A virtual experience can yield impressive preliminary results for brands and retailers. Chander Damodaran, Chief Technology Officer, Brillio, explains how utilising the convenience of the metaverse and new technology tools, retailers and brands can rethink the store experience and engage consumers extensively, increasing customer retention and acquisition.
1) How can retailers harness the true potential of metaverse for their business?
With industries around the world showing interest in the metaverse, retail leaders have an exciting opportunity to follow suit and provide customers with the ease of online shopping without compromising the benefits of physical shopping. With Goldman Sachs citing this technology as a US$ 8 trillion opportunity and commensurate investment flowing into the industry, Metaverse has become a prominent conversation of every strategic plan for executives within a short period of time.
Retailers can drive sales and profits and achieve business value in the metaverse by focusing on:
- Reinventing the stores in 3D: The Metaverse presents companies, brands, and consumers with a novel hybrid. It offers an extraordinary opportunity by combining the ease of online e-commerce with the vibrant engagement of brick-and-mortar shopping, along with the potential to drive footfall and spur impulse finds to augment basket size. For example, we’re collaborating with a supplier of outdoor apparel and footwear operating stores in multiple cities that now seeks to expand into new territories without entering expensive physical contracts. Our partnership shows how this provider can use the Metaverse to make expansion ambitions a (virtual) reality – encompassing displays of brand products, try-on, and more. The pilot metaverse store we tailored encompasses exhilarating experiences such as simulated hikes over tough terrain and allows customers to buy physical items for delivery at home. This is a chance for retailers to go beyond the current limitations of real-life or digital shopping, which hinder growth within the sector.
- Creating an NFT strategy: In the retail sector, brands and stores can embrace NFTs to sell one-of-a-kind items. Luxury brands are selling NFTs for both physical and digital assets at much higher price points. In a couture auction, Dolce & Gabbana sold NFTs representing real-world and Metaverse garments, earning the equivalent of US$ 5.7 million. There is a ready-made market for NFTs tied to exclusive services. Customers are more likely to utilize NFTs when provided with perks such as dedicated aisles in physical stores and special offers for exclusive shopping events. In India, NFTs have allowed digital artists to reach an untapped audience and an alternative to working with brands and organizations. Countless chances for these professionals have been enabled by the NFT market, as many have put their art up for sale on different platforms, resulting in a new source of income.
- Making metaverse shopping experiential: By utilising the convenience of the metaverse and new technology tools, retailers and brands can rethink the store experience and engage consumers extensively, increasing customer retention and acquisition. A virtual experience can yield impressive preliminary results for brands and retailers.
- Planning new frontiers for the supply chain: Retailers are forced to address the prominent task of optimising supply chain costs while maintaining high standards to ensure a top-notch customer experience. One clear example of this is 3D models, which have been utilised as an effective way to tackle key supply chain issues such as demand forecasting, rapid delivery times, and SKU management. As the economy has shifted drastically, it is essential to rethink product lifecycle management strategies and adopt virtualisation for new product designs to reduce time-to-market, nurture partnerships with suppliers, and boost forecast accuracy.
- Reimagining customer and field services: Retailers can use the metaverse to train and equip their field personnel cost-effectively. Virtualisation allows customers to interact with business professionals and have an immersive customer support experience. Avatars provide a way for consumers and business customers to become educated on pest issues and implement preventative strategies by consulting entomologists, technicians, and customer support personnel, watching informational videos, and investigating kiosks featuring new items and services, which also permit making appointments.
2) What are the major benefits of metaverse in the retail ecosystem?
One of the biggest advantages is the natural by-product of the metaverse’s digital environment, i.e., voluminous amounts of data. This data provides the engine retailers need to capture the voice of the customer more accurately. Furthermore, by intermixing computing capabilities with metaverse in the physical world, retailers can capture the experiences from any physical interaction and make intelligent, data-driven decisions by analysing it. The best retail experiences will capitalise on both data and engagement.
As we’ve seen with the advent of e-commerce and social networking sites, the retail industry is constantly evolving. Retailers, today, are under a lot of pressure to optimise supply chain costs while fulfilling benchmarks that enable great customer experiences. This is where metaverse comes to the rescue for next-gen retailers. Metaverse has company-wide applications for retailers, from field service to the supply chain. It’s also an opportunity to build on the physical and digital shopping limitations that hold the industry back. A metaverse offers the ideal middle ground between the convenience of online shopping and the immersive experience of physical shopping.
Moreover, metaverse enables better access to Gen Z and Gen Alpha. According to McKinsey, Generation Z and millennials expect to spend close to five hours a day in the metaverse. Gen Z and Gen Alpha are moving beyond the web and mobile app ecosystem to drive engagement in the metaverse and look forward to organically socialize and explore their beloved brands on these experiential platforms.
3) What are some of the challenges retailers might face with metaverse?
