Seizing the opportunity in virtual fashion
Kicking off this month's Fashion Focus, Alex Manning, Strategy Director at Cult, tries some virtual fashion for size. From augmented reality try-ons to the huge boom in gaming skins and collaborations with IRL luxury brands, he argues that virtual fashion isn't just the future, but the present too.
The market for virtual fashion is booming. It seems like a new Web3 play is launched by a fashion brand every week, and while some may be tempted to dismiss them as gimmicks, a quick look beyond the headlines reveals that the underlying numbers are compelling.
McKinsey estimates global spending on virtual fashion reached $33 billion in 2021. Over one billion items were purchased by gamers in the Roblox Avatar Marketplace last year and, most strikingly, an analysis by entrepreneur and author Matthew Ball has pointed out that, as early as 2018, Epic Games (the makers of Fortnite) made more money from the apparel market (both physical and virtual) than Prada, J. Crew or D&G.
McKinsey estimates global spending on virtual fashion reached $33 billion in 2021.
Virtual fashion trends are now even transcending digital realms and influencing real-world fashion product design, as in the case of Forever21, whose forays into Roblox have proven so effective that they recently launched ‘the World’s First Metaverse-Tested Fashion Collection, IRL’, a physical clothing collection consisting of hoodies and t-shirts designed with elements from the brand’s virtual offerings.
Above: In 2021 Fortnite partnered with luxury fashion brand Moncler to create two outfits, available in-game, inspired by designer Matthew Williams.
With a recent Roblox study, conducted in association with Parsons School of Design, finding that 70% of Gen Z derive real-world style inspiration from dressing their avatars, fashion brands may have to start finding space alongside their TikTok-viral pieces for ‘Fortnite Made Me Buy It’ ranges. But, for fashion brands more accustomed to creating fashion IRL than IVL (in virtual life), many will be questioning: where and how to start?
A recent Roblox study [found] that 70% of Gen Z derive real-world style inspiration from dressing their avatars.
There are many different ways for brands to enter into this buoyant industry, from augmented reality try-ons to in-game skins and assets, and from covetable metaverse wearables to the new wave of fashion NFTs, post-crash - and understanding the pros and cons of each path is crucial.
Augmented reality fashion
By far the best-explored dimension of virtual fashion to date, augmented reality allows consumers to overlay digital fashion items into real-world environments. A multitude of fashion brands have built AR into their e-commerce experiences, sometimes even in-store, to give consumers greater confidence at the point of purchase and to reduce return rates (which Forrester estimated in 2021 to be 30% of all online orders).
AR try-on has so far been most successfully implemented for ‘hard’ fashion items such as accessories and footwear. For example, Farfetch were able to drive a 5-10% uplift in conversion for footwear and watches compared to product listings without AR functionality, but the tech for faithful recreation of clothing is advancing fast, and the brands that leverage it most quickly stand to profit enormously.
Beyond functional benefits, brands are also embracing AR as a means of delivering immersive brand experiences. For example, American Eagle Outfitters have been a leading test partner in Snapchat’s developing AR capabilities, embracing everything from virtual denim try-on to an AR-enabled holiday pop-up shop that drove $2 million worth of sales.
Above: Fashion retailer Farfetch embraced AR try-on functionality to boost its business.
Gaming skins and assets
These are virtual goods that players create, buy and sell to customise avatars and enhance their gaming experience on platforms such as Minecraft, Fortnite, Roblox, Animal Crossing and so on. Virtual products currently drive the vast majority of in-game spending and many of the largest franchises are dominated by user-generated content. Working with these players yields the twin benefits of tapping into their platform expertise and follower bases, while also demonstrating their support for independent creators and designers.
Burberry has sold over 46,000 units of their Lola bags on the [Roblox] platform at an original price of 800 Robux (£8.99) apiece.
In general, luxury brands have been quickest to market in the gaming space, but the market can be hugely successful - and lucrative - for both luxury and mass brands alike. A review of the Roblox Avatar Shop reveals that Burberry has sold over 46,000 units of their Lola bags on the platform at an original price of 800 Robux (£8.99) apiece, that equates to over £400,000 in revenue (it’s also worth noting that some of the bags are reselling on the platform at markups of over 300%).
Forever21, meanwhile, told Vogue Business in June 2022 that they were on track to sell 1.5 million units of a single black beanie - an item with no physical counterpart - on Roblox. Retailing at just under 20p, this represents a revenue approaching £300,000 against a lifetime production cost of less than £500.
Above: Burberry's collaboration with Roblox saw 46,000 units of their Lola bag sold on the platform, making £400,000 in revenue.
While metaverse platforms such as Decentraland and The Sandbox lack the sheer user numbers of their gaming counterparts, virtual fashion plays in these spaces are able to attract huge amounts of hype and press attention. For example, 2022's inaugural Metaverse Fashion Week in Decentraland, attended by D&G, Etro, and Elie Saab among others, pulled in over seven billion press impressions worldwide, while attendees at the event claimed over 165k wearables from the brands in attendance.
The inaugural Metaverse Fashion Week in Decentraland, attended by D&G, Etro, and Elie Saab among others, pulled in over seven billion press impressions worldwide.
Moreover, metaverse platforms tend to have fewer established ‘codes’ and tenets for brands to conform to when compared to gaming franchises, which have established partnerships programs and larger audiences to placate. What brands lose out on in terms of linear structure and process, they gain in flexibility and freedom.
While metaverse interoperability (seamless interaction between virtual worlds and platforms) is still far off on the horizon, brands are developing metaverse wearables and finding inventive work-arounds. One such brand is Under Armour, which launched a digital sneaker in NFT form that could be adapted into four different wearable iterations: for Decentraland, Sandbox, Gala Games and Rumble Kong League. The 2,794 NFTs sold out in 10 minutes, raising $1m for charity and over $17m in secondary sales.
Above: The metaverse hosted the inaugural Metaverse Fashion Week in 2022.
While fashion NFTs have driven $245m in sales to date, their credibility has been hugely undermined by the recent market nosedive. Reframing NFTs away from ‘cryptobro’ toxicity and the whiff of high-stakes speculation and towards symbols of membership, access and intimacy is crucial to their acceptability and widespread adoption, and fashion brands are quickly recognising this exigency.
While fashion NFTs have driven $245m in sales to date, their credibility has been hugely undermined by the recent market nosedive.
Prada’s time capsule initiative, consisting of monthly, limited-edition product drops, is a great example of how a brand can create desire around NFTs without distance from their core offering. Now in its eighth iteration, the time capsule program features tokens that are married to physical products, thereby easing adoption, and they can be claimed for free alongside their purchase. Ownership of the tokens affords access to a dedicated Discord server, exclusive events and experiences around the world, and the chance to win even more enticing prizes, such as front-row tickets to fashion shows. NFTs may again become significant, reliable revenue drivers but, for now, they serve as tokens of utility and added value.
The virtual fashion market offers huge opportunities for mainstream and luxury brands alike. In taking that first step, brands must assess what’s immediately important to them and their organisation: functionality, or entertainment? People’s money, or time?
Equally importantly, they must consider what’s relevant to their customers; just as social media platforms attract different audiences and require unique approaches, focus and investment, so too do the avenues of opportunity for digital fashion.
Regardless of the answers to these questions, the universal truth is that digital fashion is here to stay, and the time to start exploring, testing and learning is right now.