Fashions displayed in a promo image for the new Meta Avatars Store – Source: Meta
Is the metaverse opportunity getting any clearer?
Annual global spending related to the metaverse could reach $5 trillion by 2030, according to McKinsey. Of that, the e-commerce impact is expected to be between $2 trillion and $2.6 trillion.
Eric Hazan, senior partner at McKinsey, said in a blog entry, “Consumers are open to adopting new technologies; companies are investing heavily in the development of metaverse infrastructure; and brands experimenting in the metaverse are getting positive feedback from consumers.”
The report included surveys of more than 3,400 consumers and 450 senior leaders globally.
Among consumers, 59 percent prefer at least one activity in using today’s early version of the metaverse versus the physical alternative. Among the 59 percent, they’re most excited about connecting with people virtually, 44 percent; followed by exploring digital worlds, 28 percent. Scoring much lower were many hyped parts of the metaverse, including purchasing and trading NFTs, customizing avatars, and purchasing real and virtual products.
About 79 percent of consumers active within the metaverse have made a purchase, mainly to enhance their online experience.
Among the executives surveyed, 95 percent believe the metaverse will have a positive impact on their industry, with about a third thinking it can bring significant change.
McKinsey predicts the metaverse will encompass five types of daily activities: gaming, socializing, fitness, commerce and remote learning.
Commerce examples cited included Sotheby’s proprietary marketplace for curated NFT art, virtual-only fashion company Fabricant and immersive retail experiences being explored by start-ups like Obsess and AnamXR. McKinsey writes, “A primary question is whether the metaverse can be a channel for selling real products at scale, and emerging technology enabling thousands of people to simultaneously interact may help.”
Mr. Hazan cited similarities to the transition to Web 2.0 in 2004 that was sparked by social networks and user-generated content. He said, “Back then, people were busy imagining utopian visions of consumer control and the democratization of the internet. There’s a lot of excitement about the potential this technology holds, but the computing power isn’t there yet to make the metaverse of people’s imaginations feasible. That said, billions of dollars are flowing into every corner of metaverse infrastructure to help get it there.”
Discussion Questions
DISCUSSION QUESTIONS: How should retailers go about determining their approach to the metaverse? When do you think the hype versus the commercial reality of the metaverse will become clear?
Poll
Loading …BrainTrust
Everyone has a different description of what the metaverse is and none of them match. Wired suggests replacing metaverse with “cyberspace” because the metaverse isn’t really a new type of technology, it’s a shift in how we interact with existing technology. That makes sense.
Losing our minds over something that keeps consumers out of stores does not. Throwing ridiculous amounts of money at it while conditions on the sales floor, and lack of customer service, continue to spin out of control does not. I am sure the metaverse will take off at some point, but frankly we’re just not there yet.
If the metaverse does not eventually increase sales due to improved customer loyalty and the “cool” factor, then it is not worth the effort. However those retailers that have already delved into it are using the metaverse to create interest and stickiness among potential customers. In other words, as a marketing tool for a set younger than Baby Boomers and their children. Some retailers have gone the step beyond and are making it possible to convert playtime and entertainment into a real purchase of a real palpable product. If the only expectation from the metaverse is to make money selling digital-only “things,” it will become a short-lived phenomenon.
The Meta TV commercial about the metaverse is a good one. I could see it for the practice of medicine. Lots of opportunity.
Retail? Meh.
Retailers should approach the metaverse the same way they should approach cryptocurrencies – very carefully. While there may be some benefit to being a first mover in this space there are risks that run well beyond money. What retailer wants to be known for making a big bet on a technology that isn’t accepted by its customers?
How should retailers go about their approach to the metaverse? In a word, carefully. The hype around the metaverse is very high and is likely to remain so. The skeptic in me says its use will likely be in areas such as gaming, and perhaps even education, long before it makes its way to being a force in retail.
The technology is at a very nascent stage, and the uses are not clear yet.
Smart retailers and brands would keep an eye out by having a small team tasked to keep up with the developments in this space, educate leadership, and be ready to execute when it’s about to become mainstream. It takes a bit of intuition and perspective to separate hype from reality. Overall it is good to adopt a “fast follower” strategy.
The metaverse will certainly make an impact. However I do not think it will make anywhere near as big of an impact as many claim. There is so much hype about the metaverse and much of it is based on nothing but fluff. A survey of consumers – most of whom don’t even know what the metaverse is (because it is not yet defined) – is not a solid indication of future behavior. Also, the experiences in many metaverse worlds today is a joke: they look like something out of a 1990s computer game! Maybe they will improve, but even so I don’t think they will replace real world experiences any time soon.
Call me when the avatars look more like the movie Surrogates and less like Lego people.
You will be waiting a long time for a call…!
I agree with Georganne Bender in that there is a long way to go, but from the primary five activities listed in the article, remote learning and training offer tremendous upside here and now. I see this as a natural and logical step for nearly all companies, and these activities can be accomplished anywhere, regardless of location.
