DUBAI: Chalhoub Group released the GCC State of the Metaverse and its Potential for Luxury Retail report last month relating to Gulf consumer thoughts on the Web3, which includes metaverse, cryptocurrencies and NFTs.
The metaverse industry is currently estimated to be worth between 40 and 65 billion dollars (1 dollar = 0.94 euros) and it is expected to reach 13 trillion dollars by 2030.
Arab News spoke to Nick Vinckier, head of corporate innovation at Chalhoub Group, to learn more about this report.
There are three key takeaways from the document, according to Vinckier. The first is that, although Web3 is still in its infancy, it is not a trend or fad that will fade. It will only grow exponentially.
The report shows high levels of awareness across all facets of Web3. Consumers are particularly interested in cryptocurrency (77%), followed by NFTs (49%) and metaverse (46%), mainly among young men who have high incomes, especially in the United Arab Emirates (UAE), in Saudi Arabia and the Sultanate of Oman.
Second, says Nick Vinckier, there is already a huge amount of value in Web3 with 48% of respondents claiming to 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 present 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, 89% of them say they would like to preview products in the metaverse and 87% say they expect their favorite brands are present in the metaverse.
Despite these possibilities, there are obstacles, such as user fear of cryptocurrency volatility (34%), lack of trust in NFTs (28%), and lack of understanding of the metaverse (42%), among others. .
Cryptocurrency, in particular, saw its reputation tarnished following last year’s FTX scandal. 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 published the balance sheet 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 legal actions against Sam Bankman-Fried, FTX and the celebrities who promoted the cryptocurrency exchange platform, resulting in a financial scandal.
“It is true that the collapse of FTX and the insolvency issue of other cryptocurrency exchanges has damaged the reputation of cryptocurrency, but people had trust and volatility issues even before the scandal. FTX”, specifies Mr. Vinckier.
As cryptocurrency adoption grows, Nick Vinckier predicts regulators will step in to work hand-in-hand with the private sector to establish a framework that protects everyone.
This point is critically important 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 last twelve months and 85% plan to do so in the next two years.
Virtual game purchases are the most common (60%), followed at 45% by purchases of real-world items and 42% by NFT purchases.
The figures emphasize the development of a new trend, phygital, which combines the digital and physical worlds.
In the Gulf region, interest in phygital goods is particularly high, as 83% of respondents would consider buying an NFT allowing them to exchange it for a physical product, according to the report.
Brands have been quick to take notice of this trend and global companies have initiated campaigns allowing 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 twenty-four hours only. The article is about 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 worth $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 for the future strategy of Chalhoub Group.
2022 was a year of experimentation for the company. She 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 its acquired knowledge, 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 are going to start operating the projects, developing them and making them more sustainable and more built. Thus, they will have more impact on our business.”
Although he didn’t give specifics, 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, he continues, “we will always be the first to preserve such approaches”.
Chalhoub Group will continue to invest, experiment and break into the world of Web3, but the split between its physical and digital efforts will not be 50-50, but rather 60-40, at most.
He says in conclusion: “We don’t sell luxury. Luxury is the experience of the purchase journey and it will be the same for Web3.”
This text is the translation of an article published on Arabnews.com