Why I Give My Kids Money To Spend In The Metaverse, And Why The Smartest Brands Are Spending Their Money There Too

My children spend their weekly allowance in the metaverse, and that’s fine with me. One may argue that it’s silly and frivolous for my daughter to spend 200 Minecoins on a virtual dress (with wings!) to sit in her virtual saddle to ride her virtual horse in the virtual world of Minecraft. But by buying and owning that dress – which could be a traceable NFT that can never be lost or stolen, and could even increase in value or be rented out for a profit – my 10-year-old is learning how to navigate the future consumer economy.

While many of the popular metaverse platforms today are gaming platforms, we have already seen brands from Forever 21 to Burberry enable commerce on them. And this spring, following in the footsteps of several brands during the recent New York Fashion Week, the metaverse platform Decentraland recently held a long-anticipated virtual fashion event. For four days, models walked on virtual cat walks dressed in looks from the globe’s most luxurious brands, attendees around the world attended after-parties, and pop-up shops offered NFTs of items ranging from handbags to jewelry. There is no question that the metaverse is increasingly important for retail and fashion, although there are many questions about how this will all look, and which investments will actually pay off.

We are still in the very, very early days - think the mobile web before the iPhone or the internet circa 1994 - but if we look closely, we can already see some of these new platforms take shape. It is important to remember that no matter what they ultimately look like, these platforms, and future ones yet to be developed, will be an essential component of the retail sector and the economy. The brands we see starting to experiment in this space will, like my daughter, be those best-prepared for the future, no matter what it looks like, exactly.

Gamevertising: This is the stage where we are now

Creating a presence on existing metaverse platforms is now a growing way to give new life to old brands, revive luxury brands, and reach Generation Alpha, those born starting in the 2010s like my children, with whom metaverse gaming platforms are wildly popular. Some of the smartest moves include Gucci not only selling, but giving away a limited number of high-fashion NFTs on the gaming platform Roblox as a way to draw in younger users or those who remain skeptical of paying for digital-only items. Ferrari offers its cars to players to use in Fortnite. And more brands are making high-fashion skins and accessories for gaming avatars.

While much of this may be fairly categorized as advertising, it is laying the groundwork for real participation in the future economy mainly by experimenting with NFTs paid for with crypto and other digital currencies. Putting engaging user experiences aside for a moment, these platforms are an on-ramp for retailers to the future economy where NFTs and crypto – now critical underlying elements for Web 3.0 – play a larger role, especially as governments mull regulating them and giving them more legitimacy as asset classes. Even if retailers don’t yet have a presence on these metaverse platforms, they should consider accepting payments in crypto, and make earning or redeeming crypto part of their loyalty program. This will pave the way for being ready to offer NFTs, either on their own as digital items or to back up actual physical items, as NFTs must be paid for in crypto in order to be traceable and never lost - one of their most appealing advantages.

A parallel world for shopping and innovation

This is emerging as the next stage of the developing metaverse. With digital products backed up by NFTs, eventually, retailers will not be able to have one without the other. Perhaps the best example of this is Nike buying RTFK, a maker of shoe NFTs, showing how a company won’t be just about physical goods or just digital goods, but will offer both. There is still a lot of hype and confusion, but it is starting to become accepted that digital and physical goods will merge.

The metaverse will also play an important role in fashion and design innovation, both digitally and physically, perhaps catapulting amateur designers into launching their own physical lines as well as NFTs, or vice-versa. Already, the digital styling game Drest, owned by FarFetch, allows consumers to create their own digital styles. FarFetch, which saw its annual revenue rise more than 35% over the last year, is now selling a white-label platform that other brands can buy and use. And tens of thousands of consumers are trying their hand at building their own designs and avatars and selling them on OpenSea and other NFT marketplaces.

A new critical infrastructure

In the future, not only will people shop in the metaverse and experience the merging of physical and digital goods, but this will become the standard way of doing business, resulting in unprecedented growth opportunities for brands. In other words, what matters isn’t which products succeed long-term in the metaverse, but rather the platform that underpins all of this. It must be remembered that Amazon started out as a place to buy books but is now a pillar of our current digital world and economy. Before we get to this point, there will likely be bubbles that burst, virtual worlds that fail, and many companies that lose money–just like we saw when the traditional internet emerged in the late 90s. But now, as then, this is an opportunity too good to pass by; that’s why there is great value in parents letting children invest in digital horse saddles or brands participating in virtual fashion weeks – even if we don’t fully understand what’s in it for everyone.

(Hilding Anderson is the head of retail strategy, North America, at digital consultancy Publicis Sapient)