- Retail brands across most product categories feel the need to adapt to compete with the rise of cryptocurrencies, NFTs, and the metaverse, which has led to a new breed of virtual shoppers demanding products and services that are changing the retail landscape.
- The effects of metaverse commerce adoption are
being felt by retail brands at various stages of the shopping journey. Shopping
works differently than in the past and requires new outlooks, models, and
competencies.
- Metaverse commerce technology transformation
requires superior technology and virtual retail environments to provide a
cohesive connected experience. Retailers need to map out their journey from
today to be ready to deliver a metaverse commerce experience that customers will
expect.
Our Advice
Critical Insight
- The metaverse will
fundamentally disrupt the retail ecosystem and take personalization from
evolution to a complete revolution. Although metaverse commerce is still
in its infancy, many retail brands are testing applications like
avatar-driven customer services, augmented reality, and 3D interaction to
entice shoppers through virtual stores, products, and events.
- For many enterprises,
realizing value in the metaverse is a mystery for now. Ultimately,
retailers will need to map out their journey from today to be ready to
deliver a metaverse commerce experience that their customers will expect
through products, customer services, operating models, and technology.
- As technology
advances, much consideration will focus on the degree to which retail
brands must leverage prospects in the metaverse commerce, or they may have
to trade due to the possibility of losing competitive advantage, market
share, and profitability.
- Retailers must validate
their strategy and persistently reinforce the enterprise’s core
capabilities and construct to capitalize on the value of this new
prospect.
Impact and Result
- Identify opportunities across your shopping journey to capitalize on the blockchain, digital twinning, infrastructure, and virtual environments to monetize key customer insights.
- Realize the effects of metaverse that are being felt on all entities of the physical and virtual retail ecosystem. Learn how the best-in-class retailers are already reaping business benefits from adopting technology demands with the Metaverse Journey Map.
- Visualize consumer, services, operations, and technology components in unison for your enterprise and industry use cases to design a list of initiatives to integrate into the IT strategic plan.
Shopping in the Metaverse
Identify and understand the metaverse commerce shopping impacts on retail value streams.
Analyst Perspective
The metaverse commerce shopping journey will lead to growth with direct-to-avatar (D2A) models via blockchain, digital twins, and non-fungible tokens (NFTs).
The metaverse will fundamentally disrupt the retail ecosystem and take personalization from evolution to a complete revolution. Although metaverse commerce is still in its infancy, many retail brands are testing applications like avatar-driven customer services, augmented reality, and 3D interaction to entice shoppers through virtual stores, products, and events.
For many enterprises, realizing value in the metaverse is a mystery for now. Ultimately, retailers will need to map out their journey from today to be ready to deliver a metaverse commerce experience that their customers will expect through products, customer services, operating model, and technology.
As technology advances, much consideration will focus on the degree to which retail brands must leverage prospects in the metaverse commerce, or they may have to trade due to the possibility of losing competitive advantage, market share, and profitability.
Retailers must validate their strategy and persistently reinforce the enterprise's core capabilities and construct to capitalize on the value of this new prospect.
Rahul Jaiswal
Principal Research Director, Retail
Info-Tech Research Group
Executive Summary
Your Challenge
- Retailers struggle to adapt to the rise in demands for cryptocurrencies, NFTs, and metaverse from the evolving needs of virtual shoppers.
- Shopping in the metaverse works differently than shopping used to, and requires a new outlook, models, and competencies to remain competitive.
- Metaverse commerce technology transformation requires superior technology journey mapping, and building a cohesive client experience.
- Retailers need a fully comprehensive strategy to address evolving shoppers' needs.
Common Obstacles
- Retailers are reluctant to execute metaverse, which is the key to the success of the retail organization's strategy.
- Most retailers don't know how to begin. Retailers have not taken a structured approach to execute technology in each phase of the shopping journey and have deployed technology before developing a robust strategy.
- Virtual and augmented customer experiences are crucial for retailers to drive value in today's market.
- Most retail brands seek to adopt a well-crafted strategy in technology deployment to master the metaverse commerce domain.
