The fashion exec’s guide to the metaverse

The metaverse is considered to be the next stage of how we use technology — the successor of the internet age. Depending who you ask, the metaverse can extend to digital fashion, social media, augmented reality, virtual stores, video games and non-fungible tokens (NFTs), meaning that many brands began dabbling in metaverse principles even before the term became commonplace. As fashion becomes increasingly entrenched in the metaverse and its core Gen Z customer base spends more of its time playing, socialising and shopping there, understanding its full potential is crucial.

An exact definition of the metaverse is hard to pin down. Cathy Hackl, also known as the “Godmother of the metaverse”, defines it as a “further convergence of our physical and digital lives” and that “in some ways it's about the internet breaking free from the rectangles in our hands, desks and walls and being all around us”. Matthew Ball is a venture capitalist, managing partner at early-stage venture fund EpyllionCo, and Mark Zuckerberg’s go-to metaverse expert who Virgil Abloh has tapped to develop a digital-only fashion brand. Ball defines it as a belief that more of our time spent in leisure, socialising and working will take place in virtual environments. “The best way to understand the metaverse is to think about the idea that we will spend an ever-increasing amount of our lives connected to persistent virtual simulations. If you believe in that, then the criticality of anything that is important to identity and self-expression intensifies.”

More than understanding the nuances of the technology, experts argue that it’s key to understand that our digital lives, and how we appear in them, will soon be as important as how we appear in our physical lives — especially for digitally-native Gen Z, the drivers of the luxury’s future growth. “Think about it like our digital lifestyles catching up to our physical ones,” says Hackl, also CEO of research firm and consultancy the Futures Intelligence Group. “We’re at the end of Web 2.0, which connected people, and heading into Web 3.0, which connects people, places and things. To me, the metaverse is an extension of what comes next for human creativity, and fashion is one of the industries that will change forever due to it.”

Indeed, fashion has been an uncharacteristically early adopter, aware of the audience’s potential. In the past year, Gucci, Prada and Farfetch have experimented with AR try-on of shoes, bags and jackets; Gucci, Vans and Ralph Lauren have created virtual worlds (and virtual clothing sales); DKNY, Balmain and Dolce & Gabbana have sold NFTs; while Burberry and Louis Vuitton made NFTs available through video games — just to name a few.

“A strong economy is fundamental to a functioning metaverse,” says Andrew Bosworth, VP of Facebook Reality Labs. “Creators need to be able to find their audience and make a living doing it. That is what is going to bring people into the metaverse and keep them coming back. People should be able to create goods at every level, whether it be a new world centered around a shared interest, personality, or brand; or plugging into an existing digital space and bringing your brand to it.”

“The idea of entrepreneurship that's unbounded by the true constraints of physics and real estate in atoms will be a boon to a lot of industries, especially fashion,” he adds. “Fashion is more often than not ahead of the curve when it comes to these things, and it won't be surprising to see this industry leading in the creation of digital goods.”

This guide to the metaverse will outline and contextualise fashion’s role in the metaverse, connecting the dots between milestone projects and what’s to come. That includes digital 3D design, in many ways the starting point of digital items; social media (as these are already familiar, influential digital forums) and extended reality (as social platforms often offer an entrée into AR); gaming, which experts compare to “going to the mall” for the younger generation, and other virtual spaces; and NFTs, in addition to some ethical and legal considerations as we move forward.

Table of contents:

The backbone: digital design

In November 2018, Scandinavian retailer Carlings sold out of a digital fashion collection that let people pay to submit a photo to be digitally dressed in limited-edition pieces. At the time, digital fashion was a nascent concept. The project won the top prize at Cannes Lions because it tackled two important issues, said judge Rei Inamoto: the environmental crisis and consumption culture fuelled by social media.

“None of us knew that Covid-19 was coming and how the world might advance as it relates to digital fashion and virtual worlds,” says Inamoto, who is also a founding partner at design firm I&CO.

Luxury digital fashion items can even have a larger consumer base in the metaverse, Hackl says, as they’re more accessible to the avatars of people who wouldn’t necessarily be able to afford luxury brands in the physical world.

