THE ECONOMIC VIABILITY OF THE METAVERSE: CAN RETAIL MEET EXPECTATIONS?
The metaverse may still be in its infancy, but the term has certainly taken the global cultural lexicon by storm. It remains more conceptual than tangible, allowing for endless conjecture about whether it will destroy or save humanity. The economic viability of the metaverse, however, continues to make web 3.0 a literal and figurative wonderland for retailers bold enough to pioneer this new terrain.
In a recent interview, Cathy Hackl said, “If the internet and social media changed your business or changed the way you interact with people, then you should be paying attention to what 3.0 and the metaverse will do, because it will change those things as well.” One thing we can all agree on is that NFTs (non-fungible tokens), AR (augmented reality), VR (virtual reality), cryptocurrency, blockchain and other emerging technologies and experiences are all part of what will become the metaverse.
As an e-commerce strategist, I've found that a lucrative source for metaverse participation is the Millennial and Generation Z demographic. Today, Millennials and Generation Z adults represent 35% of the luxury market but are expected to represent 50% by 2025, according to research by Boston Consulting Group. Lifestyle brands looking to reach Millennials and Generation Z shoppers should consider shifting toward virtual shopping but not necessarily in the iteration that exists today, as most virtual shopping environments provide Google maps-type navigation where you click on a point and "zoom” around in a 2D room, made to appear 3D.
Meeting Customer Expectations
The Millennial and Generation Z demographics are digital natives and have lived their entire lives with access to the internet. In fact, according to Fortune, 87% of Generation Z and 83% of Millennials play video games weekly, if not daily. In my opinion, the current virtual store experience is rudimentary and unrefined, and these young consumers expect a truly immersive 3D experience. They have grown accustomed to full control over an avatar, including angling and positioning of 3D products. They desire rich interactions and the ability to socialize with their friends when online.
They also expect brands to know who they are: These are social shoppers. They want memorable experiences with their friends, and they expect these experiences to be highly personalized. They flock to unique brand collaborations and want to feel spoiled and appreciated. Lastly, they expect the digital experience to be at their fingertips, everywhere and at any time. Lifestyle brands must find a way to meet their demands if they wish to earn their engagement and hard-earned dollars.
Lifestyle brands can consider offering virtual shopping experiences that are immersive so that consumers can move and socialize with their friends in enhanced 3D virtual stores as well as control the angling and positioning of virtual 3D products. This is how millions of people around the world interact in today’s highly popular multiplayer online games. The social and collaborative aspects of this demographic are key, and the journey itself matters. Salesforce research (registration required) shows that 80% of consumers say the experience of buying is as important as—if not more than—the product purchased.
Hidden Economics
While the Generation Z and Millennial demographics are the most sought after by lifestyle and luxury brands, I believe that it would be a massive, missed opportunity to overlook Baby Boomer and Generation X shoppers. These older demographics naturally have a higher amount of wealth and disposable income when compared to their kids and grandkids. According to a 2020 Bloomberg report, Baby Boomers have over $3 trillion in accumulated wealth. Generation X may be a smaller generation in comparison to Millennials and Baby Boomers, but they account for 31% of all U.S. income. Moreover, their income is higher on average than all other generations.
It would also be a mistake for brands to assume that Generation X and Boomers, specifically, are not tech-savvy or are not particularly engaged in immersive commerce (iCommerce). According to a Washington Post article, consumers 65 and older are the fastest-growing segment of online shoppers and spent 49% more on the web in 2020 than they did the year prior. They are also heavy social media users. According to Pew Research Center, Facebook use has grown fastest among the older generations over the past several years. With Facebook rebranding itself as Meta, this maneuver could serve to create a conduit to a lucrative untapped market for the metaverse.
Generation X may not be as tech-savvy as their younger counterparts, but that does not mean they are intimidated or put off by these newer technologies. In fact, Generation X is the original tech-savvy generation as the personal computing and home console gaming industries were spawned during their formative years. I've found that they have the highest brand loyalty of all other generations, and they tend to stick with retailers that take care of them and provide a consistently seamless experience.
Bold Pioneers Win
A metamorphosis is underway, nurturing customer engagement via interactivity. Shoppers continue to demand more detail and transparency, and they want to feel a kinship with the brands they love. iCommerce helps brands abstract away the technical detail, allowing people to interact, shop, experiment and have fun. Immersive experiences afford lifestyle brands a means to evolve the current e-commerce offering without alienating Generation X and Baby Boomers. A subtle shift toward iCommerce can give bold pioneers a path to drive sales, heighten online brand awareness and increase engagement.
By focusing on the immersive experiences now achievable in virtual shopping platforms, lifestyle brands can take a thoughtful and confident leap into the metaverse, knowing they are exceeding expectations across generations and meeting their customers exactly where they are—wherever that might be.
Dedrick Boyd is an international e-commerce strategist and the founder of TechSparq, an e-commerce and immersive experiences consultancy. For over 23 years, Boyd has been at the center of e-commerce working with Fortune 500 clients on everything from marketplaces, to procurement, to B2B, and finally B2C e-commerce.
https://www.forbes.com/sites/forbesbusinesscouncil/2022/05/24/the-economic-viability-of-the-metaverse-can-retail-meet-expectations/?sh=4e09c8794373