In a Nutshell…
The metaverse already boasts a range of retail digitization components, serving as a workshop and marketplace for creators and brands to create, sell and advertise their goods and services. From digital skins and mini-games to fashion wear, burritos, and NFTs (non-fungible tokens), the metaverse economy can generate value. According to Statista, 5,193.3 million people will engage in digital eCommerce by 2026, and transaction revenue for the sector could rise to €4.91 trillion in 2022.
In this article, we will explore the effect of the metaverse on the retail sector and its associated implications for future shopping experiences.
As we continue to break ground with the emergence of new technologies, society is experiencing an evolution changing how we live, work, socialize, game, shop, etc. Seamless eCommerce experiences backed by virtual reality (VR) and augmented reality (AR) are poised to become the leading mechanisms that retail brands use to reach prospective customers. We’re looking at metaverse shopping environments that are more immersive, interactive, and dynamic, eventually mirroring the sensory experience of exploring physical stores.
In their The Metaverse Mindset: Consumer Shopping Insights survey, the experimental virtual eCommerce platform Obsess revealed that 70% of consumers who visited a virtual store made a purchase.
"Our data indicate that the majority of younger consumers want to be able to shop their favorite brands anywhere they go online, including on metaverse platforms," says Neha Singh, CEO and founder of Obsess.
The survey also revealed that 60% of Gen-Z shoppers think brands should sell their products on the metaverse, and 45% believe that metaverse environments should resemble online shopping malls. Obsess has helped launch virtual stores for brands such as Christian Dior, Dermalogica, and Fendi—to name a few.
Metaverse technology will enable brands to offer consumers a more unique and personalized virtual experience through VR and AR technology. Users can interact, inspect and customize products in fascinating ways while accessing useful information that helps inform their purchase. Immersive AR and VR experiences within meta-retail already let customers browse their favorite brands' products in a way that feels like they're interacting with them in real life.
We could soon live in a world where interoperable metaverse shopping experiences converge into one virtual space, where you'll be able to hop from one environment to the other.
In tomorrow's e-retail spaces, users can enjoy cross-platform teleportation, utilize AI-driven virtual assistants, and access real-time product data–all working harmoniously to create highly engaging hyper-intuitive shopping moments. The idea is to construct a virtual environment that enables consumers to interact with virtual objects and others seamlessly–just as they would in the real world.
Imagine entering the metaverse and visiting a virtual car dealership where you can browse and inspect a vast range of sports cars via VR. Customers will be able to engage with products in an increasingly intelligent manner. Perhaps you're visiting the same car dealership in the real world? AR-enabled devices will provide shoppers with 3D information and dynamic-motion displays augmented over products.
Blockchain technology is also significantly impacting e-retail, with many businesses already experimenting with new ways to sell products on Web 3.0 and metaverse platforms. The retail sector is a $3.5 trillion industry whose success results from the rise of eCommerce and mobile shopping. The ascent of the metaverse gives brands, advertisers, and creators a new avenue to explore, tap into, and heighten their success.
The metaverse will enable retailers to sell their products to consumers physically and digitally—also known as phygital.
As metaverse and Web 3.0 becomes more prevalent in techno-social spaces, brands, artists and advertisers can quickly turn real-world products into virtual assets and NFTs. NFTs constitute ownership of virtual items within the metaverse and, perhaps soon, real-world land, cars, and items. It's already possible to create virtual representations and digital twins of real-world spaces and objects in impressive detail, and creators continue digitizing real-world assets by creating NFTs daily.
By minting virtual replicas of real-world objects into NFTs, brands can authenticate phygital products that hold real-time data and confer ownership to the proprietor through transactions on the blockchain. The benefits of intertwining physical and digital assets can also generate scarcity, reduce the risk of fraud, and the need for manual authentication processes.
Brands can then enter the metaverse and NFT marketplace to create and monetize new products while expanding their reach to promote existing ones. NFTs hold significant value in that their worth extends beyond just one application. For example, there are many metaverse games where players earning NFTs and in-game assets can utilize their value between different environments on the same blockchain network, e.g., Ethereum.
From wearable NFTs to weapons, skins, and buildings, interoperability will allow users to trade and transfer their NFTs freely across multiple applications. Brands have an opportunity to capitalize on the value of NFTs through digital commodification.
Say a metaverse user buys a physical product from a brick-and-mortar store, the company could gift customers an NFT equivalent of the physical product, which can then be used throughout the metaverse in games, social apps, etc.
Depending on which metaverse they frequent, users can use their NFTs and digital assets in-verse, leverage their value to buy other virtual items, or convert them back into tangible value. There's an excellent opportunity for brands to capitalize on the NFT phenomena, sell their products to prospective customers in this hotly-evolving marketplace and carve out a space in the world of Web 3.0.
Retailers have used virtual reality in one form or another since the early 1990s. However, it was not until recently that the concept of using VR technology to create a fully immersive experience started gaining traction.