Since Carlings’ sold-out collection launched, interest in digital fashion has surged, with a number of new marketplaces and brands creating and selling clothing meant to be worn digitally. In January, Auroboros became the first brand to show a digital-only collection at a major global fashion week. In August, Farfetch began seeding digital-only items to influencers to promote its new pre-sale offering, through a partnership with digital fashion marketplace DressX. In speaking to Ball about his imminent digital fashion project, Abloh, who is the artistic director of Louis Vuitton's menswear and CEO of Off-White, said, “I want to make virtual clothes to paint pictures that physical clothes cannot, and let buyers access a new dimension of their personal style — no matter who they are, where they live, and the virtual worlds they love."

Digital design processes are useful throughout a product’s life for both virtual and physical items, starting with design, sampling and wholesale, through to e-commerce product pages and ad campaigns. Brands can use digital design to decrease waste and design time, in addition to creating metaverse-ready assets. Tommy Hilfiger parent company PVH Corp. announced in November 2019 it would convert its entire design processes to be digital; it has already decreased its design review process by two weeks. Rebecca Minkoff added 3D product imagery to product web pages and saw a 27 per cent increase in conversions, according to the brand, while Sergio Rossi is digitising product archives.

To acquire the necessary skills, fashion brands are partnering with specialised agencies, developing in-house incubators (as is the case with PVH), while universities are updating curriculum. Farfetch is offering these services for outside brands. “Brands are coming to us,” says Farfetch founder and CEO José Neves. “We're bringing capabilities in terms of digitisation of products in high fidelity, because in luxury, you want super high fidelity — otherwise, it's just gimmicky.”

The key takeaway: Digital 3D assets are the backbone for fashion in the metaverse. Usually created using fashion-specific 3D design software, these assets can be photorealistic or stylised to suit specific environments. They can be used throughout a product’s supply chain, from design, sampling and wholesale to AR experiences, digital fashion and virtual worlds.

Learn more: 3D design, Digital fashion

Social media and extended reality

As the success of the Carlings digital fashion collection illustrated, social media is already a digital space that is highly relevant to personal identity, and therefore fashion. Digital items can be applied to both static imagery and moving images via augmented reality. Augmented, mixed and virtual reality are collectively referred to as “extended reality”; they all refer to the metaverse concept of adding digital enhancements to one’s environment. Many people’s first experience with AR is through social media, such as filters from Snapchat and Instagram. Think of it as an access point to a digital layer on our physical world, Hackl says.

AR is currently used to try-on digital versions of fashion and beauty products. It can also be used to digitally place an item (or a model) in a space, and to unlock a digital layer around physical things, such as in a store display. According to data from Foresight Factory commissioned by Snapchat, more than one in three Gen Z consumers will be shopping with AR by 2025, and an analysis of 2021 data suggests that in less than five years, there will be a 57 per cent increase in the proportion of Gen Z shoppers using AR before buying a product.

While truly lifelike AR clothing try-on is still not available, brands are using AR for sneakers (Gucci), purses (Prada) and puffy coats (Farfetch with Off-White). Tech companies have been investing heavily in the space; in July, for example, Snapchat parent company Snap, Inc. acquired 3D and AR asset-creation studio Vertebrae to help brands unlock AR commerce.

"At Snap, we have been focused for many years on augmenting reality, and building toward a future where computing is overlaid on the world around us, rather than confined to a small screen or another virtual world," says Carolina Arguelles Navas, global product marketing, augmented reality at Snap, Inc. More than 200 million people engage in AR on Snapchat daily, according to the company, which offers AR lenses made by both Snap and others. In particular, the fashion industry is building engaging AR camera-centric offerings on the platform, according to Navas.

“With AR and the metaverse, we are very excited about all these possibilities. AR, in particular, has tremendous potential in this industry. The most immediate, very practical and incredibly powerful application is virtual try-on,” says Neves, of Farfetch, adding that Farfetch has launched virtual try-on for multiple categories, including jewellery, watches, eyewear and sneakers, which he says have “higher fidelity” than other solutions.

PHOTO: GABOR JURINA

Amid the pandemic, brands including Charlotte Tilbury, Tommy Hilfiger, Ralph Lauren and Burberry introduced virtual stores; and Balenciaga created an entirely virtual (and gamified) fashion show. These experiences are designed as 360-degree, immersive spaces that resemble physical environments (not e-commerce websites), and they can be accessed on a computer or smartphone (a VR headset is not required).

