Accounting and consulting firm PwC has analysed the impact of the metaverse on the retail and consumer goods industry. After all, the market volume of metaverse-related technologies was around 48 billion US dollars (around 40 billion pounds) in 2020 and is expected to grow at an annual rate of 43 percent until 2025.
Retailers and manufacturers are also becoming increasingly interested in virtual worlds. After all, fashion shows have been taking place in virtual worlds for some time now; there are often purely digital collections and customers use filters to see as realistically as possible how a piece of clothing will look on their own bodies or a piece of furniture in their living rooms.
For the consulting firm, the shift of events, products, stores and sales strategies into connected worlds of reality and virtual spaces is one of the first steps toward the metaverse. That is why PwC analysed the opportunities, risks and requirements of the metaverse for companies, especially in the retail and consumer goods sectors, in a whitepaper. Using numerous examples, it describes how the metaverse is changing consumption and life beyond, and how retailers and manufacturers can set the course for success in good time.
Metaverse means evolution
There is still no uniform definition of what the metaverse actually is. However, there is agreement on certain characteristics: “The metaverse merges the real world with the digital world and allows users to immerse themselves in other worlds in virtual, immersive spaces in which they travel with avatars or changing personas. The metaverse is interactive and persistent, meaning it remains in place even when the user is not online,” states the whitepaper.
But development takes time: “The metaverse is not a revolution, but an evolution. The road ahead is a slow, continuous process that has long been in full swing,” comments Susanne Arnoldy, partner and head of digital for advisory Germany and consulting EMEA at PwC Germany, in a statement.
Technology as growth driver
Innovative technologies such as artificial intelligence, virtual/augmented reality (VR/AR) and blockchain are driving this development, some of them rapidly. For example, the annual market volume of artificial intelligence was an estimated 129 billion US dollars (around 107 billion pounds) in 2021 and is expected to reach 361 billion US dollars (around 300 billion pounds) by 2025 at an annual growth rate of around 30 percent.
VR technologies have also been continuously developed, and last year generated sales of around 36 billion US dollars (around 30 billion pounds); for 2025, they are expected to reach almost 192 billion US dollars (around 160 billion pounds) with annual growth rates of 46 percent. These are 67 percent for blockchain applications, and in 2025 the market volume is forecast to reach almost 30 billion US dollars (25 billion pounds).
Additional sales of fashion and luxury goods will amount to 50 billion US dollars
The metaverse itself will also provide companies with increasing revenues: According to market experts, the volume of AR/VR, blockchain and AI technologies in the metaverse context was around 48 billion US dollars (around 40 billion pounds) in 2020; with an expected growth rate of 43 percent over the next five years. Investment bank Morgan Stanley assumes that the metaverse could bring the fashion and luxury goods industry an additional 50 billion US dollars (around 42 billion pounds) in sales by 2030.
In terms of marketing and sales in the metaverse, the gaming industry is playing a pioneering role, as avatars, AR and VR are already commonplace there. “Retailers and consumer goods manufacturers are showing growing interest in collaborating with digital platforms and moving their products, offers and online stores into a virtual world,” finds the analysis.
“The transformation in the retail and consumer goods industry is in full swing. The first movers have long been developing new business models and customer touchpoints in the metaverse. The Covid pandemic has intensified this development towards digital worlds and projects,” sums up Arnoldy.
‘Digital natives’ who have grown up with gaming and e-commerce and who react enthusiastically to new technological developments are the target group but the other age groups also represent an exciting market.
Even though some fashion companies are already designing their products completely virtually, they may not have arrived in the metaverse. “This does not mean that these companies are already in the metaverse but the use of innovative technologies in combination with an appropriate business model is a step in that direction,” says Arnoldy.
Digital twins, pure virtual products and non-fungible tokens (NFTs) are part of the metaverse and all need to be considered. Furthermore, CryptoPunks have caused a stir, computer-generated digital profile pictures, some of which are sold for millions.
“The idea behind this is that the product is unique. This turns it into a luxury product and status object,” says Arnoldy, who takes a critical view of this development: “From my point of view, it's important that virtual worlds are open and usable for everyone. By deliberately making them scarce, companies are creating an artificial market that violates this concept.”
But the PwC expert is convinced that the metaverse is more than just a buzzword: “The metaverse opens up major growth opportunities for the retail and consumer goods industry through new business areas and marketing channels that enable innovative brand experiences for customers and prospective customers.”
However, companies should be aware of the risks and challenges: “For retailers and manufacturers, it is important that they constantly analyse consumer behaviour and build a solid digital basis for their company in terms of organisation, processes, data and architecture, even independently of the metaverse, but all the more so for it. It is also important that retailers come from a strategy / use case basis and deal with the technology / metaverse in the second step for the purpose of implementation and not vice versa,” advises Arnoldy.
This article was originally published on FashionUnited.de.