The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
This article first appeared in The State of Fashion 2022, an in-depth report on the global fashion industry, co-published by BoF and McKinsey & Company. To learn more and download a copy of the report, click here.
The metaverse became one of the fashion industry’s hottest buzzwords in 2021, as interest in digital products linked to blockchain-powered non-fungible tokens (NFTs) exploded, and activity on virtual reality interfaces surged as the global fanbase of video games made their presence felt. Luxury brands raced to get a foothold in these fast-evolving virtual worlds, with Gucci among those leading the charge.
In 2021, Gucci auctioned off its first NFT and issued its first-ever virtual sneakers, selling the 3D animated kicks for $12 a pair. Staging virtual brand activations on the Roblox platform and life simulation game The Sims, it has also created assets for Pokémon Go and Animal Crossing. The brand even hired a dedicated team to work on developing digital products under creative director Alessandro Michele. Overseeing Gucci’s experiments in the metaverse is Robert Triefus, the brand’s executive vice president for brand and customer engagement who has been a central player in a multi-year push to build a sprawling and highly engaged online community. But establishing Gucci’s foothold in the virtual realm isn’t just about marketing, Triefus says. In the years to come he expects the metaverse to become a “very significant” driver of revenue growth.
BoF: As blockchain technology burst into the digital art world with the emergence of NFTs, Gucci was quick to get involved, auctioning off an NFT for charity in June 2021. Since then, brands including Dolce & Gabbana, Rimowa and Louis Vuitton have also released NFTs. But luxury brands aren’t known for being first adopters of new technologies and NFTs remain a niche market, so what is it about this space that has the industry in such a hurry to participate?
Robert Triefus: The industry has changed. Whereas back in 2000, naysayers were saying e-commerce could never be a luxury experience, today there is a deeper understanding that digital can lead to enhanced [client] experiences. When it comes to NFTs, it’s going to require a lot more time to understand what they can represent in terms of customer experience or value-add. But you’ve seen a significant number of brands within the sector saying, okay, we believe that NFTs have relevance, we’re not 100 percent sure yet what that relevance is but we’re going to pilot [this], we’re going to experiment, and have some learnings and insights as a result.
BoF: Why is the audience for NFTs an interesting market to engage with? Is there really significant overlap between luxury consumers and the market for NFTs?
RT: As we think about the Gucci community, we do think about adjacencies, or other communities and cultural groups that potentially intersect. Digital art has been a growing area of cultural intersection with fashion for a few years.
BoF: How valuable to you is the intersection that NFTs have with the cryptocurrency community?
RT: Cryptocurrency is linked almost inextricably to NFTs and that’s an area with great future potential. I think cryptocurrencies will progressively become better understood, and also some of the issues surrounding [blockchain’s] sustainability, which have been of concern for NFTs too, will be resolved. It’s an area of test and learn, but I would suggest in probably a year or two these areas will be much more pervasive in terms of how fashion brands are engaged.
BoF: The NFT space still feels like it’s only relevant to a fairly narrow swathe of fashion consumers. What evolutions could help pave the way for broader adoption?
RT: One is the actual application. There are opportunities around authentication, providing an additional sense of authenticity and security to customers. Or around added value that comes with specific products, where there may be a narrative linked to it. Digital collectibles may inspire physical manifestations. This will take time, as brands are [just] beginning to understand how they can add value through NFTs. Then, as with any new technology, the customer equally needs to understand what’s in it for them, how you purchase NFTs, how you potentially resell them. That learning experience is essential as a foundation.
BoF: Isn’t there also an issue around customers’ ability to enjoy them? It’s not necessarily intuitive, how you would admire an NFT or show it to somebody.
RT: Yes. The ease with which the end-user can understand, benefit and appreciate what NFTs offer still has a way to go.
BoF: NFTs’ valuations skyrocketed in early 2021 but fell significantly later in the year. As a luxury brand, whose business is based on selling things that are meant to retain their value over time and be quite durable, do you have concerns about the reputational risk of being a first mover in a space like this?