Metaverse is still in its infancy stage, where the focus remains on developing infrastructure and processes for the future. Currently, the metaverse relies heavily on VR (Virtual Reality), AR (Augmented Reality), and MR (Mixed Reality) technologies and devices. However, as they are not lightweight, portable, or affordable, the metaverse cannot be widely adopted. For a realistic virtual immersion, it is imperative to have high-quality and high-performance models that can achieve the right retina display and pixel density in addition to hardware accessibility. Additionally, without a cloud-based infrastructure, building a virtual storefront may be nearly impossible. In the absence of strong data that builds a deep understanding of consumer preferences, selling branded digital products to a new metaverse consumer segment may fail. A metaverse-based strategy relies on clean data, cloud-enabled capabilities, and mechanisms to manage digital partnerships, all of which are not new concepts.
Furthermore, as the metaverse takes centre stage for all sectors, it will become even more crucial to lay down the foundation and guidelines for its operations. The focus must be on establishing open standards and interoperability across the metaverse and addressing concerns about the lack of existing standards, regulatory guidelines, and fragmented user base that would benefit from specialized hardware and usage framework. In the new era, the goal is to build an inclusive, open metaverse globally where organisations and companies cooperate to foster growth and users gather to experience connectivity and unprecedented spatial computing. To overcome the foundational challenges of regulation, the Metaverse Standards Forum was launched in June 2022 to focus on establishing open standards and interoperability across the Metaverse. Brillio has recently become a Principal Member of Forum along with significant players like Meta, Microsoft, and Epic Games, who are among the founding members of the Metaverse Standards Forum.
The novelty of metaverse along with the immense personal data collected, makes the metaverse a luring target for cyber-attacks. With a huge data mine, the companies need to ensure information privacy and personal data security for every user. Additionally, having the right talent that can create, manage, and support experiences in the metaverse needs to be at the forefront of engaging with it. However, given the novelty of the technology, it will be challenging to find them.
4) What is the current landscape of next-gen tech, including metaverse, in the retail sector?
The retail shopping experience today is all about data-backed customisation and experience. With advances in IoT networking, connectivity, and artificial intelligence, retailers are becoming more innovative, customer-focused, and enhancing their customer experience and impact.
The main priority today for retailers is to promote a data-driven business by harnessing analytics and artificial intelligence (AI), combined with robotics and automation. Big data analytics, e-commerce, and mobile apps are allowing brands to provide personalized customer support. In the future, the retail industry in India would include faster deliveries, AI/ML-based demand forecasting, real-time monitoring via IoT, and similar abilities. Furthermore, retailers are likely to increasingly use robots and automation technology along with voice recognition programs. Currently, investments are being made in IoT and edge computing, with 5G, Metaverse and quantum computing to follow in the coming years. Retail organisations (including traditional retailers, wholesalers, and manufacturers of consumer products) are excited about new business opportunities in the Metaverse.
In conjunction with the metaverse, Digital Twin solutions are ready to revolutionise the retail industry. These technology solutions help realise the true essence of physical-digital convergence from their ability to blend real-time data, physical dependency models, and intelligence from different platforms. Digital twins provide the retail business with an unprecedented ability to simulate, optimise, test, and operate products in a revolutionary way. It will proactively identify potential faults, pre-empt asset maintenance needs, reduce operational costs and asset downtime, reduce risks, increase safety and sustainability, and ultimately improve customer satisfaction.
Realising the full potential of these intelligent, connected ecosystems is still a long way. However, innovative enterprises are finding ways to start planning and securing quick wins that can be scaled out.
5) How do you foresee the future of metaverse retail?
As technology improves, the potential uses of the metaverse for retailers will grow. Retailers can prosper in a new era of shopping, retain employees, and embrace omnichannel engagement with a mix of the right solutions. While 2022 introduced the metaverse into the lives of all techies, 2023 will witness a massive boom in its adoption. With the metaverse concept predicted to add US$ 5 trillion to the global economy by 2030, 2023 will be a crucial year for defining its direction. Virtual platforms will accelerate the evolution of customer engagement, which will morph from a one-way street through which brands and retailers push out products and services to a collaborative, two-way dynamic that expands shoppers’ participation in product selection and product development. Over time, the metaverse will offer decentralised, persistent, interoperable, and collaborative business opportunities and models to help companies elevate the digital business to unprecedented heights, improving brand recall and loyalty while engaging with Gen Z and Gen Alpha customers.
6) How can retailers prepare themselves to leverage metaverse in 2023?
A blank canvas like the metaverse can be intimidating but also exciting. A measured approach is recommended that leaves plenty of room for experimentation and fail-fast efforts. Metaverse is an opportunity to rethink the retail experience, but it doesn’t require mastering every new technology at once. To differentiate their offerings in the metaverse, retail organisations must expand their focus, beyond simply whether to sell or not, in the metaverse. Retailers must devise a strategy on how to identify and mitigate potential risks for building trust amongst customers, regulators, shareholders, and stakeholders. Moreover, to experience the competitive advantage offered by the decentralised digital environment of the metaverse, retailers need a different set of skills. They will achieve the same by upskilling and recruiting new resources.
The lesson here is to ‘walk’ before running in the metaverse and phase in the metaverse presence. Enterprises must choose what will—and won’t—work for the organisation and be prepared to learn on the way. The Metaverse is yet another channel for the innovative approaches for customer interaction that many brands and retailers are exploring. Hence, the industry must experiment with new ways to engage.