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Retailers Should Be Using the Metaverse for Product Innovation

The metaverse is slated to change the way people shop—and what they shop for. Here’s how retailers can use this force for change as a source of innovation.

Traditionally, retailers in the apparel and shoe segment have relied on in-house fashion designers to create new product offerings, testing them with focus groups and niche markets before rolling them out to a larger customer base. However, consumer demand for more customized products has been rising over the last few years, especially among Gen Zers and Millennials. These expectations have encouraged companies like Stitch Fix to better understand their subscribers’ taste in clothing via a personal “style quiz” and Nike to allow shoppers to design their own sneakers, which are then made and shipped to order.

The metaverse offers retailers a new, unique opportunity to understand what consumers are looking for and then manufacture those products. Nike’s “Nike By You” custom sneaker builder provides a finite selection of styles, materials and colorways for customers to choose from. But in the metaverse, Nike is not limited by what materials are immediately available. Instead, the shoe brand can allow potential customers to design their own footwear from an almost infinite set of combinations for their avatars. Customers can “like” their favorite designs that Nike can then prominently display in their metaverse store and make available for other metaversers to purchase.

Nike also has the added benefit of discovering emerging trends and tastes (by customer segment, age group, geography, etc.). The most popular designs can be manufactured and sold in the physical world in the right markets.

In essence, the metaverse offers progressive retailers multiple benefits: valuable data for new product development, social engagement with trendsetting consumers, acquisition of a loyal set of omnichannel customers, a way to burnish their brand and an opportunity to closely tie physical sales with the metaverse and expand revenue potential. According to a recent report by Gartner, twenty-five percent of people will spend at least one hour a day in the metaverse for work, shopping, education and entertainment by 2025. The big players, including Facebook (now Meta) and Amazon, are ramping up hiring to build up their metaverse offerings and are making investments accordingly. Leveraging the metaverse for product discovery among consumers will become essential for brands.

Here’s how brands can implement product innovation in the metaverse:

1. Data strategy

A customer data platform (CDP) can be used to understand customer preferences better, bridge the virtual and physical experience, act as a building block for other use cases, determine marketing activations and more. This includes determining how and what data needs to be collected.

2. Customer experience

A sophisticated, data-led customer experience will allow customers to create their customized products in the metaverse. Consumers must be provided with the right tools to fully utilize the capabilities of the metaverse for designing products their avatars will don. A poor experience can do more harm than good with young, social media–savvy consumers.

3. Product viability

Products must have tangible business value. Prioritize offerings against a measurable set of brand marketing or revenue-generating objectives.

4. Supply chain

A highly responsive supply chain that can react and adjust to emerging trends as quickly as possible is vital.

5. Omnichannel

A seamless connection between physical, social and digital channels can amplify the return on marketing spend, build loyalty and enhance the brand image.

There are still unknowns in this space: which metaverse platforms users converge on, the role NFTs will play and how retailers can protect their intellectual property. Even so, the benefits the metaverse offers in terms of product exploration, discovery and innovation for retailers are significant and can be a game changer as a new generation of customers emerges and expectations evolve.

 AJ Dalal
AJ Dalal
GVP, Data Science & Analytics
Khurram Farooqui
Khurram Farooqui
Group Vice President, Retail