The metaverse is currently being heavily hyped although as yet it does not feature in the everyday activities of most companies. Actors in the retail sector should now be addressing this theme, which is forecast to have great potential for retailers.
If we think back to the early days of the internet, the situation was quite similar. Today, though, it has become the central information hub for numerous decision-making processes – for both customers and companies.
What is the reason for the growing interest? In simple terms, the metaverse is seen as the future of the internet. The metaverse takes the internet to a new level and adds the dimensions of spatiality and ownership in the digital sphere.
"The metaverse further develops the internet by adding the dimensions of spatiality and ownership in the digital sphere."
How to describe it briefly?
In simple terms, the metaverse is a virtual, three-dimensional extension of the real world in which you can live as a digital twin ("avatar") and undertake everyday activities. Augmented and virtual reality technologies are used to merge real and virtual reality. These technologies open up countless possibilities for the digital sphere and for new business potential in retail.
Which features characterise the metaverse?
It is decentralised.
It takes place in real time.
It has no upper limits on the number of participants.
The metaverse has its own economy in which companies and individuals can invest and buy and sell products and services.
People move as avatars in the virtual world and interact with each other.
Users can meet each other in virtual space, participate in meetings, go shopping or simply play games.
When was the term metaverse first used?
It was first used in the science fiction novel Snow Crash in 1992. In the book, author Neal Stephenson describes the metaverse as a virtual parallel world in which people live as avatars, i.e. as digital alternatives to the physical world.
In 2003, Second Life, the most successful metaverse to date, went online and has over 70 million registered users in 2022. Platforms such as Decentraland and The Sandbox are other early virtual worlds. The popular online game Fortnite is increasingly being transformed into a metaverse game where you can not only play, but also attend concerts and watch films with friends. The buying and selling of virtual land has given additional impetus to the metaverse in the 2020s.
What you need to know:
The metaverse is considered to be the internet's next stage of evolution and its future. Following on from Internet 1.0 with web browsers offering limited interaction and Internet 2.0 with the social media revolution and mobile devices, the metaverse will become an important part of Internet 3.0. It is expected to be more three-dimensional, interactive and experiential than the internet we know today.
Its potential is impressive: According to a 2022 study by McKinsey & Company, the metaverse could be worth up to $5 trillion by 2030, with e-commerce being the biggest component at $2.6 trillion.
These sorts of figures are galvanising many businesses. Their ideas for using the metaverse vary widely and include employing it as a new sales channel, virtual advertising space, retail outlet, recruitment and training platform and numerous other theoretical possibilities.
"The metaverse is one of the most exciting visions of our times."
2. Which technologies does the metaverse require?
The metaverse makes use of various existing technologies that are still being further developed. By combining these technologies, the virtual world becomes reality.
What do you need first and foremost?
Virtual reality and augmented reality (VR/AR) glasses play a key role. Although you can use the metaverse on standard monitors, it can only be fully experienced in 3D with VR and AR glasses.
VR glasses have been on the market for a few years now and are continually being enhanced. People can use them to meet each other virtually and interact with virtual objects. According to Bitkom, augmented reality will play a central role in the metaverse in future. This technology enables the merging of real and virtual content by importing virtual objects from the real-life environment with the aid of AR glasses.
The Bitkom study "The Future of Consumer Technology – 2022" found that 43% of the German population can envisage using VR glasses. The willingness to use AR glasses is also high with 52% of respondents saying they could envisage wearing such glasses in future.
What else is involved? Another important concept in connection with the metaverse is blockchain. Blockchain means the transparent chaining of datasets, which basically eliminates the need for traditional verification instances.
NFTs (non-fungible tokens) are based on blockchain technology and enable digital objects to be clearly assigned to an owner. In future, products will be sold in the virtual world primarily as NFTs. According to the Bitkom study, these tradable, unique digital objects will become an innovation driver for the barter economy and the financial economy in the metaverse through transparent traceability, high security and further development of their functionality.
