DUBAI: Chalhoub Group last month released its GCC State of the Metaverse and its Potential for Luxury Retail report covering Gulf consumers’ thoughts on the Web3, which includes the metaverse, cryptocurrencies and NFTs.
The metaverse industry is currently estimated at $40 to $65 billion ($1 = €0.94) and is projected to reach $13 trillion by 2030.
Arab news spoke to Nick Vinckier, Head of Corporate Innovation at Chalhoub Group, to find out more about this report.
There are three key aspects to the document, according to Vinckier. The first is that while Web3 is still in its infancy, it’s not a trend or fad that’s destined to fade away. It will only grow exponentially.
The report shows high levels of awareness in all aspects of Web3. Consumers are particularly interested in cryptocurrencies (77%), followed by NFTs (49%) and metaverse (46%), especially among young people with high incomes, especially in the United Arab Emirates (UAE), Saudi Arabia and the Sultanate of ‘Oman.
Secondly, says Nick Vinckier, there is already tremendous value in Web3 with 48% of respondents saying they have invested in cryptocurrency. Additionally, 23% say they use NFTs and are active on metaverse platforms, while 71% participate in branded virtual experiences.
Third, he adds, “the customer already expects their favorite brands to be in the metaverse.”
Avatar of Nick Vinckier, Head of Corporate Innovation at Chalhoub Group. (Photo Provided)
Luxury goods consumers want to engage with experiences in the metaverse, with 89% of them saying they would like to preview products in the metaverse and 87% saying they expect their favorite brands to be featured in the metaverse.
Despite these possibilities, there are obstacles, such as users’ fear of cryptocurrency volatility (34%), lack of trust in NFTs (28%) and lack of understanding of the metaverse (42%), among others. .
Cryptocurrency, in particular, has seen its reputation tarnished following the FTX scandal last year. Founded by Sam Bankman-Fried in 2019, FTX is a cryptocurrency exchange that has grown in popularity thanks to celebrity endorsements and an aggressive marketing strategy.
Cryptocurrency news site CoinDesk released the financial statements of Alameda Research, a cryptocurrency investment firm also owned by Mr. Bankman-Fried, in November. It shows that Alameda held a large amount of a digital currency – FTT – created by FTX.
This article sparked a series of lawsuits against Sam Bankman-Fried, FTX and celebrities who promoted the cryptocurrency exchange platform, resulting in a financial scandal.
“It is true that the collapse of FTX and the issue of insolvency of other cryptocurrency exchanges has damaged the reputation of the cryptocurrency, but people had trust and volatility issues even before the FTX scandal,” Mr. Vinckier specifies.
As cryptocurrency adoption grows, Vinckier expects regulators will step in to work hand-in-hand with the private sector to establish a framework that keeps everyone safe.
This point is of paramount importance as buying and selling becomes more common in the metaverse, where cryptocurrency is predominant.
For example, 93% of metaverse users have already made purchases in the past twelve months, and 85% plan to do so in the next two years.
Virtual game purchases are the most common (60%), followed by 45% by purchases of real-world items and 42% by NFT purchases.
The numbers underline the development of a new trend, phygital, which combines the digital and physical worlds.
In the Gulf region, interest in phygital assets is particularly high, as 83% of respondents would consider purchasing an NFT that allows them to exchange it for a physical product, according to the report.
Brands have quickly caught on to this trend, and global companies have launched campaigns that allow consumers to exchange NFTs for a physical product.
Prada, for example, launched its first phygital campaign, dubbed “Prada Timecapsule,” in 2019. Each month, the Timecapsule collection promotes a new item, available exclusively online for just twenty-four hours. The article covers both a limited edition physical product and a free NFT.
Rimowa, in partnership with digital studio RTFKT, last year sold eight hundred and eighty-eight NFTs valued at $3,000 each, redeemable for a one-of-a-kind suitcase.
This trend marks a new frontier for Web3 both globally and regionally. It will be crucial to the future strategy of the Chalhoub Group.
2022 has been a year of experimentation for the company. He has developed several projects, large and small, including the collection called “925 Genesis Mood” for the Christofle brand. All NFTs sold out within five minutes of launch.
Based on the insights gained, the company will now focus on fewer, but larger and better-funded projects.
“As with any project in my innovation department within the company, we start with an exploration phase,” says Vinckier.
“We will start managing the projects, developing them and making them more sustainable and more built. Therefore, they will have a greater impact on our business.”
While he didn’t provide details, Nick Vinckier says the company plans to focus more on phygital and multi-channel projects because “we don’t believe in a virtual-only future.”
The company remains convinced that physical in-store experiences have real value and, it continues, “we will always be the first to preserve those approaches.”
Chalhoub Group will continue to invest, experiment and break through in the world of Web3, but the split between physical and digital efforts will not be 50-50, but at most 60-40.
In conclusion, he says: “We don’t sell luxury. Luxury is the experience of the shopping journey and it will be the same for Web3”.
This text is the translation of an article published on Arabnews.com