Brands are increasingly leaning into the metaverse to market to shoppers this holiday season.
Pacsun’s holiday campaign, for example, is called “PacVerse,” and in the announcement, it teased the extension of its PacWorld experience on Roblox, which includes a holiday gift shop and virtual try-on. Pacsun said these features enhance its brand value and customer experiences. Bloomingdale’s, on the other hand, opened a multi-brand metaverse department store, available on its e-commerce site, which features holiday-themed spaces where people can shop in.
To filter out the noise this holiday season, retailers are solidifying their presence in the metaverse this holiday in an attempt to provide a unique experience for shoppers. Several retailers have experimented with the metaverse this year, and as part of their long-term strategy, they are now incorporating this channel into their holiday marketing plans in hopes that it can also generate sales. As shoppers continue to shop at a range of channels this holiday season, brands are holding onto the possibility of the metaverse playing a bigger role in shopping in the near future. However, experts warn that it might be too soon for the metaverse to offer a return on investment.
There are several factors influencing retailers’ marketing decisions this holiday, said Ryan Detert, CEO of influencer marketing firm Influential. For many marketers, the metaverse allows brands to connect with their audience in a digital realm even if they aren’t in a store or in close proximity to a store, he said. While still in its experimental phase, it holds a lot of promise for brands who enter the platform early on.
“The promise of the metaverse is that it is this immersive place that people spend a good portion of their lives,” Detert said. “Having stores and brand awareness in those places and experiences in those places will likely lead to more revenue and more opportunities to monetize on a holistic level — that’s the hope.” Gen Z, millennials and Gen Xers are projected to dedicate four to five hours per day to the metaverse in the next five years, according to a survey from McKinsey.
Meanwhile, the holiday season is a common time of the year for brands to test out creative marketing channels. For instance, makeup brand Too Faced is using an SMS concierge service experience to give shoppers gift ideas and respond to some of their questions. And JCPenney is utilizing Facebook Live for an hour-long program, featuring celebrity appearances and games.
The metaverse has also been a popular channel for brands this year, especially if they’re attempting to reach younger consumers. For instance, Pacsun’s metaverse campaign features popular TikTok content creators like Brooke Monk and Mathieu Simoneau, in a bid to attract the attention of their followers. Pacsun previously told Modern Retail in an interview that it was focused on Gen Z consumers as it furthers its initiatives around the metaverse and NFTs.
“Our consumer is what we call next-generation — currently right now mainly Gen Z, and in years to come, it will be Gen Alpha,” Pacsun Co-CEO Alfred Chang said at that time. Pacsun said it hopes to use these efforts to acquire younger customers as part of its digital-first strategy. Its digital sales have grown 65% in May 2021 compared to the same period in 2020.
Experts also said that marketers approach the metaverse much differently than traditional channels, with some adding elements that would allow shoppers to engage with brands. Bloomingdale’s virtual department store, for example, offers unique spaces for brands like Ralph Lauren and Nespresso. Ralph Lauren’s designated space leads shoppers into a ski chalet, while Nespresso takes shoppers into a Parisian café.
Kyle Wong, chief strategy officer at Emplifi, said that in its early days, a successful metaverse strategy could be defined by engagement. That’s why brands like Nike are rewarding users when they engage with the brand in the metaverse. In a separate announcement in November, Nike said it will give consumers the chance to co-create as well as earn royalties on virtual products.
Similarly, American Eagle is working with Roblox for seasonal promotions, which include the launch of interactive challenges that give people the chance to win a $5 gift card if they participate.
But engagement alone likely won’t be enough in the near future. “Like any maturity of a new platform, it will ultimately come down to conversion and measurement,” Wong said. “If brands want to invest substantial amounts of R&D and marketing dollars into the metaverse, they’re going to have to think really critically about direct sales.”
As more retailers utilize the metaverse this holiday, it signals how they’re increasingly seeing it as a sales driver as opposed to a brand-building tool alone. For example, Kohl’s is providing a metaverse experience for Facebook and Instagram users, which would allow them to use an augmented reality lens to choose items to buy with Kohl’s cash.
Getting consumers to shop at the metaverse this holiday, however, is another challenge. According to CI&T’s Connected Retail Consumer Insights Survey, 81% of respondents answered “false” when asked whether or not they have shopped in the metaverse.
“The metaverse is still too early in terms of our ability to connect and fully correlate engagement with sales,” Melissa Minkow, director of retail strategy at digital consultancy firm CI&T. “Engagement is definitely a win. But I do wonder, can we for sure say that that engagement means strong sales among that audience?”