While the technology behind VR is still evolving, there have been notable advancements over the past few years. For example, Oculus Rift, HTC Vive, and PlayStation VR offer users a high degree of immersion through their respective headsets. Users are transported into another world where they can interact with objects and people, reimagining the entire customer experience.
Fashion and retail have an opportunity to make a huge impact in the thriving metaverse environment as well. Immersive retail experiences that take VR to the next level and push the boundaries of technology will define future shopping habits. Fashion retailer Uniqlo was one of the first brands to incorporate augmented reality mirrors into some of their stores in 2012, allowing customers to interact and superimpose clothing items on themselves digitally.
Retailers should focus on creating experiences rather than products. They should think about what they want their customers to feel, not just what they want them to see- considering the physicality of the space itself and the emotional response to being there. Third parties should remember that the metaverse isn't just a tool used to sell. It's an embodied community where customer satisfaction proves just as important in-verse as it does in the real world.
Retailers should also take advantage of the immersive nature of VR and AR to create unique experiences that introduce users to the metaverse and its capabilities. Through VR, companies could offer customers the chance to try photorealistic digital garments on their avatar or digital twin before buying or let shoppers walk around stores in a fully interactive environment with AR. Creating interactive sensory experiences like these with bespoke designs is essential to developing positive customer experiences and successful adaptation to technological changes.
The Rise Of Metaverse Shopping Experiences
The retail industry is a highly competitive market, but it’s also seen significant changes over the past few years. The rise of mobile technology and social media have created new ways for consumers to shop online, while brick-and-mortar retailers are struggling with rising costs and shrinking margins. As a result, many companies are looking at how they can adapt their business models to stay relevant in the digital age.
The ideal virtual retail space in the metaverse contains elements that let customers interact with products on a granular scale using AR and VR. Attention to detail and an emphasis on informative customer care are crucial to gaining traction in this space.
Customers should be allowed to socialize and share real-time thoughts with friends to facilitate the easy purchase of products.
The new breed of virtual stores is not just about surface-level aesthetics. They also provide a seamless user experience across devices, including smartphones, tablets, desktops, laptops, and extended reality wearables. Customers can shop on any device, anywhere, anytime, making digital retail experiences more streamlined, immersive, and accessible.
Here are some examples of how retailers are leveraging these technologies:
Augmented Reality (AR) is a technology that overlays digital information onto the user's natural view of the world. AR applications are commonly found in smartphones and tablet computers, although various other devices, such as AR glasses, are on the market.
Retailers are increasingly turning to AR to improve customer experience. For example, some retailers are experimenting with ways to overlay product information onto the physical space around them. This could include adding virtual shelves to stores that allow shoppers to see what products are available to order online should they be out of stock. It could be utilizing dynamic motion in promotional posters and price infographics or projecting new adverts and trailers for the brand against a store wall.
A great example of AR shopping experiences in action is Amazon Go, which uses its patented Just Walk Out Technology, smart cameras, and sensors to track what people pick up from the shelves without any staff intervention. You can use Amazon's AR features to scan product catalogs and view them through your phone or tablet as if they were physically in front of you.
The ability to create lifelike digital versions of products has massive implications for future retail experiences. Gucci's digital Dionysus Bag, designed exclusively for the Roblox marketplace, sold for over $4,000–more than the cost of the physical version.
Virtual reality (VR) technology uses electronic displays and head-mounted wearables to generate digitally simulated depictions of environments and objects. VR headsets block out all outside sounds and visuals, immersing users in an all-encompassing virtual experience.
Retailers use VR to show off products, and digital spaces, promote new lines and give shoppers a personalized experience.
For example, Marriott International uses VR to give its customers a realistic, 3D view of their social and corporate events venues. VR headsets enable you to see 360-degree, panoramic views of custom room designs, adding a new meaning to 'try before you buy’. Marriott could expand this idea into the metaverse in a few exciting ways. For example, the metaverse could be used as the platform layer where customers use VR to interact with a digital twin of a physical space. Or events can take place in-verse at digital venues that mirror their brick-and-mortar counterparts.
In the future, we can expect to see more of these experiences as VR becomes cheaper and easier to use.
Mixed reality (MR) is a combination of both virtual reality and augmented reality. MR combines real-time 3D imagery with holographic projections to produce a seamless extra-sensory experience.
Ikea recently launched a new mixed reality app, IKEA Place, which allows customers to test their products in real-time using Apple iOS 11 ARKit technology. Customers can browse thousands of items and view them as photorealistic, true-to-scale 3D products.
Ikea revealed in a recent press release, "The app automatically scales products, based on room dimensions, with 98 percent accuracy". “We have a lot of customers who want to know if they can buy something in the store but don't want to go home and try it out...this is an easy way for them to do that", said Stuart O'Brien Ikea's Unit Facility Manager.
In addition to using MR to sell products, companies like Ikea are using this technology to allow shoppers to virtually walk around stores and see what furniture pieces look like inside their homes.
