Gucci XR/Metaverse Case Study
Gucci XR/Metaverse Case Study
Gucci, founded by Guccio Gucci in 1921, is an Italian luxury fashion house based in Florence, Italy. Its product lines include handbags, ready-to-wear, footwear, accessories, and home decoration; and it licenses its name and branding to Coty for fragrance and cosmetics under the name Gucci Beauty. In 2022, Gucci had 270 stores worldwide and generated global revenues of 10.5 billion euros or approximately $11.3 billion. Gucci is currently owned by Kering, a French-based multinational corporation specializing in luxury goods.
Before I share with you the amazing Gucci story, I want to set the scene for why fashion brands are flocking to the Metaverse. In fact, since 2021 there has been a revolution going on in the fashion business and it is happening in the Metaverse. Metaverse fashion is a new and exciting way to create, market, and sell fashion products in the virtual space. It allows brands to create immersive experiences, interactively displaying their products, and reach a wider audience. It allows customers to try on clothing, walk around a virtual store, and even attend an in-store event which will all translate into real life results. Already 21% of all fashion retail sales are done online and this figure is expected to continue to rise.
According to a recent Morgan Stanley forecast, the virtual fashion market could be worth over $55 billion by 2030. Already there are multiple brands – including Gucci – launching Metaverse-only collections and making millions of dollars from fashion non-fungible tokens (NTFs).
Why Are Fashion Brands Flocking to the Metaverse?
The simple answer is customer engagement. To be successful in the future, fashion brands must meet their customers – particularly Millennials and Gen Z – where they like to hang out. Gen Z already spends 2X as much on socialization in digital spaces as they do in real life, and forecasts call for Gen Z to spend 50% of their time in the Metaverse by 2030.
The Metaverse offers additional benefits for fashion brands who are sensitive to Millennial and Gen Z’s focus on sustainability. Did you know that clothing existing solely in the digital world was found to be considerably more environmentally friendly than its physical counterpart, emitting 97% less CO2 and consuming approximately 3,300 liters of water less per item? Not only that, but there also is data to suggest that by replacing physical samples with digital ones during a company’s design and development phases, it is possible to reduce a brand’s carbon footprint by a whopping 30%.
Here are 6 additional reasons why fashion brands are flocking to the Metaverse:
- Massive Margins: Moving to all-digital collections saves designers a lot of headaches. They no longer have to worry about issues such as sourcing raw materials, finding factories and skilled workers or inventory storage. Fashion is a notoriously laborious industry, with couture pieces taking weeks, if not months, to complete. Digital designs, on the other hand, can be created in a matter of minutes. By embracing a virtual approach, creators can dramatically cut their costs and focus their creative efforts on generating massive margins.
- NFT Revenues: Fashion houses are also experimenting with the Metaverse to create and sell fashion brand NFTs. These tokens are built on top of smart contracts, which determine the terms and conditions associated with the underlying digital asset. More importantly, this means that a brand can embed a code related to royalties, so that each time a virtual garment changes hands, they get a cut of the transaction. Just how important are NFTs to fashion brands? During 2022, major brands including Adidas, Nike and Gucci generated $137.5 million in NFT sales alone. Two quick examples: Gucci’s Queen Bee Dionysus virtual handbag recently sold for $4,000 on the Roblox platform, considerably more than the bag’s retail valuation. Dolce & Gabbana set the record for the most expensive digital suit ever sold, a digital Glass Suit, which sold for a cool $1 million. Luxury brands understand NFTs and digital ownership better than anyone. Nobody buys a luxury watch to tell the time. You buy the watch because you appreciate the aesthetics, the craftmanship, you think it might have higher resale value over time, and it gives you status and makes you part of a small group of people that appreciate the same thing. No surprise some fashion brands are already generating more revenues from the sale of NFTs in the Metaverse than the sale of their products in brick-and-mortar stores or via eCommerce.
- No Inventory or Oversupply: Fashion brands frequently face problems related to overproduction, over-inventory, and end-of-season stock. This forces fashion brands to rapidly dilute inventory before the beginning of the next season, including offering steep pricing discounts that can negatively impact their brand image. A fashion collection offered in the virtual world eliminates any number of these problems by working within the digital environment. In addition to selling a consumer the NFT, fashion brands are now beginning to also offer customers the ability to purchase a physical, wearable copy of their NFT, which has spawned the new term ‘phygital.’
- Infinite Innovation and Creativity: Fashion designers are notorious for wanting to be as innovative and creative as possible. The Metaverse offers a blank canvas meaning there is no limit to original and eccentric creations. We are already seeing garments designed out of impractical or even impossible fabrics like liquid gold, water, fire, or smoke. I am curious to see what fabrics are next!
- Extreme Personalization: The Metaverse offers fashion brands the ability to create ‘custom’ fashion apparel sold as an NFT that can be personalized for each avatar, down to the smallest detail. An NFT is assigned a unique serial number, which further cements the product’s status as a unique fashion piece. Personalization is extremely important to Millennials and Gen Z consumers, who are constantly on the lookout for new forms of self-expression.