Info-Tech's Approach
- Identify opportunities across your shopping journey to capitalize on the blockchain, digital twinning, infrastructure, and virtual environments to monetize key customer insights.
- Realize the effects of metaverse that are being felt on all entities of the physical and virtual retail ecosystem.
- Learn how the best-in-class retailers are already reaping business benefits from adopting technology demands with the Metaverse Journey Map.
- Visualize consumer, services, operations, and technology components in unison for your enterprise and industry use cases to design a list of initiatives to integrate into the IT strategic plan.
Info-Tech Insight
Many enterprises do not recognize the use of blockchain, digital twinning, AR, VR or MR as vital to their business. Interest in these spaces is quickly increasing as digital currencies, non-fungible tokens, and metaverse commerce generate new outlooks for value creation. Businesses need to develop a holistic strategy and reevaluate business and technology capabilities while planning for the metaverse. Retail brands that do not plan for the future are likely to lose market share to metaverse commerce adopters.
The metaverse is a technological convergence
The metaverse is a platform combining multiple technologies to enable social and economic activity in a digital world that is connected to the physical world.
Info-Tech Insight
A metaverse experience must combine the three P's: user presence is represented, the world is persistent, and data is portable.
Forecast eCommerce to grow progressively in the future by driving an increasing number of online buyers who are willing to spend more
Online Sales Growth
E-commerce as a percentage of total retail sales worldwide from 2015 to 2020, with forecasts from 2021 to 2025
Online Sales Growth |
E-Commerce Growth Drivers |
|
---|---|---|
E-commerce as a percentage of total retail sales worldwide from 2015 to 2020, with forecasts from 2021 to 2025
Source: Statista, Aug 6, 2022 |
|
|
Top 10 Countries, Ranked by Retail Ecommerce Sales Share, 2021
Source: eMarketer, May 2021 |
|
Metaverse will lead the next wave of growth with the direct-to-avatar model through product development, infrastructure, blockchain and product design
Retail brands are building digital products, modelling real physical environments in digital space applying
- Virtual showrooming – Designed to allow customers to take a tour and interact with 3D products.
- Virtual try-on – Assisting customers to tap into augmented reality, try on glasses or makeup, and visualize furniture.
- Customization and co-innovation –3D technology leveraged to let consumers build/design their shoes.
- Gamification – Brands are creating a video game to reach a younger audience with branded NFT collectables.
- Connected wellbeing – Digital treatments such as prescription gaming and VR pharmacies are gaining momentum in the medical world.
Top corporate capabilities needed to deliver metaverse strategy, % of senior executives | ||
---|---|---|
Top 5 |
Business (model) building |
53 |
Product development/coding |
42 | |
Infrastructure/back-end engineering |
38 | |
Blockchain/commerce/payments |
37 | |
Product design |
35 | |
Others |
Legal, risk and compliance |
35 |
Cybersecurity |
33 | |
Analytics |
32 | |
Content creation |
29 | |
Marketing/go to market |
29 | |
Brand/corporate strategy |
28 | |
Process engineering |
21 | |
Graphic design (e.g.,3-D art, games) |
19 | |
Process engineering |
12 | |
Project management |
10 | |
CRM/community management |
10 |
Source: McKinsey & Company, Senior Executive Survey, April 2022
Leading retailers and brands are offering metaverse commerce at various stages of the shopping journey
Awareness |
Consideration |
Transaction |
Delivery |
Engagement |
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Source: Open Source, Info-Tech Research Group Analysis
METAVERSE COMMERCE
Source: Info-Tech Research Group Analysis
Metaverse commerce will harness blockchain technology to advance the shopping experience
Awareness and the Readiness
Start the blockchain journey with integration, modernization, and agility at its core
- Legacy Modernization – Integrate blockchain into an existing legacy environment.
- Service Integration – Assist complex integration when integrating blockchain into the current business and technology environment.
- Agile Prototyping – Practice agile prototyping to achieve efficient communication with stakeholders, track design decisions, and manage the implementation of blockchain prototypes.
