The metaverse represents a $50 billion opportunity for the fashion and luxury retail sector, according to a recent industry study.
The report ‘GCC State of the Metaverse and its Potential for Luxury Retail’ by Chalhoub Group revealed that metaverse industry is currently worth $40-$65 billion and expected to reach $13 trillion by 2030, which offers luxury retail brands with an untapped resource to grow their business.
Chalhoub Group surveyed 1,600 consumers across the GCC to measure the actual adoption rate of, and future behaviour towards crypto, NFTs and the metaverse.
According to the report, there’s a high level of awareness in UAE, Saudi Arabia and Oman when it comes to crypto (77 percent), NFTs (49 percent) and the metaverse (46 percent), mainly amongst younger and high-income males.
Amongst the GCC luxury consumers interviewed, 89 percent would like to preview products in the metaverse and 71 percent are already engaged with branded virtual experience. When it comes to adoption rates, 48 percent confirmed they have already invested in crypto, while 23 percent stated they are engaged with NFTs and active on metaverse platforms.
“We believe that the GCC exhibits the right elements for implementation of the metaverse strategies,” said Jasmina Banda, Chief Strategy Officer at Chalhoub Group.
“The region’s vibrant innovation ecosystem paired with empowering regulatory framework provides a solid foundation upon which the metaverse can be explored further. With this potential for growth, it is only natural for global luxury groups to experiment with the metaverse and adopt it gradually across the full customer journey, from awareness to retention.”
The motivation behind purchasing NFTs varied. The majority (66 percent) reported doing it for investment purposes with virtual art and sport being the most purchased types.
The study also revealed that luxury consumers have clear expectations for their favorite brands to be present in the metaverse (87 percent), while the majority (89 percent) were keen to preview products in the digital universe.
Phygital is the future for the customer in the Gulf, as 80 percent would consider buying physical products that include NFTs, and 83 percent would consider an NFT that allows for redemption for a physical product.
A favourable market for the metaverse
The report also confirms that the GCC has the right foundations to support the success of metaverse initiatives, driven by young and tech-savvy youth, and enabled by a favorable regulatory environment.
Other factors supporting the favourable environment for metaverse development include the high disposable income in the GCC, and the oppeness of regional enterprises with experimenting with the metaverse. Additionally, there’s a thriving startup scene with over $500 million of funding.
Moreover, GCC governments are also giving priority to incorporating the metaverse into national strategies. In July 2022, Dubai approved the new phase of the Emirate’s Metaverse Strategy which aims to create 40,000 virtual jobs and add $4 billion to the emirate’s economy over the next five years.
However, everything is not all roses. The study underscored that despite the opportunities, there remain barriers in consumer sentiment, such as users being afraid of crypto volatility (34 percent), lack of trust in NFTs (28 percent), and lack of understanding of the metaverse (42 percent) among others.
Nick Vinckier, Head of Corporate Innovation at Chalhoub Group, said, “The GCC is known for its young and tech-savvy consumers who are very knowledgeable about the metaverse, while being luxury enthusiasts. For us at Chalhoub Group, we recognise that leveraging the power of Web3 enables us to reinvent the entire customer journey, whether it’s building awareness, increasing brand engagement, enhancing conversion, nurturing loyalty or launching new business models. We deployed multiple experiments the last 12 months, and we’re gradually increasing the velocity and size of our future initiatives.”
