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Ayza Kayabaşı
Business Economics
Fashion Industry and Metaverse
Overview Fashion Industry
In the report published in 2022, McKinsey predicts that the fashion industry will experience a
decline in growth rates in the short term.
“After experiencing 18 months of robust growth (early 2021 through mid-2022), the
fashion industry is again facing a challenging climate." Hyperinflation and depressed
customer sentiment have already resulted in declining growth rates in the second half of
2022. We expect that the slowdown is likely to continue through 2023. (1)
Overview Metaverse
The global metaverse market revenue crossed $58.5 billion in 2021, and it is expected to
advance at a CAGR (compound Annual Growth Rate) of 43.7% during 2021–2030 to reach
$1,525.7 billion by 2030. This is attributed to the surging demand for the metaverse to purchase
digital assets using cryptocurrencies. (2)
The driving force of the Metaverse world is the gaming industry. Participation in the virtual
world created by the game industry and payment facilities (tokens and digital currency usage)
develops the metaverse world.
Morgan Stanley predicts that the luxury fashion industry alone could turn over up to 50 billion
dollars in the metaverse over the next ten years.
Issues in the Fashion Industry
Difficulty entering the market for new players The formation of a new international
brand is difficult.
 Costs of public relations work, communication strategies, advertising
campaigns, working with world-famous faces and sponsorships.
 Participation of global actors in R&D studies, creating a multinational
company structure and employee portfolio
 Using high technology in production and electronic marketing strategies and
spreading and promoting quality products all over the world.
 Government Support. It is important to provide incentives to newly formed
companies, to establish infrastructure and to provide financial support. In
addition, it should pave the way for the sector by making agreements with
other countries and international trade organizations.
 Idea generation is limited. New ideas in the fashion industry are limited to those
from the design teams of important companies in the market. Designers who do not
or cannot join this team have little or no chance of getting their ideas implemented
in the market.
 Market constraints—the problem of not being able to reach the fashion
market—are limited to fairs, stores, and the internet.
 Fair activities are used as new product launches at certain times of the year.
 Merchandising is a costly marketplace in the fashion industry. Opening sales
areas in shopping malls, famous boulevards, and streets of the city is
important in terms of creating the perception of quality.
 The Internet is the most common way to reach consumers. However, the
biggest problem is that users cannot "experience the product". As a result,
the return rate of fashion products is much higher than any other product. (3)
This situation negatively affects consumer satisfaction and the cost of
 Stealing, changing, and using intellectual property rights In fair and festival
activities, companies promote the new season. These activities are also an
“inspiration” period for small, local companies in the clothing industry, showing
them what they should do in the new season. These companies implement the
creations of these companies, which have a certain position in the market, by
imitating or inspiring. Since they do not spend any money on R&D activities, they
get a share of the market by using the cheap and local accessibility effect.
The Combination Area of Metaverse and Fashion Industry
Many Zoomers (Generation Z) witness their avatar as the purest form of self-expression, while
fashion players see an opportunity to assist them in shaping these identities, thereby
strengthening brand loyalty. For the current term, fashion brands primarily increase brand
recognition in new countries by collaborating with game developers to design player clothing
and skins. A digital avatar can wear any garment without any constraints on type, design, fabric
or use. Items can have skins put on them to change their appearance, similar to how a car might
have a wrap in the real world.
The 5 Most Important Fashion Brands in the Metaverse (4)
1. Nike
The US sports goods manufacturer Nike recognized the potential of virtual products early on
and has firmly integrated the "gold mine" of the Metaverse into its business plan. Last
December, Nike Inc. announced the acquisition of the hip NFT fashion producer RTFKT, one
of the leading brands in the virtual sneaker and digital collectibles sectors. "This acquisition is
another step that accelerates Nike's digital transformation and enables us to serve athletes and
creatives at the intersection of sports, creativity, gaming, and culture," said John Donahoe,
president and CEO of NIKE Inc. "We are acquiring a very talented team of creatives with an
authentic and connected brand."
