Head of General Counsel Services | Commercial | Retail & Consumer
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The metaverse represents a new frontier for retail. Partnerships are key to putting brands on the metaverse map.
The metaverse is reshaping the retail landscape by the way we socialise, do business and shop. Not only are partnerships a fantastic tool for building brand awareness, trust and media coverage, they could be essential for getting a foot in the door of the metaverse at all, particularly in its early stages.
As with partnerships in the physical world, the rewards are expected to be huge, but they are not without their risks.
This blog highlights the benefits and potential obstacles for brands embarking on partnerships across the metaverse, and sets out some steps addressing these.
The metaverse is an augmented, virtual reality encompassing the breadth of interactions and encounters we currently experience in the physical world across work and play. The metaverse will facilitate real-time interactions on a digital platform.
For many, the metaverse is something of the future. But research suggests it’s going to be relevant for most businesses very soon. Gartner predicted that by 2026, a quarter of people will spend an hour in the metaverse every day.
It’s not just the most cutting-edge technology businesses that are already interested and invested in the metaverse. Beauty and fashion are trying the metaspace on for size, offering virtual fashion shows, limited edition virtual items and partnering with influencers and celebrities to connect with consumers already immersed in the metaverse. Some FMCG brands are already testing the waters. In our recent podcast, Retail Matters, Kantar (a global insights company) highlighted that they are seeing a rise in users wanting to buy products in the metaverse, with the top product being physical clothes.
To get a foothold into the metaverse, capture consumer interest and hold it, partnerships are going to be crucial.
To get a foothold into the metaverse, capture consumer interest and hold it, partnerships are going to be crucial. We already know that partnerships are a hugely popular marketing strategy for retail brands, both online and on the high street. In our latest report, ‘Harnessing the power of brand collaborations’ we spoke to more than 80 companies, including some of the UK’s best-known retailers, who almost unanimously agreed that partnerships are considered one of the best catalysts for growth (98%).
Collaborations are a valued and well-developed marketing strategy, and already entrenched in many brands’ modus operandi. It therefore makes sense to enhance the metaverse retailer industry, and consumer experience, via this tried and tested approach.
And we can already see this happening. Fashion brands are collaborating with virtual influencers, including Prada, Dior and Calvin Klein with Lil Miquela and Yoox created their own virtual influencer, Daisy, working with high profile brands such as Polo Ralph Lauren, Persol and New Balance.
Few brands have the cash or capacity to build their own platform for entering and building a presence in the metaverse. And even those that could manage this look to partnerships to support them. Take Nike, for example, they partnered with Roblox who own their online metaverse platform. Together, they created NikeLand, free to enter for Roblox players, providing more open access to Nike’s metaverse world. Partnerships are a powerful means of kickstarting activity and opportunities in the metaverse.
But with such partnerships will come complications, and a need for transparency and accountability. Huge amounts of data, potentially crossing country borders, will be shared between the parties. There is currently no metaverse-specific consumer protection law, so it's not unreasonable to assume that existing physical world laws will apply for now - this is an evolving space, and one to keep a close eye on.
As Paolo Sbuttoni, Partner at Foot Anstey explains in our Retail Matters podcast, should brands enter partnerships with platforms to access and inhabit the metaverse, the responsibility for complying with laws will need to be allocated between the parties – and this can be challenging.
Legal issues are already perceived to be a fundamental risk of partnerships across retail in the physical world. Our brand collaborations report revealed that 69% of retail brands surveyed had encountered legal barriers in partnerships, with 44% of the brands surveyed considering legal issues around ownership as a key risk. Despite the risks, collaborations remain a favoured marketing strategy, and this is where legal teams can step in to support.
Complying with consumer law isn’t just a legal issue, it’s about making consumers feel safe and secure to improve customer satisfaction and experience. If a consumer enters your virtual space and knows that their data is respected by your brand and kept safe, they are likely to feel more confident and loyal to your brand.
Our brand collaborations report revealed that 69% of retail brands surveyed had encountered legal barriers in partnerships
The metaverse provides fertile ground for brands to thrive, if they get their strategy right early.
Our five-step checklist supports brands to successfully scope out and run collaborations. Our guide covers the following points which all brands should consider:
We have a wealth of information and advice about each of these steps in our brand collaborations report.
Speak to us about putting the right measures in place, and how to have constructive conversations with your existing and future collaboration partners.
Read more in our ‘Harnessing the power of brand collaborations’ report and listen to the Retail Matters: Retail in the Metaverse & beyond podcast episode.