Why the metaverse is the ultimate luxury environment
Al MacCuish of The Sunshine Company looks at luxury brands as part of The Drum’s Metaverse Deep Dive, noting how these early movers into metaverse marketing have created some of the most visible and celebrated virtual brand extensions to date by reinventing scarcity on digital platforms.
Burberry’s NFT launch in Blankos Block Party is an early look at the future of luxury in the metaverse
Since the advent of the internet, one of the aspects the luxury industry has grappled with is the lack of curation. The traditional luxury and fashion publishing ecosystems owned by Conde Nast and Hearst held so much sway for so long because they were expertly curated. That has huge value – and efficiency. The internet as we know it is, by design, the opposite – it’s open to all and that’s not truly luxury behavior – or efficient. You don’t see Celine next to a supermarket on a high street.
It’s not a judgment on the supermarket or the high street, it’s simply because luxury brands seek adjacency with one another. Go to the art district in Miami or Mount or Bond Street in London and you see that congregation in full effect. Their focus is on curating every aspect of an elevated customer experience – it’s transformative for the customer and underwrites the premium on price.
For luxury brands, the metaverse has the potential to be the ultimate curated environment. A brand can determine, to an astonishing degree, every single facet of an interactive experience. In any emerging territory there is an element of trial and error, but luxury businesses thrive on that dynamic. The three main groups – LVMH, Kering and Richemont – are family-owned and hugely enterprising. Other major players like Farfetch are disruptors by nature, so innovation is the industry’s lifeblood: they understand well the risk-to-reward ratio. With the confluence of NFTs and crypto, the potential for luxury businesses goes far beyond a marketing or brand experience though – it’s a new product vertical and revenue opportunity.
Early mover Burberry’s Sharky B collection in Blankos Block Party sold out for almost $400,000 equivalent, while Karl Lagerfeld x Endless NFT – the third installment of the highly sought-after Ikonik NFT collectibles – sold out on Dematerialised, the British digital retail platform that positions itself as ’the digital department store of your dreams’.
Brand new opportunities
The luxury industry needs this opportunity if businesses are to continue to grow revenues at the rate they have enjoyed over the past decade. In a social climate where, increasingly, consumers are aware that unchecked physical consumption is unsustainable and aspirations are shifting, they are on the right side of history in pursuing it. There are no raw materials or supply chain issues in digital products, labor is minimal and production is remote. Release timelines are shorter and there are no overstock or discounts. As a result, margins are extraordinarily high. The scarcest items immediately become an asset class. In many ways, it’s a perfect storm.
And scale mainstream players have spotted – and are investing in – that same potential. Nike recently acquired pioneering design studio RTFKT while at the same time applying for 200 patents for digital apparel in the metaverse. If one of the world’s biggest and best-regarded retailers is taking the opportunity seriously, there is an element of determinism at play too.
The big question luxury brands are asking right now is: ’which metaverse?’ It’s still early. Cost of entry is high. Demand culture is still, in terms of scale, in its infancy. There will be plenty of Second Lifes as this area explodes. The Sandbox and Decentraland look solid, but the aesthetic is limited.
The answer in part is to follow the founders and investment money. There are already huge bets being placed that will, to a degree, be self fulfilling. But ultimately, customers, audiences and fans will decide who is successful and that’s where luxury brands are hugely powerful – they have direct communities already in place.
Luxury brands are ideal for the taking a leadership position in how the metaverse develops – particularly fashion brands: the majority are independently owned by the three big groups so they can invest and take a long view; they value imagination, creativity and spectacle enormously and, in this new physical-to-digital reality, individuality, self expression, creativity and distinctiveness will be at a premium in these new imaginary worlds. In that respect, everything and nothing has changed. The best, most relevant and resonant idea wins.
So watch this space – and the new studios like RTFKT and Defaced.
And get a wallet.
Al MacCuish is founder and chairman of The Sunshine Company.
For more on the exciting new opportunities for marketers in this rapidly evolving space, check out The Drum’s Metaverse hub.