Chalhoub Group explores the metaverse potential for luxury retail across GCC
With the virtual and immersive world of the metaverse gaining more traction in the retail world, 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. Their comprehensive report, “GCC State of the Metaverse and its Potential for Luxury Retail”, offers insights into the potential and opportunities of the metaverse in the GCC, consumer sentiment and the implications of the metaverse for luxury retail.
The report shows elevated levels of awareness when it comes to crypto (77 percent), NFTs (49 percent) and the metaverse (46 percent), mainly amongst younger, high-income males predominantly in the UAE, Saudi Arabia and Oman. According to several analyst reports and aligned with Chalhoub Group growth projections, the metaverse industry is currently worth US$40-US$65 billion and expected to reach US$13 trillion by 2030, with fashion and luxury retail representing US$50 billion.
Amongst the GCC luxury consumers interviewed, 89 percent would like to preview products in the metaverse and 71 percent are already engaged with branded virtual experience. Luxury consumers have clear expectations for their favourite brands to be present in the metaverse (87 percent), while the majority (89 percent) were keen to preview products in the digital universe. Phygital is the future for the customer in the Gulf, as 80 percent would consider buying physical products that include NFTs, and 83 percent would consider an NFT that allows for redemption for a physical product.
When it comes to adoption rates, 48 percent confirmed they have already invested in crypto, while 23 percent stated they are engaged with NFTs and active on metaverse platforms. The motivation behind purchasing NFTs varied. The majority (66 percent) reported doing it for investment purposes with virtual art and sport being the most purchased types.
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 US$14,808 per capita average disposable income in the GCC, the regional enterprises already experimenting with the metaverse, and the thriving startup scene with over US$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. In July 2022, Dubai approved the new phase of the Emirate’s Metaverse Strategy which aims to create 40,000 virtual jobs and add US$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 socializing in metaverse environments.
Despite these opportunities, there are however barriers in consumer sentiment, such as users being afraid of crypto volatility (34 percent), lack of trust in NFTs (28 percent), and lack of understanding of the metaverse (42 percent), amongst others.
Nick Vinckier, Head of Corporate Innovation at Chalhoub Group said: “At Chalhoub Group, we recognize 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”
Chalhoub Group has already launched several Web3 initiatives, including a successful NFT launch of Christofle, including offering a customized 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.