Retailers must explore blockchain with proof of concept (PoC) for recognized use cases using an agile approach.
- Leverage Smart Contracts to Execute Commercial Transactions and Agreements – Smart contracts use blockchain to enforce the obligations of all parties in a contract, without the extra overhead of a middleman. They are computer programs that facilitate, verify, or enforce the negotiation or execution of an agreement. Smart contracts often emulate the logic of standard contractual clauses, so many contractual sections can be made partially or fully self-executing, self-enforcing, or both.
- Enhance Data Portability and Reduced Risk Storing Customer Information – Know Your Client (KYC) Statements can be stored on the blockchain to decrease administration problems and costs while outlining the concerns that still need to be addressed. A decentralized identity management platform would reduce the stress on the current centralized approach to storing customer information. By storing data in blocks and using a tamperproof hash format, retailers can improve the security of the stored identity, improve the portability of data, and reduce the time taken for KYC efforts.
- Deliver Seamless Direct Money Transfer and Payments – Blockchain technology could be used to overcome the current problem of the correspondent system and international money transfer. The fee-intensive & fragmented cross-border non-cash transaction could be eliminated by excluding third parties, direct money transfers, and efficient interbank settlements. Creating a competitive marketplace of liquidity providers potentially ensures the best exchange rates for international exchange and payment transactions.
- Use Decentralized Ledger for Trade Settlements – Trade settlement processes usually require two to three days for payments and securities to change hands. Moving this process to a decentralized ledger can have a transformative effect on the markets. This need not be limited to debt, etc., but can also be extended to complex modelling.
Digital twinning will take personalized retail from evolution to revolution
Awareness & Readiness
- Digital twinning aids in applying changes in test mode, fine-tuning the process online, and deploying flawless solutions into reality.
- All hypotheses can be verified within the simulation, which saves time, money, and other resources. Enterprises fundamentally get a trial run for any likely changes online, which significantly decreases errors in the real processes.
- Digital twins can be used to generate computational investigative models for any purpose desired. It embraces operating effects, predictions of conditions, and determining behaviours.
- Models can recommend enhanced actions based on engineering input, ML and AI, sciences like physics, chemistry, statistics, as well as business objectives.
AR/VR/MR* Merchandising |
COMPUTATIONAL INVESTIGATIVE MODELS |
|||||||
---|---|---|---|---|---|---|---|---|
Testing Prototypes |
→ |
Simulating Merchandise |
→ |
Process Deviations |
→ |
Tracking Change In-Diverse Conditions |
→ |
Managing Product, Production, Performance Lifecycle |
Diagnosing Risk Factors Virtual Scanning |
→ |
Rapid Diagnosis, |
→ |
Predicting Reactions |
→ |
Faster, Fewer, Safer Clinical Trials |
→ |
Optimizing Efficiency of Retail Pharmacy Facilities |
*AR: Augmented Reality; VR: Virtual Reality; MR: Mixed Reality
To master the metaverse commerce domain, retailers need to adopt a well-crafted strategy in technology organization
- AWARENESS
- Evaluate Business Goals
- Market Investigation –
- Customer Segmentation
- Trends Analysis
- Competitors Mapping
- Buyer Personas (Avatars)
- Buying Patterns
- Usability Calculation
- Channel Fluidity
- Maturity Assessment
- Organizational Change
- Process Implications
- CONSIDERATION
- Metaverse Strategy Plan
- Assortment Planning
- Order & Inventory Management
- Centralized Marketing
- Campaign Management,
- Location-Based Promotions
- Personalized Communication
- Product Information
- Social Networking
- Crowd Sourcing
- Trend Monitoring
- SELECTION
- Business Process
- Enterprise Architecture
- Architecture Roadmap
- Data Definition
- Cost Benefit Analysis
- Product, Production, Performance Evaluation
- Customer Experience Classification
- Negotiation
- Change Management
- Program Management
- Compliance Requirement
- Legal Framework
- Technical Architecture
- Design Governance
- APPROVE
- Cross-Channel Visibility
- Cross-Channel Integration
- Customer Identity
- Access Administration
- Product Implementation
- Custom-made Development
- Social, Commerce Integration
- FOLLOW UP
- Platform Operations
- Application, Tools Support
- Business Intelligence
- Predictive Analytics
- Technology Automation
- Continuous Customer Engagement
- Customer Services and Loyalty
RETAIL INDUSTRY REFERENCE ARCHITECTURE
Envision business capability components, costs and competitive advantage creators in unison to align the value streams
Source: Info-Tech Research Group Analysis
STORE IN METAVERSE
Case Study: Lowes expands into the metaverse by unveiling a ‘digital twin’ store leveraging the NVIDIA Omni-verse platform and Magic Leap.