- Open Accessibility: Whether you are an established fashion brand or an emerging designer, there will always be opportunities to showcase your work in a Metaverse boutique store and share it freely across virtual worlds. Having attended several invitation-only fashion shows, I was fascinated to attend this year’s Metaverse Fashion Week that took place in March. This virtual event showcased the latest in digital fashion and technology. Held entirely in Decentraland’s virtual world, I was able to explore the latest virtual designs and interact with both well-known top fashion houses and less well-known emerging designers.
Gucci: Pioneers in the Fashion Metaverse
Let us now turn our attention to Gucci, one of the earliest Metaverse movers who boldly embarked on multiple Metaverse initiatives that have propelled the Italian luxury brand to new fashion heights.
For the past 3 years, Gucci has been at the forefront of Metaverse and Web3 technologies. Let peek at how Gucci is applying these technologies:
- In May 2021, Gucci became the first luxury brand to launch an NFT.
- In 2021, Gucci and the gaming platform Roblox created the interactive virtual experience called the Gucci Garden, which was an immersive multimedia experience set in Florence, Italy and which was created to celebrate Gucci’s 100th anniversary. Roblox users had the opportunity to explore Gucci Garden’s immersive themed rooms, as well as try on and purchase Gucci NFTs to be worn by their avatars while playing inside the game. The activation was so successful that during the two-week Gucci Garden exhibition, 20 million users visited the space.
- In February 2022, Gucci and SUPERPLASTIC®announced their first NFT project partnership focused on SuperGuccci The project involved combining a mix of Gucci’s patterns with animated characters from SUPERPLASTIC. Janku and Guigimon were selected for the NFT project, and both characters sold for over $20 million.
- In May 2022, Gucci launched its first NFT-related project, with a movie inspired by its Aria collection. The movie was sold at a Christies-led auction as part of the ‘PROOF OF SOVEREIGNTY: A Curated NFT Sale by Lady PheOnix’ offering.
- In October 2022, Gucci became the first luxury house to announce it had purchased digital real estate in the Sandbox virtual world. Gucci created an impressive store/event space called the ‘Gucci Vault’ that included a virtual gallery displaying NFT artworks and vintage fashion pieces. Visitors to the Gucci Vault could learn about Gucci’s heritage and core values through vintage fashion NFTs, compete with other players for a chance to buy digital collectibles, play mini-games and complete tasks to earn blockchain-based rewards, and use Gucci Vault Aura NFT wearables to dress their avatars.
- Most recently, in November 2023, Gucci opened the virtual doors of Gucci Cosmos Land, another immersive digital experience in the Sandbox. This experience offers a digital interpretation of the physical Gucci Cosmos exhibit currently open in London, England that takes viewers through Gucci’s 102-year history. This approach – mirroring popular physical experiences with digital counterparts to expand access and offer digital-only perks – has become a key strategy of Gucci’s ‘Dream Big Team’, which oversees Gucci’s Metaverse and Web3 strategy.
Gucci, a $11.3 billion global company, proactively took the decision in 2021 to put stakes down in the Metaverse. The Gucci executive team felt they could not rest on Gucci’s past reputation to secure its future. To the contrary, Gucci opted to create its own disruption as it sought to maintain and grow its revered status in the fashion industry.
Let me close by sharing with you what Gucci CEO, Marco Bizzarri, recently told Vogue Business: “Gucci is not afraid to be a first mover in many areas and will continue to adopt this mindset and challenge the status quo. Other big players prefer instead to wait, following up at a later stage, adopting a more conservative approach – a respectable strategy, but it is not ours and it never will be.”
My Metaverse business partner, Tim Bajarin, and I are keen to assist healthcare companies at each step of the way to ensure their successful entry into the Metaverse. To read about additional healthcare and related Metaverse case studies, I strongly encourage you to visit ISM’s award-winning Metaverse Resource Center – www.ismguide.com/metaverse-resource-center – where in addition to gaining access to more than 275 Metaverse case studies, more than 275 Metaverse articles, and more than 100 Metaverse videos, you can download ISM’s new ‘8 Steps to Do Business Successfully in the Metaverse’ White Paper, download ISM’s New ‘VR Training Guide for the Enterprise,’ learn about and sign-up for ISM’s complimentary 2-hour Metaverse Executive Bootcamp, and more.
Barton Goldenberg (firstname.lastname@example.org) is president of ISM, Inc. Since 1985, ISM has established itself as the premier strategic advisor leveraging leading edge technologies – the Metaverse, Digital Communities, and CRM – to create and implement customer strategy with a focus on sales, marketing and customer service. His thought leadership including creator of the ‘Business Success in a Virtual World’ podcast, creator of the award winning Metaverse Resource Center, and author of three business books including The Definitive Guide to Social CRM. He is also in high demand as a keynote speaker (www.bartongoldenberg.com).