In June, virtual environment creator Obsess, which worked with Tilbury, Hilfiger and Lauren, received $10 million in venture funding, bringing the company’s total funding to $13.4 million, to accelerate global expansion. Companies will increasingly develop purpose-built metaverses, says Obsess founder and CEO Neha Singh. In the case of shopping, these spaces “will encompass much more than the primary functionality we see on most e-commerce sites today,” she says, including user interaction, dressing one’s avatar, attending events and learning skills, in addition to purchasing both physical and virtual items. These brand worlds will continuously evolve and brands will have more creative freedom to express themselves and attract customers than in either the physical or online retail spaces. Also, the products brands sell in the metaverse will include both physical and virtual items.

"For younger people who grow up not only digital- or mobile-first, but AR- and VR-first, the virtual world becomes their real world and vice versa,” Singh adds.

The eventual goal, experts agree, is the advent of AR glasses, which enable people to see digital items overlaid on the world around us hands-free. Google Glass’s false start in 2013 notwithstanding, Snap, Facebook and Apple are all in various stages of introducing smart glasses. Futurist and investor Peter Diamandis envisions a “shopping mode,” during which, for example, one could look at a friend’s dress to see the price and the designer, with the option to purchase, as if they were browsing Pinterest. Facebook is already working on providing this service for images on Facebook and Instagram.

The key takeaway: As virtual spaces for personal representation and social engagement, social media platforms are an early iteration of metaverses, and they are an important venue for digital enhancements through augmented reality. Social, AR and VR experiences are important technologies for the metaverse, and for fashion, for both shopping and representing one’s style.

Learn more: Augmented reality, Virtual reality

Gaming and the new mall

Branded spaces and assets in games and virtual worlds are becoming popular among fashion brands, both through partnerships with existing platforms and their own games. Games have a built-in audience accustomed to buying digital items because they place importance on how their avatars appear. But more than that, they are evolving to be early versions of metaverses, where “competition” elements are falling by the wayside in place of socialising and attending events — often compared to hanging out at the mall, for younger generations now.

Roblox, valued at more than $45 billion, with 46 million daily active users, according to the company, is often called a gaming platform, but the company does not describe itself as a gaming company, says Christina Wootton, Roblox VP of brand partnerships. “The metaverse to us is a lot more than gaming; it's a place where you have your online identity, where it can represent your true self, or you have the choice to be anybody that you want to be. You can work, learn, play, shop and experience entertainment together. It's whatever you see in the real world that you can imagine in the digital world — but it's limitless.”

Both Gucci and Vans have opened digital worlds via Roblox, which lets people create their own spaces and create, sell, buy and wear avatar items throughout those worlds. (In the first half of 2021, developers and creators on the platform earned more than $248 million, according to the company.) In May, Gucci opened a two-week Roblox experience with multiple themed rooms that were virtual interpretations of a physical installation in Florence; people’s avatars changed colours and patterns based on their personal experience in the space. Gucci also sold limited-edition items; many, like a digital bag that was resold for $4,000, were resold among players for more than their physical counterparts. This September, Vans opened a virtual world that lets players co-create their own items. Soon, Roblox will enable users to layer individual digital fashion items to create and style more personalised looks.

The Vans experience on Roblox lets people customise sneakers that they can also order in real life. Venturing into the metaverse through Roblox “was a no-brainer,” says Julia Patkowski, Vans’s senior manager of global brand digital marketing, primarily because creativity and user-generated content are important to the brand. “It made so much sense for us to not only create items available for purchase, but to create this immersive world.”

Ralph Lauren is selling virtual clothes for the first time through Zepeto, based in South Korea, after the brand previously experimented with digital clothing through a Bitmoji partnership. More than 20 million users are wearing Ralph Lauren Bitmoji products, says Alice Delahunt, Ralph Lauren CDO and chief content officer. The brand chose Zepeto because of its popularity in the Asian-Pacific region and because of the high fidelity of the garments’ appearance. It’s celebrating the launch with a virtual event, joined by K-Pop group Tomorrow X Together, and has designed vantage points for people to take selfies.