There is no denying that mixed reality will significantly influence our lives in the future as it transforms how we shop, collaborate, and reinvent the way we fulfill everyday tasks in practical and ground-breaking ways. PR Newswire predicts that the combined AR, VR, and MR market will reach USD 454.73 Billion by 2030, registering a CAGR of 40.7%.
In the last few years, virtual reality has progressed to a point where we can clearly see its benefits to the digital experience. We’re now at a point where creating compelling, personalized experiences indistinguishable from real life is now possible.
This has led to interesting applications and innovations for consumers and businesses. As we previously mentioned, one such way is the potential for AR technology to enhance the visual experience of retail environments. Photorealistic virtual shopping experiences have already been created for everything from fashion to food. These experiences are often so immersive that many people mistake them for being real.
We expect that immersive, photorealistic eCommerce experiences will gain in popularity as brands look to adapt to marketplace changes and enhance customer reach. Metaverse platforms can facilitate companies in creating highly engaging, interactive shopping experiences that will ultimately work to amplify brand identity and drive sales.
One example is the recent launch of the new Google Lens feature for Android smartphones. With assistance from Google Lens, users can simply point their smartphone camera at any product or item in a photo gallery and get information about it. For instance, when pointing at a pair of shoes, Google Lens will tell you how much they cost, where they were made, and deduce customer reviews to tell you whether they're comfortable or not.
Immersive experiences such as these will shape the future of retail as businesses move towards the adoption of innovative technology. As more consumers become accustomed to using augmented devices to interact with physical objects, the lines between physical and digital commerce will continue to blur—enter the era of phygital.
Shoppers will soon expect to be able to access all of their favorite brands and services wherever they are. Brick-and-mortar locations will need to evolve into places where customers can seamlessly connect just as they would via online sources.
Developing a cohesive metaverse retail strategy is essential for businesses that wish to reaffirm their digital presence in decentralized spaces, create new products and implement company-wide digital transformation efforts. By leveraging extended reality technology in future e-retail spaces, companies can provide customers with e-shopping moments that ultimately increase revenue and bolsters wider-digital adoption throughout the company.
There's no shortage of opportunities for retailers to use the metaverse to improve their business operations. However, many retailers struggle to develop a coherent strategy for integrating the technology into their existing processes.
To help guide your efforts, here are some key questions to ask yourself when creating a metaverse retail strategy:
Before starting any project, it is crucial to define your goals as clearly as possible. These should include increasing revenue, improving operational efficiency, and reducing costs.
The metaverse offers a unique opportunity for brands to utilize technology to reimagine consumer engagement and how products and services are sold. As such, it is critical to understand your vision for the future. How will the metaverse change the way people shop? Will it make shopping more convenient? More fun? And perhaps most importantly, will it allow customers to do all these things while maintaining their data privacy?
Take augmented reality (AR), for example. The metaverse allows users to interact with various real-world objects and physical environments through AR. Users can interact with everything, from billboards and music to food and clothing items. These items can be interacted with using touch screens, voice recognition, and gesture control.
One day, you may be able to scan the ingredients in your fridge using AR glasses, and if you're out of items, they'll be automatically added to your grocery list. Capabilities like this make up the physical components of the metaverse. Brands should recognize this as an opportunity to launch digital campaigns and augment their physical products with pop-up information and holographic overlays.
While it may seem obvious to focus first on the digital component of the metaverse, this approach could hinder your ability to achieve success. Instead, start by focusing on the physical environment. This will allow you to test the technology and ensure it works as expected before moving onto the digital side.
While it’s possible to begin planning for metaverse implementation anytime, retailers are typically advised to wait until they clearly understand what the technology can do for them. You risk wasting valuable resources if you jump right in without a strategy. Metaverse strategies should complement whatever dominant system you have in place to drive traffic to your site, increase sales and improve digital adoption rates for both consumers and your business.
The metaverse is already seeing significant interest from retailers who want to leverage the technology to create new ways to connect with customers. You can expect to see more companies adopting VR/AR solutions in the future.
Several startups are working on creating products that will allow us to use our smartphones to virtually try clothing, shoes, furniture, jewelry, and even cars. These experiences are known as AR shopping apps.
But what if you could take this concept one step further? What if you could not only shop in your own home or office but also visit any location in the world?
While we may be years away from experiencing these types of interactions, they are coming soon. And when they arrive, they will change the way we shop forever.
As you can see, the future of retail is fascinating. We are entering a new era where consumers will be able to shop anywhere, anytime, and receive customized recommendations based on their unique needs.
If you haven't already done so, now is the perfect time to think about what you want to see in the metaverse and how you’d like it shaped. How are you going to interact with your customers? What does your metaverse experience say about what your brand has to offer? eMarketer estimates that there are 90.9 million AR users in the US and 57.4 million VR users.
So what does all of this mean for you? Well, it means you should wholeheartedly embrace the changes in the retail sector and try to understand how new and emerging technologies such as the metaverse will impact your business.
Learn how you can leverage the power of the metaverse to grow your brand by reading our article “Everything You Need To Know About The State Of The Metaverse in 2022”.