Al MacCuish from The Sunshine Company examines luxury brands as part The Drums Metaverse Deep Dive. He notes how early movers in metaverse marketing have created some the most prominent and celebrated virtual brand extensions by reinventing scarcity online.
One of the challenges the luxury industry has had to face since the advent the internet is the lack of curation. Because they were carefully curated, the traditional luxury and fashion publishing ecosystems of Conde Nast & Hearst held such sway for so many years. This has enormous value and efficiency. The internet as we know is open to everyone. That’s not luxury behavior or efficient. Celine is not next to a high-street supermarket.
It is not a judgment of the high street or the supermarket, it is simply because luxury brands seek mutual respect. This congregation is evident in Miami’s Mount or London’s Bond Street. Their focus is on creating an exceptional customer experience. It’s transformative for customers and underwrites the premium price.
The metaverse can be the ultimate curated environment for luxury brands. A brand can control every aspect of an interactive experience to an amazing extent. Luxury businesses thrive in this dynamic. There is always some trial and error in emerging markets. Richemont, Kering, and LVMH are all family-owned businesses that are highly entrepreneurial. Farfetch is one of the major players in the industry. They are also disruptors by design, and innovation is the industry’s lifeblood. They understand the risk-to reward ratio. Luxury businesses have the opportunity to create new revenue streams and product verticals with the convergence of crypto and NFTs.
Burberrys early adopter Blankos Block Party: Sharky B collectionThe equivalent of almost $400,000 was paid for the sale, Karl Lagerfeld x Endless FTThe third installment of the highly-coveted Ikonik NFT collectibles was sold out on Dematerialised. This British digital retail platform is known for being the digital department store of dreams.
New opportunities
If the luxury industry is to continue growing revenues at the same rate as the past decade, this opportunity is crucial. In a society where consumers are becoming more aware of the dangers of unchecked consumption and shifting aspirations, they are right on the right side. Digital products are free of supply chain and raw materials issues, labor is minimal, and production is very remote. Digital products have shorter release times and no overstock or discounts. Margins are therefore extremely high. The most scarce items are immediately an asset class. It’s a perfect storm in many ways.
And mainstream players of scale have seen the potential and are now investing in it. Nike recently acquired RTFKT, an innovative design studio.While simultaneously applying to 200 patents for digital apparel in metaverse, If one of the largest and most well-respected retailers in this world is taking the opportunity seriously then there is also an element of determinism.
The big question luxury brands are asking is: Which metaverse? It’s still early. The entry cost is high. In terms of scale, demand culture is still in its infancy. As this area expands, there will be many Second Lifes. The Sandbox DecentralandAlthough it looks solid, the aesthetic is not.
Partly, the answer is to follow founders and invest money. There are huge bets already being placed that will, in a certain degree, pay off. But ultimately, customers and fans will decide who wins. Luxury brands have large communities that are already strong and can make a difference.
Luxury brands are ideal for leading the metaverse development, particularly fashion brands. They are all owned by three large groups, so they can invest and see the long view. They value imagination and creativity greatly and, in this new physical to digital reality, individuality, creativity, and distinctiveness will be at the forefront of these new imaginary realms. Everything has remained the same. The most compelling, relevant and meaningful idea wins.
This space will be closely monitored, as well as the new studios like RTFKT & Defaced.
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Al MacCuish is the founder and chairman of The Sunshine Company.
The Drums Metaverse hub provides more information on the exciting new opportunities available to marketers in this rapidly changing market.
