The winds of fashion are blowing in the direction of the metaverse. Haute couture is strutting off the runaway… and into the virtual world. In the conversation below, Dr. Alexandra Diening, EPAM’s Head of Research & Insights for EMEA, explains why fashion brands are jazzed about working in the digital realm. Read on, as she describes in sharp, stylish language the essential attributes of digital fashion; why fashion houses are welcoming NFTs and young, internet-empowered designers; how the industry needs to approach consumers in the metaverse differently; and the ways digital fashion will affect the industry as a whole. Try it on for size!
What’s the current state of fashion in the metaverse?
The metaverse is still science fiction in certain verticals. Not so in fashion. Fashion brands appreciate the business opportunities that are emerging from the convergence of digital and physical worlds.
As a result, many luxury brands are engaging with the metaverse in a surprisingly rigorous manner—from appointing chief metaverse officers, to participating in responsible metaverse initiatives (for example, LVMH; they are already in), all the way to engaging with the online gaming communities and reaching out to new segments of young gaming consumers. Luxury brands like Gucci and Balenciaga have already launched experiences on Roblox and Fortnite. Also, Louis Vuitton, Burberry, Prada, and Givenchy are among those that have jumped on the craze for non-fungible tokens (NFTs) in gaming and virtual fashion.
How do you define digital fashion?
There is a high-level definition that involves the alignment of crypto, high tech, gaming, and fashion—but what it means to consumers is that they're basically purchasing online and digital garments, digital pieces of clothing that don’t exist in the carbon-based world.
And then there are various ways to wear and display those digital garments, which are very different compared to physical fashion. Digital fashion designs can be accessed by purchasing digital assets through designers and platforms (such as Dematerialized, the Fabric, or DressX). You can then dress your avatar in a game. You can buy a 2D garment and dress your photograph, photoshop it, and post it on social media. You can use Snapchat skins. This can go all the way to purchasing unique NFTs of digital clothing.
Would people pay real money for clothes that aren't real? What has to happen in order for them to make that leap?
Well, that brings us to the question: What is really real nowadays? We've been living in an increasingly virtual world. The metaverse is now breaking down this two-dimensional barrier and making it three-dimensional, which is new, but we've been living in virtual environments for quite some time already, and the pandemic vastly accelerated this. So the first step is understanding how this blurring of physical and digital changed our definition of what is really real.
You can fall in love, you can get angry, you can be bullied in the virtual world: Those things are real. They might not be physically tangible, but they are real. So perhaps what inhibits some people from buying clothes that are not real, or are considered not real, is our current mental model for clothing, which is mainly physical. Clothing is what you wear on your body.
But let's consider all the roles of clothing. There is this primary one, which is providing protection. Yes, we want those physical safeguards for our bodies that prevent us from harm or from the climate, being burned by the sun or being too cold. But other reasons for wearing clothes include adornment, identification with social groups, covering up for the sake of decency, or demonstrating status. These functions are neither tangible nor physical but they’re quite real. Very often we buy clothing, particularly luxury clothing, because of such non-tangible, non-physical attributes.
Now look at how much time we spend in our virtual environments, at the integral role social media plays in our everyday life. The people we are on social, in virtual environments, and in real life are now interdependent. And increasingly often the digital self is our most important self, and it influences who we are away from our devices.
Think about all those non-tangible attributes of clothes—they need an audience to appreciate them. You can run around naked if you're on your own; if there’s an audience, you need to get dressed. You won’t wear your Dior dress while making toast in the kitchen. You need an audience to make an impression. If you compare the virtual and physical worlds, you've got a bigger—potentially much bigger—audience in the virtual space. When dealing with digital clothing, particular luxury items, the emotional-utility calculation matters very much. Online worlds simply provide bigger audiences and bigger emotional utility for showcasing your fashion style. More exposure! More likes! More comments!
If you talk to some typical 16-year-olds, who spend half their time in the metaverse, the question would be: Why wouldn’t people buy digital clothes?
Can you describe the difference between an NFT and a digital fashion outfit on Instagram?
An NFT, as opposed to a digital fashion outfit on Instagram, has a very specific piece of code which you can save in your wallet. The applications of NFTs are much wider, as you can wear these clothes everywhere (to all different metaverses). So, there is interoperability. But most importantly, NFTs are just yours. They’re limited. Scarce. No one can take them away from you. NFT represents power in proof of ownership.
Digital is decoupling fashion from the (very often limiting) functional attributes of mere physical clothing and moving more towards self-expression. Towards art. This is where the NFTs kick in, because when you divorce clothing from its purely functional aspect, elements like exclusiveness, scarcity, collectability, and ownership come to the front of the runway. Just like with art.
Think about people who buy a Jackson Pollock painting. A Pollock is not something they bring to the supermarket to show to other shoppers. It’s sitting in a temperature-controlled storage facility. But just the fact that they have it and everyone knows about it, that they have a receipt of ownership, is gratifying to people on both an extrinsic and intrinsic level.
NFTs will bolster the authenticity of the digital clothes and create a perception that they are less functional wearables and more scarce art objects.
Let's zoom out a bit: How will digital fashion impact the fashion industry as a whole?