Photo: Courtesy of Ralph Lauren

Zepeto’s marketplace has already sold 1.2 billion total items, according to the company, and amid the pandemic, the platform has seen an uptick in available virtual fashion items and inbound interest from brands has surged, says Curie Kim, who heads Zepeto’s strategic partnerships. “This is what used to be our mall. [People] can be whoever they want. They can try on different outfits and see what type of style they want, and they meet people there and interact with others. They meet their friends.” When speaking to potential brands, Zepeto evaluates whether they would be a good fit for the audience. “It's the best way to get a head start and allow yourself to be an early influence on younger people — to showcase your products to the next generation before anyone else.”

Already, digital concerts for Gen Z are big business: I&CO’s Inamoto points to virtual concerts in 2020 from DJ Marshmello and rapper Travis Scott in Fortnite; 12.3 million people watched Scott’s April 2020 performance, according to Epic Games, which also sold digital merchandise. “I don't think anybody expected that kind of scale for a virtual world," Inamoto says.

“Five years ago, almost nothing was spent on virtual apparel and in-game items,” says Matthew Ball, who contrasts that with last year’s estimated $54 billion spent and his own estimates that more than 400 million people participate in immersive virtual environments every day, cumulatively. “One could argue that Fortnite is already one of the largest apparel companies in the world. They have between $3 to $5.5 billion per year, predominantly in the sale of virtual outfits. That exceeds Prada, Fenty, D&G. We see an enormous expansion in the demographic range of the people in those simulations, and then we see the absolute legitimisation of highly priced, virtual items through cryptocurrencies and NFTs.”

The key takeaway: Video games offer a somewhat unexpected, and increasingly important, venue for fashion brands to experiment with digital fashion and virtual worlds, and their prominence includes an expansion from “gaming” to socialising, attending events and wearing fashion.

Learn more: Gaming

Blockchain and NFTs

NFTs, or non-fungible tokens, use technology that essentially allows digital items to have a unique digital identity, using blockchain. It enables creators to limit items, prove ownership and prevent duplicating. This unlocks luxury-like, real-world properties for digital items. The first recorded sale of a three-dimensional digital fashion NFT was the “iridescence dress” designed by Amber Slooten, creative director and co-founder of digital fashion house The Fabricant. The dress sold in May 2019 for the equivalent of $9,500 in cryptocurrency. “It was a really beautiful experiment, but back then that was a crazy amount for people to even think of for a piece of digital fabric that doesn't really exist in your life. Obviously now it's a logical thing,” Slooten says.

NFTs present an incredible opportunity for luxury, LVMH consultant and Ledger CXO Ian Rogers recently told Vogue Business. “Just because it’s digital doesn’t mean it means any less to us. You don’t buy a luxury handbag because of its incredible utility. You buy it because the brand has built culture. It’s a tribe that you want to belong to. The value is not because it’s made of something solid, it’s value is its place in culture and its rareness.” For this reason, heritage brands are now willing to dive in; many are auctioning commissioned artworks and many are giving proceeds to charity: Gucci auctioned a fashion film for $25,000; Givenchy and Nars sold multiple art NFTs; Levi’s made playing cards; British jeweller Asprey is selling digital twin NFTs connected to physical items; and Balmain’s Olivier Rousteing is auctioning a one-of-one digital dress this month.

“It’s going to take time to find the right utility for NFTs, but brands need to start now,” Hackl says. Games have proven a welcome on-ramp, as Matthew Ball noted. In August, Louis Vuitton launched its own game, offering players who reached a certain threshold the chance to win one of 30 free NFTs.

At the other end of the scale, Burberry sold out of $375,000 worth of NFTs in a game called Blankos Block Party in less than two minutes. The game enables players to price and resell NFTs, with Burberry making a percentage of the sale each time. In addition to selling out of those 2,250 limited-edition items, Burberry has seen high volumes of online conversations, reposts, shares and likes about the project. “We’re really interested in the idea of true digital ownership, where people can genuinely own something from our brand that isn’t necessarily physical,” says Rachel Waller, Burberry’s global VP of channel innovation, noting that Burberry has previously released its own games and created a social retail concept with gaming-like attributes. “NFTs allow us to do that by giving people a way to prove ownership. They also allow the object or asset to transcend specific environments, breaking into marketplaces and beyond. We are excited to keep experimenting in this space,” she says.