If I were a successful middle-tier retailer I would be reading up on the metaverse, and in particular its application to retail. And I would be waiting to see successful models built and how user adoption goes. My estimate is that we are at least three years away from any significant progress in retailer to end-user engagement.
Opportunities in the metaverse will unfold in stages. Initially, the metaverse will be for the curious, then for socializing, including virtual meet-ups and events. Commerce will slowly take hold and virtual malls may be set up. I don’t see remote learning in the early stages here, because schools have invested time, money, and training in their digital blackboard systems – which won’t be upended overnight. In terms of physical fitness – well, maybe. You will always have gym rats who love visceral connection.
Remember the original mobile phone? First it was a “car phone.” Then it was for talking (“Can you hear me now?”). After smartphones became ubiquitous, they became a tool for banking, social media and augmented reality. It’s one step at a time.
Gaming? No doubt. Socializing? Sure. Commerce? Why? Seems like in retail, we’ve got more than we can handle or figure out — as is the case with Web 2.0. It will be a while before we reach success/adaptation for retail, in my opinion. But in gaming? It’s huge right now. (PS: a big thing not mentioned is figuring out a better delivery system vs unwieldy/massive head gear – maybe that’s Web 4.0.)
It will take a long time, a lot of research, and a whole lot of money to spend for this to land on commerce’s front doorstep.
…if at all.
The metaverse offers seemingly unlimited potential and is emerging as another engagement platform between brands and consumers. There are undoubtedly elements of the risk/reward principle at play when engaging and monetizing off of the metaverse.
Considering the rapid rate of accelerating innovations, the McKinsey forecasts of annual global spending related to the metaverse reaching $5 trillion by 2030 may become a reality. However while segments of the population engage in this space via gaming and VR experiences, most customers enjoy real-life experiences.
The metaverse will become another engagement platform where consumers will engage with brands and retailers. The experiences and relationships formed in that virtual world will translate to influencing in-store and digital purchases.
It’s more likely that the metaverse will ultimately settle down as a niche space for very specific brands and their corresponding customers, but for the vast majority it won’t be very profitable — especially heading into tighter economic times. However I am intrigued by the virtual-only nature of metaverse purchases, meaning no shipping costs required, which inherently means the profit margins will be much more sustainable than with typical e-commerce only businesses.
I am still having difficulty imagining practical metaverse applications beyond gaming and social activity. When it comes to commercial uses, don’t shoppers want to deal with reality rather than an avatar of sorts?
Do you want to check out the future? Go to today’s RetailWire discussion of augmented reality.
The metaverse is in early stages and retailers should approach it as any early stage tech. The use cases for retail and commerce still remain elusive. Until these are discovered or invented with consumer support, metaverse for retail will be chaotic.
I’ve talked to a number of brands about the metaverse. It is still foreign to some. My thought — figure it out or be left in the dust by the competition.
Although the path for some is becoming clear, retailers should focus on originality and innovation to write their own playbook. The applications are limitless, and there will be first-mover advantages if their ideas are customer-centric and unique to their specific demos. The commercial reality in large application is likely far away, but right now there is still potential for brand building which will still count indirectly to a brand’s success.
Two significant considerations for the metaverse are currency and decentralization. Retailers need to understand both of these factors. With that said, early movers are able to use the metaverse as a great branding effort, especially to capture Gen Z and Alphas. We are at least a decade away from seamless in the metaverse but the learning curve will not be as steep as moving to online was in the ’90s.
I think retailers should understand the insights into why people would opt for a virtual world when they don’t want to head to a store. There is probably something in the metaverse around making e-commerce better, perhaps you could shop with friends more easily a la during an e-commerce experience.
I think they need to understand the technical aspect but more importantly the insight into why humans would want to engage in this medium or might want to down the road. If there is a tension it solves or might solve, or an unmet need, they can do some experiments around that.
I think the hype versus reality will become clear when there are more articles in the press around utility — in gaming, content (Netflix/etc.), retail, healthcare, education — versus these ho-hum marketing campaigns as of late.
Most retailers don’t need to be in the posture of early to the metaverse. It’s OK to let large brands test the waters first, spend money finding a path. Like the early internet, and ecommerce, it will ultimately evolve and ROI will become clearer as time goes on.
For the time being, retailers best stick to their knitting in-store, execute well on ecommerce and engage more effectively with customers — digitally and in-store.
I feel that there’s two traps here — looking only at ways in which the metaverse emulates the physical world, and looking only at what it means for the individual customer. For example, the metaverse could be a place to visualize additional layers of data over the digital twin of a retail space — imagine being able to go around the virtual twin of a mall while looking at traffic data or sales for each shop, or electrical and HVAC networks.
While AR is certainly going to have a more immediate impact on retail than VR, I’m amazed at the lack of enthusiasm. Granted, I’ve been using “the Metaverse” for years, but it does have application in all of these areas and more, and I believe it will take off, albeit gradually not suddenly. Ask your kids….