Metaverse is a complicated technology, driving and defying dominance of internet at the same time. This piece evaluates how the metaverse is going to change fashion world going forward.

Metaverse, an immersive technology, has gained momentum since Facebook turned Meta and global tech giants such as Microsoft and Apple too started making advances in this direction. Meta aspires to create and shape a new virtual world for the future. So, what actually is metaverse? Experts explain it as the next evolution of social connection offering a 3D virtual reality universe where users from all over the world are present at the same time. In more real-life explanation, metaverse will enable users to experience their 2D experiences such as shopping via smart phones or computers, watching concerts or movies, in an environment where they are ‘really’ with their own avatars (3D replica of self) in a completely virtual 3D world, and can do this simultaneously with different users from all over the world. In other words, the digital technology that enables people to shop via 2D devices such as phone or computer, will now be able to offer the opportunity to go directly to a 3D virtual store.

Amalgamation of technologies

Although a revolutionary technology, metaverse is unable to operate in isolation on its own since it is an inter-weave of various new-age technologies of our times including virtual reality (VR), augmented reality (AR) and blockchain that produces cryptocurrencies and the most recent one – NFTs (non-fungible tokens). Each technology is a vital component of this ecosystem. It is their collaborative execution that creates and sustains a 3D virtual world known as metaverse. Metaverse story initiates from VR – a computer technology that enables a ‘near-to-reality’ experience by creating a simulated environment as can be experienced in head-mounted display (HMD). With advent of AR which can be described as VR with one foot in the real world that simulates artificial objects in the real environment, the idea of metaverse became more achievable. In AR, the computer uses sensors and algorithms to determine the position and orientation of a camera. AR technology then renders the 3D graphics as they would appear from the viewpoint of the camera, superimposing the computer-generated images over user’s view of the real world. Metaverse, using enlarged canvas of AR along with 3D capabilities, has the ability to create human ‘avatars’. The avatars can then be part of a virtual world wherein people will interact with each other, watch movies together, hold meetings, shop, enjoy have recreation and even feel each other’s touch as sensory vibes. Such a world can further conduct businesses through which people can buy virtual lands, carry out shopping and do other financial transactions. To facilitate such transactions virtual currencies and NFTs will be made available hence the need and involvement of blockchain technology which will not only make involved monies secure but also authenticate the ownership of the digital assets. How penetrative and useful this metaverse can be to human’s real world is yet to be seen but many areas including fashion have started exploring its usage and benefits.

Fashion of tomorrow

Over the last two years, fashion consumption suffered due to store closures and work from home. This pushed fashion players to switch to online channels for sustaining their business and booking orders. They even switched to virtual shows and exhibitions to reach end-consumers. The move helped them survive through the tough times. The result is that, today, they are investing in various emerging technologies with increased dependency on digitisation. They have realised that the role of technology will only grow in future, so acquiring futuristic technologies has become one of their top priorities. The development is not solely guided by the need but strong logic too. Morgan Stanley, an American multinational investment bank and financial services company, predicts that metaverse could present more than $50 billion opportunity for the luxury fashion industry over the next decade that would include $22.6 billion market for luxury NFTs too. This seems quite realisable seeing the increased merging of physical and digital worlds during the recent times. This will only gather pace in the coming years and fashion’s entrenchment in the metaverse will be one of its definite outcomes. Therefore, driven by ‘future-need’, many fashion brands have started their journey to be a part of metaverse.

Why turn to metaverse

Metaverse is seen as a unique technology with additional opportunities and benefits for fashion brands. With acquisition of such game-changing technology, fashion brands can conveniently stand out in the competition. They are sure to be positioned ‘ahead of time’. As is the case with possession of any new technology, brands will add new dimensions to their key function areas such as marketing, communication, PR and product development. This is evident with 3D avatars and NFTs becoming new marketing and promotional tools for fashion players. As brands adopt increased digitisation, digital fashion will be more in demand making products in the digital environment unique. In addition to the digital presence of brands selling clothing in the real world, companies selling clothes that can only be worn in the digital world will also take fashion to a different dimension. At the same time, it is expected that clothes will gain more importance in both the worlds – virtual as well as physical, with metaverse getting more involved in people’s daily lives. The world is witnessing rise of cryptos as alternate transaction medium, and through them, the commercial needs of fashion metaverse will be ably served too. In fact, brands have already begun utilising NFTs in their digital fashion. In terms of target markets, metaverse will specifically appeal to younger generation – the major fashion market, which exhibits a sharp inclination and an urge to experiment with every new technology. A significant part of this generation is glued to gaming which can serve as an effective medium to reach them. This has made fashion brands to utilise gaming world as their growing advertising and communicating medium so that they can be part of young generations’ gaming world. For them, avatars in games wearing branded outfits and accessories are more eye-catching than brands’ retail shops or shopping websites. Localisation of avatars in specific geographies or communities can further help brands to establish connect with them.