RT: When you test and learn, you always do that with an understanding that the learnings may move you not to proceed. Is it better to test and learn or sit on the sidelines? If you ask me, it’s better to test and learn.
BoF: Speaking about the metaverse more broadly — whether it’s NFTs or your recent projects on virtual reality interface Roblox, where you staged a Gucci Garden exhibition and sold high-top sneakers — what are some of the top-line learnings your team gained from these experiences?
RT: There’s the dynamism of the gaming world, which has grown significantly, probably because of [pandemic] lockdowns, but also because of the innovation that is going into the experience. Then there are more and more second worlds where you can express yourself. There is probably an underestimation of the value being attached to individuals who want to express themselves in a virtual world with a virtual product, [through] a virtual persona. The idea that everything has to be physical is very quickly being disproven. We had 19 million visitors to the Gucci Garden within the Roblox metaverse.
BoF: Could you tell us a bit about how fashion brands’ deals are structured with emerging players in the metaverse, like Roblox or The Sims? Are any brands actually seeing revenue from these initiatives so far, or is it more of a marketing investment?
RT: It depends on the objective. It might be about branding, or a revenue share, or a combination of the two. I won’t tell you how we structured our different deals [but] what I can tell you is that we have proven to ourselves through these collaborations that the virtual world can create a very significant new revenue stream.
BoF: How significant? How lucrative do you think the metaverse could become for brands and how soon can it be monetised?
RT: Roblox has a remarkable market capitalisation… and they’ve only been around for a very short while. This demonstrates that they have become very successful at understanding how to monetise virtual experiences. We know that people are willing to pay good money for NFTs, for digital collectibles, and to have a second life in the metaverse. So the revenue potential is absolutely there. One has to understand how to curate the experience as in the physical world, and make sure that experience is delivering what the customer would expect from the respective brand.
BoF: Still, with some initiatives in the metaverse it’s hard not to suspect the brand is doing it for the headlines. How much of the activity we’re seeing in this space is just tech-washing?
RT: Of course, to be perceived as a brand that is innovative, that is leading potentially the industry or the sector, those are great perceptions. But I think Gucci has been recognised as a brand that is authentic, that doesn’t put marketing ahead of trust with its community. There’s too much at stake in these innovations. You’ve got to go into it with your eyes open and a belief that they can ultimately benefit the business and the brand. We have a dedicated team that is focused on this area. We really want to be able to understand what it is like to exist in the metaverse.
BoF: One thing that feels like a sticking point with virtual products is that they’re often limited to one specific platform. Consumers are bouncing around between social networks and games, so does it make sense to buy a digital product that is only usable in one of them? Are any solutions emerging for better compatibility?
RT: In terms of collectibles and digital assets, we certainly want to try to create value by allowing assets to be used in multiple universes or metaverses. Where that isn’t feasible, we have to look to create something that is appropriate and authentic to a specific metaverse. With The Sims and with Roblox, the way we entered those experiences and those worlds was to co-create with creators from those communities, who can ensure there is authenticity.
BoF: Social media platforms remain the “second world” we’re most familiar with — and it’s one where Gucci is very active. Since the pandemic, you’ve left the fashion week calendar and have been setting your own pace for releasing designs and content online. What’s working and what isn’t right now in terms of your social media investments?
RT: Because of Covid, we decided not to put on physical events [until] our first physical fashion show for some time, [which was] on November 2nd in Los Angeles. The way that we have been able to navigate these unusual circumstances has been to exploit all the digital platforms that are available to us. In the West, I’m thinking of Instagram, Snapchat, TikTok, Twitter, YouTube. Then, in China and in the East, there’s another whole ecosystem. Each platform’s community is based around a certain type of experience, and if you go on to that platform with an experience that isn’t relevant, it’s not going to be successful.
This interview has been edited and condensed.