RTFKT caused a sensation with a sales campaign that was carried out together with the artist
FEWOCiOUS and in which users could buy real and virtual sneakers in a package. The result:
in six minutes, 600 pairs of NFTs were sold for over 3.1 million dollars.
Nike's commitment to the metaverse is also evident through its recent trademark filings. Seven
new brands could focus on producing and selling virtual sports fashion and accessories in socalled meta-worlds.
2. Gucci
Gucci collaborated with the metaverse and gaming platform Roblox to create various immersive
themed spaces that referenced various campaigns from the fashion house. "As visitors enjoy
the interactive, virtual exhibition inspired by Gucci advertising campaigns, their digital avatars
transform into dress-up dolls that absorb exhibition elements and become unique works of
digital art themselves." In the process, visitors can choose from a limited collection of items for
their avatars, created solely for the experience.
Gucci created a bag model that sold for 350,000 Robux (Roblox currency), or $4,115. In the real world,
the price of the bag is only $3400. Users understood scarcity because Gucci's digital goods were only
available for a short period of time. Later, people sold some of these products for much higher prices
than their real-world equivalents. Currently, the online store hosts a promotional selection of vintage
items as well as selling Gucci Vault and NFT artwork.
3. Ralph Lauren
In keeping with tradition, the first foray into the metaverse for fashion brand Ralph Lauren was
into the winter-themed sportswear world. Players can try on and buy eight exclusive and
gender-neutral collections for their avatars.
Afterward, they can go virtual ice skating or prepare hot drinks in Ralph's Coffee House, among
other things.
(Ralph Lauren in Roblox: https://www.roblox.com/ralphlauren)
4. Balenciaga
The fashion house Balenciaga has entered into a cooperation with Epic Games, the developers
of Fortnite. After all, the company dresses starlets like Kim Kardashian, who also appear like
futuristic video game starlets in reality. For 400 million users worldwide, it is now: a style like
Balenciaga has integrated four stylishly hip skins into Fortnite. In addition, there are various
fashion accessories, such as a Balenciaga Bling backpack.
The fact that this collaboration will not remain a one-off show that a department responsible for
the metaverse has been set up in the fashion company.
(Balenciaga in Fortnite: https://www.epicgames.com/site/en-US/news/balenciaga-brings-highfashion-to-fortnite)
5. Adidas
Sporting goods manufacturer Adidas has gone comparatively deep into the metaverse.
Adidas has acquired a virtual property in the metaverse game The Sandbox.
b. Cooperation with the cryptocurrency exchange Coinbase in November 2021 showed a strong
interest in crypto wallets.
c. Engagement in the Bored Ape Yacht Club (BAYC) community. A BAYC NFT (via the
Ethereum blockchain) is considered a ticket to the virtual "yacht club"; the cheapest Bored Ape
now costs hundreds of thousands of dollars.
Adidas announced a collaboration with Bored Ape maker Yuga Labs, among others, to add the
"Into the Metaverse" collection to its in-house lifestyle label Adidas Originals. 30,000 NFTs
were sold for 0.2 Ethereum (about $800) each, generating $22 million in revenue for Adidas.
Balenciaga teamed up with the video game Fortnite, giving one of the characters a digital Balenciagabranded hoodie that could also be bought in real life for €725.
(1) (https://www.mckinsey.com/industries/retail/our-insights/state-of-fashion)
(2) https://www.psmarketresearch.com/market-analysis/metaversemarket#:~:text=Market%20Overview,purchase%20digital%20assets%20using%20cryptocurr
(3) https://makewebbetter.com/blog/fashion-ecommerce-return-rate-reasons/
(4) https://www.linkedin.com/pulse/11-most-important-fashion-brands-metaverse-what-offergaby-k-slez%C3%A1k/?trk=articles_directory