Recent developments

Presently, the fashion industry’s digital transformation and adaption of fashion in the digital era are enabling brands to use NFTs and blockchain technology to attract, verify and connect with consumers from all over the world. There are use cases suggesting more possibilities like the French Fashion Week and Haute Couture Federation partnering with the ‘Arianee’ platform to create NFTs that could be exchanged in the 2022 men’s fall/summer fashion week in Paris and other high fashion exhibitions. These tokens would allow its users to view exclusive fashion – the hallmark of a paradigm shift. According to a recent survey, 50 per cent of US consumers are interested in purchasing some kind of digital asset in next 12 months – underlining the growing demand for the technology. In terms of target segment, Gen Z is touted as the key demographic that will drive and influence digital fashion. Whether it’s their exotic virtual pets, fashion avatars or elaborately designed spaces online – creating, exchanging, owning and consuming digital goods is and will continue to be the norm for this generation. With metaverse gaining traction in the next few years, new opportunities will be created for brands to engage with the younger generation that is tech-savvy, future-ready and a key market for fashion brands. As far as developments in fashion world are concerned, they can be prominently observed in luxury fashion, designer and fashion brands, and sportswear segments.

Luxury fashion

New adaptations have begun from top of pyramid with luxury fashion tapping into the tech revolution, creating digital garments solely for people’s virtual identities. Take the case of Italian luxury brand D&G’s ‘Genesis’ collection that included NFTs to be bought and exchanged digitally. It fetched ~$5.65 million when its auction concluded at the end of September 2021 though news of the sale came out later. The collection was hosted by luxury marketplace UNXD, functioning on the Polygon platform, that facilitates the building and connecting of blockchains. UNXD’s D&G drop was the first-ever by a major luxury fashion brand to include NFTs. While other brands have worked with gaming platforms on NFTs, this was the first that came directly from a luxury brand.

Another Italian luxury brand Gucci also experimented with NFT by launching its first NFT-related product in May 2021. However, it was not really about fashion, but a 4-minute film ‘Aria’ co-created by Gucci’s creative director Alessandro Michele and director Floria Sigismondi to accompany a runway show by the former. As part of the ‘Proof of Sovereignty’ sale organised by Lady PheOnix – a digital artist, the film sold for $25,000 by art auction house Christie’s. All sale proceeds went to UNICEF USA for COVID-19 vaccine initiatives. The same month, Gucci collaborated with metaverse and gaming platform Roblox, launching a space called Gucci Garden, basing the digital experience on a real exhibition on show in Florence to mark the brand’s 100th anniversary. Just like the physical exhibition, the Gucci-Roblox Garden offered multiple, immersive themed rooms, paying homage to various Gucci campaigns. The players could enter through a virtual lobby and their avatars could view, try on and purchase digital Gucci items to be worn in the game. In a record-setting development, the virtual version of the Gucci Dionysus bag was sold for $4,115 on the gaming platform Roblox using 350,000 Robux currency, which is not valid outside Roblox world. Similarly, since it is not an NFT, the virtual bag holds zero value outside the Roblox world. Interestingly, this virtual bag sold at a higher price than the product in the real world, where it starts from $3,400.

Roblox remained in high demand among luxury brands. American Ralph Lauren launched its ‘The Ralph Lauren Winter Escape’ also in partnership with Roblox. The game features an exclusive gender-neutral digital clothing collection comprised of eight winter sportswear looks enabling players to try on and purchase clothing to customise their avatars at Polo shops.

A little earlier in November 2020, UK’s Burberry collaborated with Tencent Games and created designs for popular Chinese online battle game ‘Honor of Kings’. The clothes designed by Riccardo Tisci – Chief Creative Officer of the brand, known as Skins were for the character Yao. This was brand’s way to connect with local Chinese customers and create communities.