The dematerialization of fashion will certainly impact sustainability. There will be measured planetary savings. Consider the fact that digital garments emit 97 percent less CO2 than physical ones.
Dematerialization will be one of the biggest revolutions ever in the fashion industry. Designers will be able to create clothes that aren't possible in a physical world. They will no longer be limited by the laws of physics. They can create gravity-defying avant-garde fashion. A dress which is on fire. (In fact, Balmain already designed one). Or a dress made of water. It will afford designers unprecedented flexibility.
And at the same time, it gives a completely different lens to users. They will become much more demanding. They won’t just ask, ”Can I wear it?” and “Is it comfortable?” They will be looking for items that are totally different from what they've seen before.
Which means that fashion producers will need to search for different sources of inspiration such as gaming and sci-fi movies and other new reference points.
It will also change the way fashion is released. In the past, there was a specific lifecycle for fashion releases that was limited to a certain timeframe. That’s a thing of the past.
Think about RTFKKT Studios, which recently hired a teenage artist and sold just over 600 pairs of virtual sneakers, generating a total of $3.1 million in revenue, in five minutes. It took them two weeks to produce the whole thing, from design to content to launch.
This completely changes the way fashion is produced and sold. Digital fashion can be an avenue for in-real-life purchases. This could manifest itself in a gamer purchasing a real-life version of the hoodie she wears in a game—or even in brands launching their collections in digital first, and later producing the most popular pieces in the carbonized world.
It also removes many barriers to entry. In the past, if one wanted to become a fashion designer and build a brand, one needed to have years of experience. One needed to have a couple million dollars to launch a brand. No more. Right now, there can be an amazingly talented 16-year-old designer in the Ivory Coast; all she needs is to get her hands on a computer. She can enter the market and compete with the biggest brands.
Historically, fashion has a poor track record of anticipating and adopting new technologies, but they are now making up for this by jumping on the metaverse train surprisingly fast. Very likely because they realize it’s going to completely disrupt the fashion industry.
They’re bringing these young designers into their houses as a way to defend themselves?
Yes, that’s one way to work; to empower those young designers and collaborate with them and at the same time ensure that they keep in step with them.
So what does the fashion industry have to do to get this right?
The industry needs to realize that consumers will be spending ever more time in virtual environments. They will be experimenting, actively using those realities. The more brands engage with them, the better. Fashion brands should be part of this emerging ecosystem, and they should be there not just to sell, but first to learn.
They should be there to engage with consumers as soon as possible and study how the consumers behave, how they interact, how they shop, how they discover, how they create and co-create—which we know is quite different from how it’s done in the physical word. We know, from a large number of scientific studies, that our brains operate very differently in virtual environments, which means that consumer behavior, decision-making patterns, will also be different. Brands should get as much understanding of this new breed of metaverse consumers as possible, and then co-create experiences together with them.
Note: It’s important that brands not get trapped in the mental model of physical fashion by trying to produce the same thing in the virtual world.
They need to understand the cognitive processes involved. What is the underlying instinct? Emotion. What is the chain of reasoning that leads someone to value and buy a garment they can't touch and wear? Brands need to design their fashion and the whole ecosystem of experiences around that.
Purchasing digital clothing, especially NFTs right now, is inherently complex, too complex, for most people. They need to have a wallet. If they want to transfer ownership to someone else, they need to even have an Ether. People need to be able to buy NFTs without needing to understand of how the whole complex crypto world works. By minimizing all of that complexity to the bare minimum, a major barrier would be removed.
Companies need to have the right people building metaverses and designing fashion experiences effectively. It will be a big challenge for the houses because the historical model of real-life fashion is no longer applicable. They need to work with people who know how to design, how to experiment, how to learn. People with those talents will soon be scarce; so get them as soon as possible.
What about digital knockoffs? In luxury fashion brands, we know that's a problem in offline fashion. Are companies thinking that NFTs will take care of all that?
Right now, as soon as a consumer buys a handbag, there are two issues. First, the brand doesn't really have control of the experience. Sometimes people will buy a handbag and resell it on resale platforms and the brand has zero control of the experience. Second, there are issues of authentication.
With NFTs, the problems of control and authenticity are eliminated. This is the beautiful part about NFTs. The power of authenticity. And also power of ownership. If you buy, say, a sweater and leave it at a party, people can steal it and you’ll never see it again. In the metaverse, if you own an NFT, no one can take it away. It’s yours, unless you transfer the ownership to someone else (or get unfortunately phished like Seth Green).
Right. And it will never fray or get dirty.
If you wear, say, a Louis Vuitton blouse, it can indeed get stained. You might completely ruin it by ordering spaghetti Bolognese for dinner. With digital fashion, the longevity and resilience of clothing will no longer be an issue. So again, it will be much safer to buy a digital fashion luxury item—which you can transfer to your child and to your grandchild a decade later without a sign of wear—than to own a physical one, which can get broken, stolen, damaged, and all that good stuff. Or, rather, bad stuff.
So, despite the fact that some people are confused about digital fashion, very soon it will make an awful lot of sense to get an NFT of a Burberry coat, or at least to pair your real life one with the NFT version, for your next metaverse business conference.