerce platforms in the metaverse.
With more consumers than ever before continue placing greater value on brands that offer options like AR-fueled "try-before-you-buy" showrooms and personalized self-service checkouts through a unified virtual storefront, the majority of B2B decision-makers have taken notice, placing greater emphasis on these value offerings to meet the growing needs of their customers.
Considering this mutual growth in demand for high-value virtual offerings, it could be theorized that the apparel industry's eventual place within the metaverse will become one not only of AR/VR showrooms, but fully-virtual spaces similar to traditional shopping malls. In these spaces, customers could have the opportunity to try on or test run apparel items in an entirely virtual environment.
Such a shift would introduce two additional benefits to the apparel industry. First and foremost, it would do away with the need for cumbersome physical inventories of products, freeing up cash flow for a larger portion of apparel brands and retailers. Secondly, the ability to offer customers a wider range of products in a VR environment opens the door to greater customization options — another aspect that apparel industry consumers have placed more value on in recent years — with each product purchased essentially being made-to-order to meet each individual customer's needs.
With this in mind, it begs the question of how other technologies could create additional value to consumers both in and outside of the metaverse, such as how the broader adoption and integration of non-fungible tokens (NFTs) within the metaverse could provide the apparel industry's brands and customers alike with even more customization options and value.
The role of NFTs for the apparel industry in the metaverse
Throughout the bulk of 2021, NFTs became one of the most popular technological innovations across global media news cycles. As a newly-emerging class of digital assets, NFTs operate as a kind of digital receipt or token (hence the name) representing the purchase of a product from a marketplace on the blockchain using cryptocurrencies like Ethereum or Solana. Once purchased, an NFT can then be traded or sold to others on the blockchain, with some NFTs being sold for $10-70 million or more.
Although NFTs have become incredibly popular amongst the digital art trade and video game industries, these are far from the only realms where the sale and trade of NFTs can be applied. For example, in late 2021, news broke that sportswear mogul Nike had purchased RTFKT Studios, a startup that "leverages [NFTs], blockchain authentication, and augmented reality…to design merchandise like physical shoes that utilize imagery in other NFT projects including Crypto Punks and Bored Apes." Should more apparel brands follow Nike's charge in the NFT space, it could completely alter how we consider the value of fully customizable, one-of-a-kind products as transferable digital assets in the metaverse.
Perhaps one factor contributing to the explosive growth of NFTs in such a relatively short time is the intrinsic uniqueness of each one. Since every separate NFT is embedded with a unique digital signature allowing users to verify its chain of ownership and authenticity as a digital asset, no two separate NFTs can ever be exactly the same.
Bundling this understanding of the nature of NFTs with consumers in the apparel industry places greater emphasis and value on the ability to receive customizable products and personalized ecommerce experiences. Additionally, with the potential for apparel brands to eschew larger physical inventories of products within their virtual storefronts in the metaverse, the industry's possible utilization of NFTs within the metaverse becomes nearly limitless.
Although such utilization is likely nearly a decade away at best, it could position the apparel industry as one of the most popular go-to marketplaces for customizable, wearable NFT products in what will eventually become the metaverse. Customers could transfer the NFTs they purchase to and from their VR avatar in the metaverse, or even sell them to other users, gaining additional real-world value from these transactions. Furthermore, brands such as Nike or RTFKT could potentially release customizable products as unique NFTs through their virtual stores in the metaverse, creating entirely new consumer markets for their products through an economy based upon blockchain technology integrated into the metaverse's ecommerce platforms.
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