In a latest development in European fashion, French luxury brand Balmain and Barbie announced a new collaboration in January 2022, featuring a ready-to-wear fashion and accessories line and three NFTs. Three unique Barbie avatars, each dressed in pieces from the collection, were auctioned off online by mintNFT. The highest bidder not only became exclusive owner of the avatar but also a one-of-a-kind real-life Barbie-scaled version of the doll.

However, among the earliest starters in 2019, French fashion house Louis Vuitton debuted in the gaming arena with the launch of ‘Endless Runner’ that featured Virgil Abloh’s FW19 Runway collection-inspired retro 16-bit style gameplay. On August 4, 2021, it progressed further in its gaming strategy when it extended to NFTs to celebrate its founder’s 200th birth anniversary by launching a mobile game called ‘Louis The Game’, introducing a unique crossover of fashion and gaming. As an exclusive mobile game embedded with 30 NFTs, it chronicles the journey of the fashion house’s mascot Vivienne – wooden doll bearing the flower monogram of the LV brand. The art collage with estimated value of $69.3 million was made in collaboration with NFT artist Beeple. However, the NFTs used were only a part of the game’s collection and were not open for public selling.

While some luxury brands are utilising NFTs, avatars and blockchain aspects of metaverse, there are others who are busy developing their visionary template for metaverse. Among them is fashion Group Kering-owned luxury brand Balenciaga. Metaverse has influenced the French luxury brand so much that in December 2021 it announced creation of a dedicated business unit to explore the opportunities for marketing and commerce in metaverse. The initiative comes with the backdrop of past experience when it released its Fall 2021collection through a gaming environment called ‘Afterworld: The Age of Tomorrow’. The game was created using Unreal Engine besides famously partnering with the video game Fortnite in September to create a series of “Skins” for the game’s character. This came as a result of Balenciaga collaborating with Epic Games – the creator of Fortnite, which commands 400 million users across the world and over $5 billion sales. The luxury brand designed four virtual outfits and various accessories for Fortnite avatars, available for players to purchase through the game. Limited-edition physical Balenciaga-Fortnite merchandise was also made available through brand’s shops and website. The brand has been quick to adopt new formats, but it has not created its own NFT collection or brought a bigger brand presence to the metaverse space as yet. The online networks and digital clothing are presented as limited-edition drops, increasing the value of highly sought-after items.

Designer brands

The next fashion segment in the pyramid to have caught the metaverse fever is the designer brands. Cohen, a designer from UK, launched her first fashion brand at the age of 15 and eight years later she founded Charli Cohen – a technical fashion brand that blends high-performance fabrics with high fashion design. Cohen was born out of a need for evolved clothing and progression within fashion industry. It claims to make ‘nextwear’ looking at the future of fashion in terms of technology and sustainability. It manufactures limited quantities of physical fashion in London, Leicester, Porto and Shanghai, sourcing premium, responsibly produced technical textiles from Milan as well as upcycling from military surplus and tacticalwear, besides creating digital counterparts to its physical fashion to be experienced in-game, in AR, VR and across the metaverse. To commemorate the 25th anniversary of Pokemon, the brand collaborated with British high-end department store Selfridges to create an immersive digital shopping experience which could be accessed by a phone or a computer, while an in-store pop-up allowed customers, using AR, to move about the store and search for rewards. The “Electric City” and Kaleidodrip collections, created by Yahoo Ryot Lab, are based on the same world as the current Pokemon film. Besides strengthening the brand’s association with immersive technology, the move made Selfridges first shopping centre to get involved in AR through a dedicated space. It also allowed Selfridges to touch different consumer bases from long-time gamers and fans of Pokemon to traditional fashion consumers through Charli Cohen.

Similarly, Rebecca Minkoff from New York -- a designer brand that globally offers apparel, handbags, jewellery and accessories, also forayed into metaverse. Early in her career Rebecca had designed a version of the “I love New York” t-shirt as part of a 5-piece capsule collection. In 2021, she worked with digital marketplace The Dematerialised and Yahoo on 400 digital garments to correspond with the brand’s “I love New York” collection shown at the NY Fashion Week. The garments sold out in auction at OpenSea – a peer-to-peer marketplace, within 10 minutes. The gallery of the NFTs, including 10 photos of models in the brand’s outfits and five digital garments, was created by Yahoo which worked in partnership with the brand to produce NFT exhibition. The whole collection was built in-house using Yahoo’s XR immersive platform. Minkoff is also known for working with alternative platforms like Clubhouse and Only Fans and is keen explorer of the digital space. Since the collection was a charitable venture, all the proceeds from the sales were donated to the Female Founder Collective.