The Bitkom study also argues that artificial intelligence (AI) is vital to the creation of virtual worlds. For instance, an AI system could generate its own worlds from historical data. It is conceivable that AI systems could create entire virtual worlds without any human intervention at all. Another potential area of application is the creation of avatars. An AI engine could analyse 2D images or 3D scans of users and create an extremely realistic avatar quickly and easily.
3. How many people are aware of the metaverse?
More and more people are now familiar with the term "metaverse". This is confirmed by "The Future of Consumer Technology – 2022" study conducted by the German digital industry association Bitkom, which focused on the metaverse. According to the study, over a quarter of Germans have heard of the term and one in twenty is able to explain what it means.
How relevant is the metaverse trend for today's retail?
Information relating to this question can be found in the Retail Trend Check Vol. 4 study conducted in summer 2022 by EEC COLOGNE, a subsidiary brand of IFH COLOGNE (Institute for Retail Research), in cooperation with the Salesforce cloud computing company.
According to the study, online shopping in the metaverse is already a familiar concept for 21% of all respondents. Among the 18 to 29-year-olds surveyed, the figure rises to 45%. Specific interest in online shopping is reported by 11% of respondents, whereas among 18 to 29 year-olds the figure is almost twice as high at 20%.
What role does gaming play in all of this?
According to the study, gaming could serve as a model for e-commerce in the metaverse, even though the products involved here are different. By looking at the world of gaming, it might be possible to identify initial potentials and insights into possible user behaviour. Around half of the respondents (46%) see the metaverse as a kind of computer or video game. This also explains why 54% of those who had previously played computer or video games use the metaverse.
Companies are expected to use the huge potential of gaming as a new sales channel and for marketing. According to the study, gaming is widespread in the metaverse. Purchases are also increasingly being made there. There are also consumers who would like to see a greater presence of companies from the retail sector.
And how is virtual shopping in the metaverse seen?
The Retail Trend Check Vol.3 study conducted by EEC COLOGNE and Salesforce shows that consumers see great potential in this area. 41% of respondents can envisage viewing product presentations in the metaverse and 36% shopping there. Virtual visits to events were also interesting to 39% of those surveyed. "Fashion & accessories" was named as the top segment for product purchases in the metaverse, followed by "Home & furnishings" and "Leisure & hobbies".
Is the metaverse revolutionising online shopping? A significant proportion of consumers, particularly young people, expect it to provide new shopping experiences. Almost a third of younger consumers can already envisage buying products for their digital identity.
However, according to the study, there is also a need to raise awareness. Over two-thirds of respondents currently see no added value in the metaverse and do not intend to buy additional hardware such as VR or AR glasses. However, this could change quickly as practical examples emerge.
4. What opportunities does it offer for retail?
The metaverse offers retailers enormous opportunities and possibilities – for product presen-tations, fashion shows, shopping and customer dialogue, as well as internal collaboration and staff management, to give just a few examples.
"In the metaverse, augmented and virtual reality technologies merge real and virtual reality. These technologies open up countless possibilities for the digital sphere and thus for new business potential in retail."
Product presentations, virtual tours and showrooms
Let's get started: These days, you no longer have to get in your car and drive when you want to browse or buy new products. Instead, you can do your shopping from the comfort of your own home in the metaverse. Products such as vases, decorative items etc. can not only be presented realistically, they can also be displayed as they are intended to be used, for instance on a laid table or shelf. For retailers, this opens up attractive sales opportunities that can significantly boost sales.
Other possibilities: If you want to show your business premises, sales rooms or production areas to customers, you can create high-quality virtual tours in the metaverse. There is then no need to take into account the safety requirements of participants and they do not have to walk long distances to see everything.
The virtual showroom offers completely new presentation possibilities. Potential buyers can move around within it, get advice from experts, experience products and innovations up close in 3D and try them out as if they were holding the products in their own hands. There are no limits to showroom design.
