To filter out the noise this holiday season, retailers are cementing their presence in the Metaverse this holiday to offer shoppers a unique experience. Several retailers have been experimenting with the Metaverse this year, and as part of their long-term strategy, they’re now incorporating the channel into their holiday marketing plans in hopes it can generate revenue, too. As shoppers continue to shop across a range of channels this holiday season, brands are holding onto the possibility that the metaverse will play a bigger role in shopping in the near future. However, experts warn that it may be too early for the metaverse to offer a return on investment.
There are several factors influencing retailers’ marketing decisions this holiday, said Ryan Detert, CEO of influencer marketing firm Influential. For many marketers, the metaverse allows brands to connect with their audience in a digital space, even when they’re not in a store or in close proximity to a store, he said. While still in the experimental phase, it shows promise for brands that are early into the platform.
“The promise of the metaverse is that people spend a good part of their lives in this immersive place,” Detert said. “Having stores and brand awareness in these places and experiences in these places will likely lead to more sales and more opportunities to make money on a holistic level — that’s the hope.” According to a. Gen Z, Millennials and Gen Xers are expected to devote four to five hours a day to the Metaverse for the next five years McKinsey survey.
The holiday season is now a common time of year for brands to test creative marketing channels. For example makeup brand too faced uses an SMS concierge service to give shoppers gift ideas and answer some of their questions. and JCPenney uses Facebook Live for an hour-long program of celebrity appearances and games.
The Metaverse has also been a popular channel for brands this year, especially when trying to reach younger consumers. For example, Pacsun’s Metaverse campaign features popular TikTok content creators like Brooke Monk and Mathieu Simoneau to grab the attention of their followers. Pacsun previously told Modern Retail in an interview that it is focused on Gen Z consumers as it advances its initiatives around the Metaverse and NFTs.
“Our consumer is what we call the next generation — currently mostly Gen Z, and in the years to come it will be Gen Alpha,” said Alfred Chang, co-CEO of Pacsun, at the time. Pacsun said it hopes to use those efforts to attract younger customers as part of its digital-first strategy. His digital sales are up 65% in May 2021 compared to the same period in 2020.
Experts also said that marketers are approaching the metaverse in a very different way than traditional channels, adding some elements that would allow buyers to engage with brands. For example, Bloomingdale’s virtual department store offers unique spaces for brands like Ralph Lauren and Nespresso. Ralph Lauren’s designated area takes shoppers to a ski chalet, while Nespresso takes shoppers to a Parisian cafe.
Kyle Wong, chief strategy officer at Emplifi, said that in its early days, a successful metaverse strategy could be defined by engagement. This is why brands like Nike reward users for engaging with the brand in the metaverse. In a separate announcement in November, Nike said it will give consumers the ability to co-create virtual products and earn royalties on virtual products.
Similar, american eagle is working with Roblox on seasonal promotions that include the launch of interactive challenges where people have a chance to win a $5 gift card for participating.
But engagement alone is unlikely to be enough in the near future. “As with any new platform maturity, it ultimately comes down to conversion and measurement,” Wong said. “If brands are going to invest significant amounts of R&D and marketing dollars in the Metaverse, they really need to think critically about direct selling.”
As more retailers take advantage of the metaverse this holiday, it shows they increasingly see it as a sales driver and not just a branding tool. For example, Kohl’s offers a Metaverse experience for Facebook and Instagram users that would allow them to use an augmented reality lens to select items to purchase with Kohl’s cash.
But getting consumers to shop at the Metaverse on this holiday is another challenge. According to CI&T’s Connected Retail Consumer Insights Survey, 81% of respondents answered “wrong” when asked whether or not they shopped on the Metaverse.
“The Metaverse is too early in our ability to connect and fully correlate engagement with sales,” Melissa Minkow, director of retail strategy at digital consulting firm CI&T. “Commitment is definitely an asset. But I’m wondering if we can say with certainty that this engagement translates into strong sales with this audience?”