The value of the metaverse industry is projected to hit about $13 trillion by 2030, with fashion and luxury retail representing $50 billion, a study from Chalhoub Group shows.
Currently, the sector is estimated to have a value of between $40 billion and $65 billion.
The potential is particularly big in the GCC, where a combination of a young tech-savvy population, a favourable regulatory environment and a well-funded start-up ecosystem, in which those involved in Web3 — one of the key underlying technologies of the metaverse — have attracted about $553 million in investments, the Dubai-based luxury retail company said in a report on Friday.
However, the uptake of the metaverse and non-fungible tokens remains moderate, with less than a quarter of luxury consumers surveyed in the GCC saying they own or use these assets — although a further 57 per cent saying they are interested in them.
But the adoption of cryptocurrencies, an emerging key component of the metaverse that can be used to transact, is relatively high in the region, with 48 per cent of these users owning these digital assets.
These are indications that the GCC is able to exhibit the right elements in order to implement metaverse strategies, Jasmina Banda, chief strategy officer at Chalhoub Group, said.
“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 metaverse is the virtual space where people, represented by avatars can interact. It is also poised to reshape workplaces and businesses by using new techniques to streamline operations.
Web3, meanwhile, is the emerging new concept of the World Wide Web, with blockchain, decentralisation, openness and greater user utility among its core components.
The metaverse is projected to contribute about $15 billion to GCC economies annually by 2030, led by Saudi Arabia and the UAE, a study this week from Strategy& showed.
The Arab world’s two biggest economies, along with Bahrain and Qatar, already have regulations in place and programmes encouraging the use of Web3 technologies.
Kuwait has implemented guidelines to approve digital banks, while Oman is studying how to regulate cryptocurrencies and virtual assets.
Globally, the technology is seen as an economic opportunity worth between $8 trillion and $13 trillion, heavily dependent on how much companies are willing to invest in the emerging innovation, according to consultancy PwC.
Luxury retail brands have sought to tap into Web3 and the metaverse to create new revenue streams and forge partnerships.
In the GCC, cryptocurrencies enjoy the most awareness among luxury consumers with 77 per cent, while NFTs have 49 per cent and the metaverse 46 per cent. On a per-country basis, the UAE topped all categories in the Chalhoub report, with awareness at 85 per cent, 56 per cent and 53 per cent, respectively.
High-end brands LVMH, Prada, Richemont and OTB have partnered with Mercedes-Benz to form the Aura Blockchain Consortium to guarantee the authenticity of their products using tagging solutions.
Lacoste and home decor company Christofle have launched their NFT collections, while Nike, the world’s biggest sports apparel brand, had generated more than $200 million from these digital assets.
“The metaverse could be a game changer for the luxury industry, forcing players to adjust their agenda on the topic and test and learn, with GCC being the perfect test bed,” the Chalhoub report said.
Even in games, retailers are making their presence felt. In the popular online video game Roblox, there is an area called Gucci Town that has been visited more than 35 million times. This lets users earn digital currencies that can be used to buy limited edition virtual items from the Italian fashion house.
Bulgari, another high-end Italian brand, is present in the South Korean South Korean metaverse chat app Zepeto, while jeweller Tiffany and Co has allowed holders of NFTs from the CryptoPunks non-fungible token collection to purchase personalised pendants.
Meanwhile, Ralph Lauren has also announced a partnership with the battle royale game Fortnite.
On the regional level, several companies are already implementing metaverse and Web3 strategies, including Abu Dhabi’s Etihad Airways, Saudi Arabia’s $500 billion high-tech city Neom, and Dubai industry majors Damac Group and Majid Al Futtaim.
“Digitalisation is opening up new revenue streams. Rather than focusing on ones that already exist, it is creating myriad opportunities to connect with customers and drive sales beyond the in-store visit,” Shireen El Khatib, chief executive of shopping malls at Majid Al Futtaim, recently wrote in an article on the World Economic Forum website.
“To tap into this, retailers need to get used to meeting their customers wherever they are, and that includes the metaverse.”
Updated: December 10, 2022, 4:00 AM