Lowe’s Companies Inc. is a retail company specializing in home improvement, based in Mooresville, North Carolina. The company operates a chain of retail stores in the United States and Canada. As of February 2021, Lowe's and its related businesses operate 2,197 home improvement and hardware stores in North America.
Lowe’s wanted to enter the metaverse by opening a virtual store, providing customers with a 3-dimensional shopping experience where associates can also interact with and visualize store data to improve operations and logistics.
Solution
- Lowe’s leveraged the omni-verse platform, which helps build and operate metaverse applications on a real-time large-scale 3D database. The platform empowers 3D designers and teams to connect and build existing 3D pipelines that operate virtual worlds simulations.
- Operatives can create and collaborate on any device with the Omniverse App Streaming feature, access and edit shared virtual worlds with Omniverse Nucleus Cloud, and scale 3D workloads across the cloud with Omniverse Farm.
- Lowe’s empowers warehouse workers to work efficiently by seeing visual stimuli in the warehouse while wearing the Magic Leap 2 augmented reality (AR) glasses.
- Nvidia’s SaaS offering, Omniverse Cloud, is an IaaS that links Omniverse applications running in the cloud, on-premises, or on-edge devices.
Results
- Lowe’s has prepared an interactive digital replica of its store within NVIDIA Omniverse Enterprise’s environment, where associates can interact and visualize store data to optimize operations and logistics.
- Lowe’s associates can access live at two stores, through desktops or computers and with Magic Leap 2 AR headsets.
- With the virtual replica of the store, the company is analyzing a variety of other use cases, including reconfiguring designs, restocking support, real-time collaboration, and what it calls “X-ray vision.”
- (Sources: Nvidia 2022, Retail Dive 2022)
Related Infotech Research
Retail Industry Business Reference Architecture
Leading organizations require business reference architecture techniques such as strategy maps, value streams, and capability maps to design accurate blueprints of retail operations.
Assess your initiatives and priorities to determine if you are investing in the right capabilities. Conduct capability assessments to identify opportunities and prioritize projects.
Into the Metaverse
Understand how Meta and Microsoft define the Metaverse and the coming challenges that enterprises will need to solve to harness this new digital capability.
Learn about other solution providers implementing the enterprise metaverse and How IT can prepare for the new digital world
Identify risks in deploying metaverse solutions and how to mitigate them.
Define Your Digital Business Strategy
Design a strategy that applies innovation to your business model, streamlines and transforms processes, and makes use of technologies to enhance interactions with customers and employees.
Use digital for transforming non-routine cognitive activities and for derisking key elements of the value chain. Create a balanced roadmap that improves digital maturity and prepares you for long-term success in a digital economy.
Adopt Blockchain for Supply Chain Transparency
Simplify, automate, secure. Smart contracts enable businesses to simplify, automate, and secure traditionally complex transactions.
New business models. Smart contracts enable the redesign of your organization and business-to-business relationships and transactions.
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Research Contributors
Larry Fretz
VP of Industry Research
Info-Tech Research Group, USA
Rajiv Shankar
Chief Information Officer
REDTAG, United Arab Emirates
ROB REDFORD
Practice Lead
Info-Tech Research Group
Nastaran Bisheban
Chief Technology Officer
KFC, Canada
ERIC FROHLICK
Executive Advisor, Global Services
Info-Tech Research Group