The metaverse also opens up exciting possibilities for presenting fashion items. Your own avatar can try on a new dress or shoes. If everything fits perfectly and you like it, you can buy the clothes or shoes and have them delivered to your home. You can also dress yourself for the virtual world – an environment towards which social interactions are increasingly shifting. Your own avatar would probably like to be dressed just as vibrantly or even more so as in the real world.
Plus: In the new virtual worlds, companies can create their own worlds and digital goods and sell them. Young people in particular are already prepared to spend money on digital products with which to fit out their avatars and provide them with various objects – just like in real life.
And how are payments made?
NFTs (non-fungible tokens) are used to make purchases in the metaverse. They represent a unique asset and provide an inseparable, verifiable proof of ownership for the digital product.
What about interpersonal communication?
During the Covid-19 pandemic, many meetings were moved to virtual spaces where people could come together in a digital meeting instead of being physically together. In future, such meetings will also take place in the metaverse. The only difference is that participants come together as avatars and it is almost like a real face-to-face meeting.
5. Which companies are already active in the metaverse?
Even if the metaverse is still more hype than reality, many companies are now on their starting blocks or actually in the thick of the race for existing and future buyers. Well-known brands, particularly from the fashion sector, are already active. Companies, such as online fashion shop About You, sports goods brand Adidas and fashion group H&M, have already taken the step into the metaverse or are about to do so.
While e-commerce company About You has launched the Hypewear digital fashion platform in the metaverse, Adidas has taken a different approach. The sports goods manufacturer offers virtual clothing in the metaverse that buyers can wear as actors in the online multiplayer game "The Sandbox". H&M, meanwhile, remains true to its roots as a textile retailer and offers invited guests a virtual showroom for brand presentations, events and discussions.
Nike is also already active in the virtual world. The world's largest sports goods manufacturer has created the virtual brand world Nikeland on the metaverse gaming platform Roblox. In Nikeland, users can transfer their own offline movements to the online game via smartphone. In addition, avatars can be dressed in Nike products in a digital showroom. Roblox is extremely popular with children and young people. With an estimated 200+ million users a month, this opens up enormous potential for Nike.
Which other well-known names are among the pioneers? We have three examples for you: The Timberland label uses the free-to-play game Fortnite by Epic Games to advertise its fashion items to players. Internet company Tencent, a major shareholder of Epic Games, is investing US$ 2 billion to build a metaverse for children and young people. ByteDance, the operator of the video portal TikTok, is also spending significant sums of money on its own metaverse. The company has invested over US$ 700 million alone in the development of a virtual reality headset.
Even if the metaverse is only slowly emerging, companies should now be laying the foundations for the future and doing two things: keeping an eye on developments, new trends and technologies and doing their digital homework – for example, creating a functioning in-house merchandise management system or CRM system.
"This digital world will slowly emerge. However, the foundations for the future are already being laid."
6. Where is the journey heading?
In one sense, the metaverse is still a faraway dream, but in another, it is already very real. At present, we can only guess at the significance it will one day have in our lives. However, many industry experts agree that the future clearly belongs to the metaverse.
"With the metaverse, we are at the very beginning of a development that promises great things."
What you need to know: The virtual world of the metaverse may develop in a similar way to the internet as we know it today. Initially exclusively a medium for specialists, today it is impossible to imagine daily life without the internet. Numerous new products, services, business models and networks – including many of which we are currently unaware – are being developed in and for the metaverse. Could anyone have guessed two decades ago how dominant social media would one day become?
The question of whether the metaverse is on its way or not is no longer in doubt. It will be interesting to see how it develops over the coming years and decades. One thing seems certain, though. The metaverse has the potential to become an integral part of our everyday lives, just as the internet is today.
7. Summary
The technologies of the metaverse open up countless possibilities for the digital sphere and for new business potential in retail. However, because many technologies relevant to the metaverse are still in their infancy, this area does not yet play a significant role in the everyday activities of sales and marketing managers. Nevertheless, the metaverse is something we need to pay attention to now so as not to miss out on a significant development, as was the case with social media marketing in many companies.
