Metaverse Fashion Week (MVFW) debuted in March and although the event had mixed reviews, fashion brands are already taking learnings from the first MVFW and planning for the second iteration, slated for next year.
According to MarketWatch, “analysts at Morgan Stanley say there’s scope for luxury goods makers to sell virtually as they do physically—and say the market could be as large as $57 billion by 2030.”
The big questions for jewelers are why and how they should dip their (virtual) toes in.
Background: Defining Metaverse, Blockchain & NFTs
The metaverse, simply defined, is a network of 3D virtual worlds that focus on social interaction, connection, and user experiences facilitated by the use of virtual and augmented reality (AR) headsets.
Users create avatars to enjoy immersive content and experiences in a “mirror world” that is powered by blockchain technology.
At present, the most popular metaverse platforms include HyperVerse, Decentraland (which hosted Metaverse Fashion Week), The Sandbox, and Roblox—and more are on the horizon. Tech giants and other investors are competing against each other in hopes of developing the metaverse platform that will dominate this new digital landscape.
Blockchain is a shared, unchangeable digital ledger that records transactions and tracking of assets in Web 3.0—the catchall term used to describe the next stage of the internet driven by cryptocurrency and blockchain, also known as Web3—and the metaverse.
Developed initially for tracking cryptocurrencies, blockchain also enables individual users to own assets in their preferred metaverse universe. Users can purchase, sell, or upgrade their avatar’s virtual assets in virtual space. Unlike a video game, though, the process never ends. Users can continue to enjoy their experiences however and whenever they choose.
One such asset that users can own is an NFT, or non-fungible token.
NFTs are virtual or digital assets such as art, virtual fashion, trading cards, media, and items with links to real-world assets.
Blockchain records and tracks NFT ownership, and users can trade their NFTs as they wish, making them both investments and/or collectibles, just like fine art or Pokémon cards.
Why Jewelers Should Get Involved
Given the speed with which consumers typically engage and respond to new interactive digital experiences (think how quickly consumers adapted from Facebook to Instagram and now to TikTok), the metaverse is poised to grow quickly.
It already has become a playground and shopping mall for high-end Gen Z consumers.
According to statistics published last month by Influencer Marketing, there are expected to be more than 1.1 billion mobile AR users globally by the end of this year, making this a prime and still relatively untapped market for luxury brands and retail jewelers.
In a recent article for Jing Daily, Daniel Langer, CEO of luxury brand strategy firm Équité and executive professor of luxury strategy at Pepperdine University, said: “Immersive brand interactions, accessible from any place worldwide, will significantly alter luxury.
“Instead of building flagship boutiques on Rue Royale in Paris or Fifth Avenue in New York City, new flagships will be in the metaverse—and they will offer personalized experiences that go far beyond what is possible today.”
Jewelry is a category that seems highly relevant in the metaverse.
Syama Meagher, CEO and chief retail strategist of Scaling Retail, suggests retail jewelers start thinking about the metaverse now.
“Jewelry is the perfect category for the metaverse. It is collectible by nature, perfect for collaborations, and carries more brand loyalty than clothing. We have to ask ourselves, how do our brands create meaning in a virtual world where people are congregating and socializing?”
Jewelry as adornment has always been an integral part of socializing.
As the metaverse is all about social connection, it makes sense that consumers would want to have access to jewelry there too.
Forward-thinking jewelry brands like Kendra Scott and L’Dezen by Payal Shah have already launched NFTs as opening forays into the 3D digital world. Both opted to have a real world, tangible asset tied to the NFT.
Scott partnered with a female artist to develop artwork in support of female empowerment. Anyone who purchases the NFT (artwork) also receives her female empowerment charm in the real world.
Shah, on the other hand, offered to allow collectors to redeem their NFT for physical ownership of the NFT (earrings).
The desirability and tradability of NFTs is critical and a benefit for jewelers, according to Meagher.
“A strong upside for jewelry brands creating products in this space is the royalty component associated with resale. Imagine that only 100 digital earrings were produced, creating scarcity, and after someone wore them a few times and wanted to resell them, they could, and the brand would earn a royalty every single time this happened.”
How Jewelers Can Get Involved
Jewelry has always been a highly personal purchase; therefore, offering personalized brand experiences in the metaverse with jewelry should be both fun and successful.
Immersive brand experiences that are highly exclusive will be key.
For example, consider personalized experiences for your customers to create and strengthen brand loyalty. Perhaps your digital flagship could offer short-term digital jewels curated for the specific avatar/customer preferences—earrings or cocktail rings that can be swapped out or updated every few months or for special occasions.
Without real-world limitations of security/storage/rarity, jewelers can consider branching into other categories as well, such as jewelry belts, diamond shoestrings, bejeweled buttons and hats.
In the metaverse anything is possible, and jewelry could be a unique way for avatars to stand out and increase their social interactions.
NFTs tied to reward perks would also be interesting.
For example, perhaps an NFT of a pair of earrings increases in value (diamond studs grow in carat weight) with every friend referral or with every new jewelry purchase.
Similar to a Starbucks reward card or Neiman Marcus InCircle points, customers can opt in to promotions that give them more rewards each time they purchase another NFT or attend an event or resell their NFT (with your store earning royalties each time the NFT is resold).
Jewelers can also create special events that bring the luxury experience to life. It is easier to create “worlds” without real-world limitations.
As an example, popular jewelry brand Messika recently hosted a partnership with celebrity Kate Moss in the Drest fashion styling game in the metaverse.
Over a period of two weeks in March, visitors were able to dress or style Moss’ guest avatar with their preferred pieces from her Messika collaboration, as well as with clothing from other designer labels.
Gary Vaynerchuck, chairman of VaynerX, a media and communications holding company, and active CEO of VaynerMedia, predicts the digital universes of the Web 3.0 will be the new playground for content creators.
Hollywood and other artist communities will be creating pieces of art and videos or films you can only view in the metaverse.
Collaborations with content creators are a bit more feasible for jewelers without security and location limitations.
Jewelers could, for example, sponsor or participate in product placement in Hollywood films whose story is jewelry-related, like a classic jewelry heist film.
If your digital jewels are featured in the film, you could invite your best metaverse customers to the exclusive, private movie premiere.
Also, consider some cross-promotional fun, like adding avatar spa experiences before the red-carpet glamour moments and/or lending jewelry to wear to the premiere, similar to celebrity jewelry loans IRL.
Meagher, of Scaling Retail, advises learning and exploring prior to making too many plans.
“There are many vehicles to get into this new digital world, and it is important not to rush, especially for budget-constrained brands. I believe NFTs and metaverse applications will be at the forefront of building customer loyalty, and revenue streams for the foreseeable future. Can we afford not to be thinking about this?”