Fashion brands

The American premium clothing brand Tommy Hilfiger was among the first movers. The brand had planned to have 100 per cent of its apparel produced via 3D design by 2022. Fully aware that it would require an overhaul of its organisational processes and its people, the brand created an internal incubator, called Stitch that operated like a “corporate start-up”. The incubator is made up of two groups – software engineers who develop the proprietary 3D design technology and ‘creatives’ (team) which train and transform the company’s existing design teams. Though the project is far behind its target with 55 per cent realisation so far, it made an enterprising start in metaverse. The incubator proved to be a critical tool in helping attract the calibre of tech talent required to get such a project take off. The brand is expected to use same strategy with a new incubator, Metaverse Studio, which will help the company experiment, test and learn to become a formidable player in the virtual reality space. Like many fashion brands, Tommy Hilfiger is also relying on third parties to realise its virtual ambitions. In addition to collaborating with Roblox and Animal Crossing, the brand has since 2019 worked with Obsess – an e-commerce platform that builds the virtual stores. Tommy Hilfiger case suggests that if the metaverse is to live up to its hype and fashion players are to truly profit off of it long-term, they will need to map out a talent strategy. The strategy must allow them to build their own bench strength that would include finding pool of 3D designers and engineers having skill to work with or developing technology.

Then there is an interesting case of high-end clothing brand Overpriced. The brand debuted with its first NFT-linked hoodie which sold for a record $26,000 at an auction. The brand considers itself to be the world’s first true NFT-driven fashion brand. Its first physical clothing piece is linked to a ‘patent-pending scannable V-code’ that allows a person to wear, authenticate and show off their unique NFT in public. If at any point the hoodie is lost, stolen, damaged or sold, the V-codes can be invalidated and a new hoodie will be shipped to the new owner’s address of choice thus becoming an authentic piece. The company calls its pieces to be wearbale ‘art’. The industry experts feel that the hoodie drop represents an evolution in fashion where the value is placed in the digital token and not the physical garment. The company was founded by Adventure Club’s Leighton James and Impossible Brief’s James Zwadlo and Chris Levett in early 2021. Overpriced season 1 drop consisted of 25 NFTs paired with physical garments out of which ten were sold at auction on NFT market platform Block Party, while the rest got divided among influencers in the music and fashion industry.

Sportswear

Metaverse is catching up with sportswear brands too led by segment leaders – Nike and Adidas. Ending 2021, Nike, the sportswear behemoth, made a major investment in the metaverse by acquiring RTFKT – a leading virtual fashion platform best known as a creator of virtual sneakers. RTFKT, founded in 2020, is a leading innovator within the space. It took a page from streetwear and arguably Nike’s own playbook and has developed a rabid fan base through limited-edition drops and collaborations with artists such as Jeff Staple and Takashi Murakami. Nike’s investment will help it in steering its expansion and growing RTFKT innovative and creative community. Nike’s own digital footprint and capabilities will be strengthened too. Though details of arrangement are yet to be known, Nike plans to scale the brand as its own distinct entity rather than absorbing it into Nike brand. In its earlier move in 2019, Nike had partnered with Roblox to create a trio of digital characters and worked with Fortnite to bring Jordan sneakers into the game. At the end of the same year, it was also granted a patent that allowed Nike to link a digital asset to a physical sneaker using blockchain technology. Nike’s virtual space efforts continued in 2021 too when in October Nike filed for trademark applications for virtual goods. Additionally, it has sought to hire in the space, posting job listings for ‘virtual material’ designers. It also launched a new collaboration with Fortnite again centred on its Jordan brand and a full-fledged experience in Roblox called Nikeland. Despite Nike’s growing interest in virtual goods, they are not expected to make any substantial share of its revenue anytime soon.