“We’re always learning from the gaming community, whether it’s about aesthetics or behaviours,” Waller continues, adding that working closely with Blankos parent company Mythical Games was crucial to the project’s success. “There is a lot to be gained from taking the time to get the right minds in the room. We love the creativity in this space — there are boundless opportunities for consumers and brands to join forces in creation and expression.”

The key takeaway: Non-fungible tokens, certified on the blockchain, enable digital goods to possess luxury-like properties such as exclusivity and status, which means that luxury brands can extend beyond marketing purposes to commerce-related goals in the metaverse.

Learn more: NFTs

Legal and ethical considerations

Although these new worlds often parlay physical principles onto digital items that aren’t constrained by the laws of physics, digital items and metaverse economies introduce new quandaries. Hackl advises that as brands dive into their metaverse and NFTs strategies, they should create best practices and ethical-based guidelines along the way. “This will help you to stay aware of the environment, what’s possible, and what laws may be enforced in the future,” Hackl says.

One question, for example, is copied items. Many virtual spaces enable creators to sell their own designs that mimic designer brands; the Roblox marketplace, for example, sells user-created items with logos from Burberry, Chanel, Prada, Dior and Louis Vuitton, and an Hermès Birkin-inspired art NFT recently sold in a Basic.Space auction for the equivalent of $23,500. This raises questions around ownership, legality and buzz; brands must decide if this is a good thing, because it demonstrates brand affinity in the metaverse, or if it’s worth pursuing legal action. According to lawyer and fashion law expert Julie Zerbo, founder of The Fashion Law, the most important element when thinking about trademark use is if the average consumer would be confused. Hackl recommends brands work proactively with platforms and creators to have more say in how they show up in virtual spaces.

Another consideration is to what extent AR effects should alter consumer appearances, especially in light of advertising rules from countries including the UK and Norway, which address digital alterations when promoting products. For example, should a mascara try-on filter automatically smooth the skin? And should an artist disclose when eye shape has been digitally altered?

Questions also remain around who has permission to alter digital items, where they can be worn and who ultimately decides these rules. In the physical world, “if I purchase an outfit, I can distort it, destroy it and modify it, because the law says it's mine,” Ball says. “This is where we get into the question of NFTs versus other virtual goods; everything that you purchase in Roblox is owned by Roblox. If you purchased something that's $10,000 but you don't have guarantees that you will keep it or that the platform owner won't change it, or change your utility, you're unlikely to spend as much on it.” Additionally, he says, if someone buys a digital Prada bag in one world, for example, and they can’t use it in other places, they might be disinclined to pay as much. “I would need to buy multiples, and a lot of people are willing to do that because we're still pretty early, but by 2025, some people will say, ‘Hey, I bought this already 15 times,’” Ball says.

There is also criticism that NFTs are bad for the environment, because of the greenhouse-gas emissions required in the computing power. Many brands, such as Re-inc, have taken to buying carbon offsets or investing in other means designed to negate this impact, while the blockchain platform Ethereum is converting to a new protocol aimed at reducing carbon emissions.

Finally, because the metaverse isn’t confined by the laws of physics, it presents important considerations surrounding gender, race and appropriation. “Everyone recognises that virtual avatars are a really important and interesting opportunity to express complex subjects such as gender identity, and yet there's still a little bit of uncertainty as to what's appropriate,” Ball says. For example, men are more willing to use female-oriented avatars, but women are very disinclined to use male avatars. Additionally, he says, “How relevant is race? Is it OK for someone who's white to use a Black Cryptopunk? We've had a really important dialog on, say, [indiginous] clothing and the degree to which it might be co-opted or misappropriated by someone not from that ethnicity, but the rules and the appropriateness in the virtual world are less clear.”

While those questions remain, experts do agree that more of our time spent socialising, working and at leisure will take place in virtual simulations. “We hope that those simulations are all interconnected, which means you can take one thing from one place to another, but that means that every business is collaborating and you have an open economy. You have questions over who owns what, what's appropriate and how do you manage value-creation and intellectual property rights,” Ball says. “In the metaverse, all of these become more challenging and more consequential. We're talking about a virtually infinite number of interconnected simulations that have extraordinary economic value.”

The key takeaway: Because the metaverse is introducing new ways of creating, selling, owning and wearing products, there are few established guidelines, so brands must be mindful in shaping projects.

Learn more: AR ethics, Legalities of digital fashion

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