When Facebook disclosed its intention to rebrand the group as Meta last month, the announcement catapulted both the term and concept into public discourse. Retail Week examines what the metaverse is and the opportunities that the next chapter of virtual living holds for retail brands.

Facebook's idea of the metaverse

  • The metaverse is “a hybrid of online social experiences”   
  • “It’s about hanging out with your friends and ultimately going shopping,” says Alibaba executive
  • A big problem is commanding enough server power required to create virtual worlds

Currently, the only universal agreement about the metaverse is the fact that there is no singular definition of what it actually could look like. 

In Facebook’s announcement, the tech titan defined the metaverse as “a hybrid of today’s online social experiences, sometimes expanded into three dimensions or projected into the physical world.” It also said, “it will let you share immersive experiences with other people even when you can’t be together — and do things together you couldn’t do in the physical world.”

“The broader definition of the metaverse is about belonging to more worlds than one,” CCP Games CEO Hilmar Veigar Pétursson puts it simply.

Most commentators agree that it will be a platform that will unlock a connection between the physical and virtual worlds, allowing people to inhabit a digital environment through the presence of a customisable avatar. The metaverse will also have its own economy, which is making retail brands sit up and take notice.

‘A walled garden world’ 

It is likely that when the opportunity to fully engage with the metaverse becomes possible, there will be a plethora of virtual worlds to inhabit.

“Although the metaverse is in a conceptual state right now, there is no true metaverse but multiple companies are working on developing platforms catering to specific audiences,” explains Rupantar Guha, associate project manager for GlobalData’s thematic research team. 

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The metaverse looks likely to be formed of many individual clusters, rather than one shared community.

Michaela LaRosse focuses on creative strategy at The Fabricant, the world’s first digital-only fashion house. The company works with brands, such as Puma, to promote sustainable digital sampling techniques as well as create its own couture range, which only features digital garments.

She believes that the interest from large companies in the metaverse, like Facebook, casts doubt over the likelihood of a shared metaverse platform.

The Fabricant's virtual collaboration with Puma

“We advocate for an open metaverse which means that everything you do, we want it to be interoperable. You can transition our garments between multiple spaces, otherwise what’s the point?” She asks. “These big entities are already established, I can’t imagine them wanting their assets to be able to be transitioned here, there and everywhere.

“I imagine they’ll want a walled garden world.”

For now, experts believe immersive games like Fortnite, Roblox and Minecraft are the closest examples of what a future metaverse will look like. 

In these games, players choose their appearance, connect with other users and even attend concerts digitally, as was the case with US rapper Travis Scott on Fortnite - an event watched by more than 12 million people last year.

This marks the major difference between the internet as we know it and the potential worlds of the metaverse; while the world wide web is a shared platform that is not controlled fully by any one entity, the race to build the metaverse is one many companies are competing in and each entity has its own vision and beliefs of what the metaverse should be.

While it remains impossible to pinpoint when consumers will be inhabiting these virtual spaces, analysts guess that increased functionalities in the metaverse will continue to emerge in the coming decade. Now, retail brands are capitalising on the increased interest and utilising technology to connect with the growing numbers of virtual shoppers.

Targeting the consumer

Alibaba Group is among the retailers already providing a platform to enhance a consumer’s quest to shop in a virtual world, with the creation of its Taobao Life platform - an extension of its online shopping marketplace Taobao.

Facebook's idea of the metaverse

“You can create an avatar, you can guide it around Taobao Life, you see couples that make avatars that look like them. They may not be able to be together in person at that moment, they can hang out together in Taobao and go shopping together,” explains general manager for UK, Netherlands and Nordics for Alibaba, David Lloyd.

Lloyd however is hesitant to say that this move propels the online retail giant into the metaverse. “It’s a way of making you feel like you can really live your life or parts of your life within the ecosystem. It’s about hanging out with your friends, finding out more about the things you are passionate about and yes, ultimately going shopping.”

The Fabricant’s LaRosse says the metaverse could provide another avenue for retailers eager to engage with Gen Z who have grown up traversing both the digital and physical worlds: “Brands have this awareness that they need to communicate with the new generation who will be the global spending power on their terms. 

“Younger people don’t feel a loyalty to brands that historic consumers have done. Their digital lives have equal relevance as their physical lives.”

CCP Games boss Veigar Pétursson, who also spoke about the metaverse at last month’s Retail Week Live, agrees that providing virtual goods for sale in the world of the metaverse is a potential route to success for “any brand whose primary purpose is to help people to develop their identity.”

The Fabricant's virtual collaboration with Puma

Luxury brands are those who have proven particularly enthused about setting up shop in the metaverse. A collaboration between Balenciaga and Fortnite allowed players to stock up on virtual items to wear in the game, as well as purchasing the 3D equivalent in a physical launch. Ralph Lauren designed a 50-piece digital clothing collection that can only be purchased on the app Zepeto, which lets users create a personalised avatar.

Some companies are designing their virtual worlds while offering eager consumers the chance to own a piece of the action. Louis Vuitton unveiled its own video game that permits users to purchase 30 different non-fungible tokens (NFTs).

NFTs are one-of-a-kind blockchain-backed digital assets that only exist on this virtual plain. They can be bought or sold but have no real-world equivalent. Retailers are embracing the consumer willingness to invest in the non-physical: in October, Nike filed requests with the US Patent and Trademark Office to protect its brands in categories, including “downloadable virtual goods.”

“We dropped the first digital fashion NFT back in 2019,” LaRosse explains. “Back then non-physical fashion is quite a confronting idea for people - and it still is. So when we had to present the idea that this is a garment that is not physical and someone just paid $9,500 to wear it, it kind of upset a few people.”

For LaRosse, NFTs are already becoming more widely accepted by customers, due to the involvement of retail giants such as Gucci and Adidas.

The journey ahead

While the metaverse has gained widespread coverage and attained buzzword status for some brands, it is still early days for the concept on its journey to reach global acceptance. 

For companies looking to delve into the metaverse, one issue that remains is commanding enough server power required to create virtual worlds that many users can gather at once. 

“Once you’re through [the hardware challenges], there’s going to be a lot of societal and psychological issues that are going to emerge from this very disruptive technology”

“By far, it is the hardware challenges and the cost, the enabling technology,” Veigar Pétursson explains. 

Brands also need to be conscious that once these worlds are created, traction may initially be slow as consumers gradually embrace new technology. 

“Once you’re through [the hardware challenges], there’s going to be a lot of societal and psychological issues that are going to emerge from this very disruptive technology,” Veigar Pétursson adds.

“It’s very hard to predict what that will be. I don’t think anyone using Facebook when it came out was going to be concerned about Facebook affecting a national election,” he concludes.

While it’s hard to say whether the metaverse will ever achieve the unanimity of the internet, there are already brands betting big on shaping this brave new world of customer interaction. Ultimately retailers are going to have to decide for themselves whether they can afford to be left behind.