The world’s number 2 sportswear brand Adidas made its intentions clear into metaverse when it announced a partnership with cryptocurrency exchange ‘Coinbase’, grabbed a space in virtual world ‘The Sandbox’ and unveiled collaboration with the NFT projects ‘Bored Ape Yacht Club’ and ‘Punks Comic’. Further, Adidas announced its next collection to be a mix of digital and physical items that will be sold as NFTs produced with collaboration such as Bored Ape Yacht Club. The collection, titled “Into the Metaverse”, will comprise virtual wearables that buyers can use in online platforms and also the physical clothing to match. Adidas is positioning the launch as a way to engage with fans driven by the great opportunity that blockchain technology offers to brands via NFTs. Adidas is building a foundation with Web 3 (a blockchain-based vision of the internet) that will lead to new creative opportunities for partnerships, engagement through digital goods and a path towards a more inclusive future. The brand will be launching “Into the Metaverse” through its lifestyle label, Adidas Originals.

Adidas NFTs went on sale on December 17, while the digital and physical wearbales for NFT owners will be available in 2022. The digital items will be usable in the blockchain-based gaming world of The Sandbox as well as other platforms and the physical products will include a hoodie, tracksuit and Gmoney’s signature orange beanie. As part of the launch, Adidas also purchased its first NFT ape#8774 of Bored Ape’s 10,000-strong collection of ape avatars. The club comes with some perks for owners which Adidas will also have an access to. Additionally, the brand has acquired a plot of virtual land inside The Sandbox which it plans to fill with “exclusive content and experiences”.

A balancing perspective

The other side of metaverse needs a mention too. Metaverse is going to involve multiple technologies that would require huge data transmission at much higher speed. This humungous data needs to be stored and processed as well, which will require high power-consuming and even more advanced IT infrastructure that will further add to existing piles of e-waste. The heightened power consumption will invite numerous environmental concerns. Above all, the social fabric will also change significantly due to psychological impact of the new virtual world on human mind. In such a world, there will be new challenges in the transformed civilisation on the ethical and legal front too.

To start with, superfast data speed on metaverse will require no less than 5G network technology which is already under suspicion for possible harms to human life. Though research on this aspect is still going on, the adverse effects of electromagnetic field of networks is already an established concern. This will be the first challenge to be taken care of in all seriousness for validating technology’s go-ahead.

Blockchain, another involved technology in metaverse, is also under immense pressure to justify its huge power consumption in mining, i.e., computing complex problems to generate NFTs and cryptos. According to an estimate, a single Ethereum (ETH) transaction has a footprint on an average of around 35 kWh, roughly equivalent to an EU resident’s electric power consumption for four days. Yet another estimate calculates that over its lifecycle, the average NFT will accrue a stunning footprint of 211 kg of CO2, which is equivalent to driving 513 miles in a typical US gasoline-powered car. Imagine metaverse raging globally at its full force consuming hugely exponential power, transcending all social, national, geographical and economical boundaries, the outcome could be devastating for sure, if not suicidal. The amount of power consumed, and CO2 generated in earth’s atmosphere can lead to an unimaginable breakdown never experienced by mankind. That is why the hype surrounding NFTs has led to a rising concern over their environmental impact. This indicates that the final frontier of metaverse, i.e., bringing people together in a virtual world, could become a ‘Frankensteinian’ achievement.

More than technology backlash, metaverse is also feared to unleash new social concerns. We are past just few years of social media emergence and the times have already turned dangerous with too many people using it to spread untruths and promote division. AR and metaverse have the potential to amplify these dangers to incomprehensible levels. Metaverse, gaining more powers with combination of advanced and more able technologies, will create increased ‘personalised’ worlds which will be even more captivating than present day social media. There can be a possibility that we get imprisoned in that virtual world of our own creation and be kept away from the real-world realities.

Metaverse holds the possibility of having unlimited number of metaverses as anyone can create own digital universe like websites of today, with no gatekeeper. If so, then who knows the world may witness power-clashes among metaverse creators competing for tech-resources and larger market share.

Future of digital fashion

Metaverse, a revolutionary technology, has bright future whose journey in the fashion world has just begun. However, a world with only digital fashion will remain a distant realisation until the technology is made accessible to everyone. Till then, metaverse—bringing all the tech concepts of AI, blockchain, machine language, cryptocurrency and NFT together—is expected to continue expand organically. While it elevates the digital world to a different stage and brings along new production and consumption processes, it is anticipated that the changing perception of reality and needs will also accelerate the transformation of the fashion industry in parallel with it. As consumers spend more time online and the hype around the metaverse will continue to cascade into virtual goods, fashion leaders will unlock new ways of engaging with high value younger associates. To capture untapped value streams, players should explore the potential of NFTs, gaming and virtual fashion — all of which offer fresh routes to creativity, community-building and commerce.