What are the implications of the metaverse for GCC luxury retail?

Luxury retailer Chalhoub Group has revealed the findings of its comprehensive report “GCC State of the Metaverse and its Potential for Luxury Retail,” offering deep insights into the potential and opportunities of the metaverse in the GCC, consumer sentiment and the implications of the metaverse for luxury retail.

According to several analyst reports and aligned with Chalhoub Group growth projections the metaverse industry is currently worth $40-$65 billion and expected to reach $13 trillion by 2030 with fashion and luxury retail representing $50 billion.

Looking at regional luxury consumers Chalhoub Group surveyed 1,600 consumers across the GCC to measure the actual adoption rate of and future behaviour towards crypto, NFTs and the metaverse. The findings show elevated levels of awareness when it comes to crypto (77%), NFTs (49%) and the metaverse (46%) mainly amongst younger, high-income males predominantly in the UAE, Saudi Arabia and Oman.

Amongst the GCC luxury consumers interviewed 89% would like to preview products in the metaverse and 71% are already engaged with branded virtual experience. When it comes to adoption rates 48% confirmed they have already invested in crypto, while 23% stated they are engaged with NFTs and active on metaverse platforms.

The motivation behind purchasing NFTs varied. The majority (66%) reported doing it for investment purposes with virtual art and sport being the most purchased types. Luxury consumers have clear expectations for their favourite brands to be present in the metaverse (87%), while the majority (89%) were keen to preview products in the digital universe. Phygital is the future for the customer in the Gulf as 80% would consider buying physical products that include NFTs and 83% would consider an NFT that allows for redemption for a physical product.

The report also confirms that the GCC has the right foundations to support the success of metaverse initiatives driven by young and tech-savvy youth and enabled by a favourable regulatory environment. Other factors supporting the favourable environment for metaverse development include the $14,808 per capita average disposable income in the GCC, the regional enterprises already experimenting with the metaverse and the thriving start-up scene with over $500 million of funding.

Moreover, GCC governments are also giving priority to incorporating the metaverse into national strategies to boost their digital economy and create more virtual job opportunities. For example, in July 2022, Dubai approved the new phase of the Emirate’s Metaverse Strategy which aims to create 40,000 virtual jobs and add $4 billion to the emirate’s economy over the next five years.

With this trend gaining increasing momentum luxury brands and retailers are presented with numerous ways to capitalise on opportunities within the metaverse from building further trust and awareness around cryptocurrencies over experimenting with phygitals, collaborating with local NFT artists and platforms to developing branded experiences that focus on fun and socialising in metaverse environments. Despite these opportunities, there are however barriers in consumer sentiment, such as users being afraid of crypto volatility (34%), lack of trust in NFTs (28%) and lack of understanding of the metaverse (42%), amongst others.

“We believe that the GCC exhibits the right elements for implementation of the metaverse strategies. 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,” said Jasmina Banda, Chief Strategy Officer at Chalhoub Group.

“The GCC is known for its young and tech-savvy consumers who are very knowledgeable about the metaverse, while being luxury enthusiasts. For us at Chalhoub Group, we recognise that leveraging the power of Web3 enables us to reinvent the entire customer journey whether it’s building awareness, increasing brand engagement, enhancing conversion, nurturing loyalty or launching new business models. We deployed multiple experiments the last 12 months, and we’re gradually increasing the velocity and size of our future initiatives,” added Nick Vinckier, Head of Corporate Innovation at Chalhoub Group.

Chalhoub Group has already launched several Web3 initiatives including a successful NFT launch of Christofle, including offering a customised product via token-gated commerce for NFT owners, a virtual quest in The Sandbox Alpha Season 3 in collaboration with Exclusible, as well as a recent phygital NFT for the limited-edition sneaker by Level Shoes in partnership with Lanvin.