Retail, Web3 and the Metaverse

kimveillaux - 05/01/2023

Introduction: Retail, Web3 and the metaverse

Some numbers:

The retail market represents approximately 190 billion euros in France in 2019. The e-commerce sector (products and services) represents 129 billion euros in 2021, up 15.1% over the year (Covid).

Leclerc has the largest market share with 22.5% in 2022followed by Carrefour with 19.7% market share. These are the most dynamic retail brands. On the other hand, Lidl has a market share of 6.8% and Casino has 7.7%.

The players in the retail industry did not measure the opportunity of e-commerce before the year 2000. It was only when certain pure-players grew and became sufficiently threatening that retailers woke up, sometimes a little late. It is on the American continent that the counter-attack will be the most brutal from 2014 with massive investments from Wallmart to compete with Amazon.

In 2020, the health crisis is a super gas pedal. Life pauses, businesses close. Food stores remain open to supply the French population. The front lines are applauded. But, a problem arises, people are afraid to leave their homes and refuse to queue in crowded stores. It is the revenge of the Drive which knows lightning growths. 

According to "the essentials of drive 2022," from 2019 to 2020, the drive saw a 47% increase and then a 6% increase from 2020 to 2021.

Historically, the idea of the automobile withdrawal goes back to 1997 with the creation of the DriveMarché brand. Subsequently, many brands have opened their drives such as Chronodrive, (subsidiary of Auchan in 2004) or Leclerc since 2007 with a drive on the site of Roques-sur-Garonne.

The e-commerce model of the supermarket is the drive. Some brands are investing in marketplaces or will join forces with existing marketplaces or form partnerships. A recent example is Monoprix, which has joined forces with Amazon. The Monoprix group sells its products through e-commerce on the Amazon marketplace.

Overall, covid has created a climate for digitalization that has only accelerated over the last 10 years. The use of drive-throughs has increased in the food sector and marketplaces have taken over in the non-food sector.  

Indeed, consumers are ready. Generations Y and Z have been raised on video games, and it's only natural that the arrival of the metaverse is shaking up the established codes of a retail industry that needs to be dusted off. The metaverse is going to become a channel in its own right and retailers have understood this. 

How will distributors behave on the web3?

Context: Retail, Web3 and the metaverse

The metaverse is a fictional virtual world connected to the Internet. In other words, they are virtual spaces accessible in 2D or 3D by videoconference. The term "metaverse" is the contraction of the word meta and universe. The goal of these platforms is to allow users to exchange or play with other users. 

We are far from the classic brick and mortar distribution model and yet metaverses are a fairly faithful reproduction of the real world. You can walk in cities, buy houses or visit public spaces.  

But then, why is the retail industry entering the virtual world of the metaverse and Web3?

Like all retailers, the retail industry wants to offer more experiences to their customers. 

The metaverse is a unique opportunity to build immersive and virtual stores, to organize thematic events but also and above all to set up games and address Generation Z. Indeed, tomorrow's consumers are gamers/Generation Z.

More generally, we're talking about culturization here, as retailers want to keep up with the times. They also want to adapt to new technologies, to understand the codes, habits and technologies that generation Z and alpha use every day. 

Experiences are multiplying; in the past, large retailers, such as Walmart, have offered their customers 3D COMMERCE experiences. 

Very recently, it was META that accelerated the movement and pushed retailers to invest in the metaverse.  

As always, it's the world's number one, Walmart, that is investing the most heavily in the metaverse. The company chose to launch on Roblox for one simple reason: "Roblox is one of the most dynamic and largest platforms in the metaverse, and we know that our customers spend a lot of time on it. So we're focused on creating new and innovative experiences that they are passionate about. That's what we're already doing in the communities where they live and now the virtual worlds where they play," said William White, chief marketing officer for the company.explained William White, marketing director of the retail giant.

Examples of distributors in the metaverse

At the same time, Walmart announced the launch of virtual stores where customers can try on clothes before continuing their purchases on the website or in physical stores. 

Indeed, this virtual universe becomes a space where customers can test new styles, shapes, colors of products. This tool is an excellent way for retailers to measure consumer interest in a product before launching its production. This allows the company to place more accurate orders and reduce inventory, but most importantly, to better respond to customer requests.

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In a very "brick & mortar" capitalist reflex, the brands began by buying up land on public metaverses. 

At the end of 2021, the Casino Group acquires a parcel in "The Sandbox" 

In addition, to better target gamers, the company offers its customers to play in the metaverse to win shopping vouchers. Capital describes in this this article the description of a game based on the theme of food in order to stay in a field known by the brand. The people playing the game, will then hold "golden tickets" to advance in the game and win vouchers. A good way to propose a new approach to customer loyalty via Web3.

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Carrefour is also investing in The Sandbox, with the purchase of a 36-hectare plot of land. Questioned by some Internet users about the reasons of this purchase, Carrefour does not advance any particular reason for the purchase of this virtual land. For the brand, it is mainly about not missing the rush towards this new sales channel and it is also an opportunity to create buzz.

The investment in the metaverse also attracts criticism. Some people have pointed out that the group has shed tens of thousands of employees in recent years and do not look kindly on this kind of investment. 

Beyond the buzz, what are the motivations?

The internet retailing articleThe article from Internet Retailing identifies the main motivations of buyers who engage in a virtual world, namely :

  • Customer loyalty (20%)
  • Serve customers quickly and efficiently (19%)
  • Make the store an immersive and impressive experience (14%)
  • Strong marketing, design and branding (14%)
  • in the cryptocurrency metaverse than using your credit card in a traditional store. 

Some benefits of the metaverse for distributors:

  • The use of customer support will be facilitated Calls can be made virtually and the "Bot with artificial intelligence" assistants can respond instantly to customer requests.
  • Permanent adaptation of their marketing strategy The metaverse offers the possibility to design a multitude of virtual universes according to their customer target.
  • Offer NFTs to their customers: A non-fungible token is a piece of data composed of a token type that represents an object, to which a digital identity is attached.
  • Use of cryptocurrencies The metaverse has its own currency. Today it's as easy to buy a product in the metaverse in cryptocurrency as it is to use your credit card in a traditional store.

Examples of brands launched in the metaverse:

The example: Selfridges

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Selfridges is a British retail chain founded in 1908. It is an institution, investing in the metaverse to provide an immersive experience to its customers. As for other retailers, they have acquired virtual lands and provide their own NFT.

Used to collaborations, the London luxury store has partnered with the Vasarely Foundation and Paco Rabanne to launch its virtual store in "Decentraland".

In this virtual space, users will be able to take a guided tour that details each NFT and view art exhibits.

The world of luxury is now "broken in" to WEB3 and the use of the metaverse, as we saw in our article on business opportunities in the metaverse.

The example: Decathlon

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To understand how to leverage the metaverse and NFTs, Decathlon has created a chief metavers officer position in December 2021. The brand has started marketing NFTs. For this first launch, the brand collaborated with Séan Garnier, world champion and three-time French freestyle champion, to create a sneaker model. The sneakers are available in a limited edition of 2008 and each pair is associated with an NFT from the Tezos blockchain. 

Decathlon relied on this collaboration to offer the athlete's athlete's credibility but also his strong popularity and influence on social networks. Successful bet, a limited investment for a maximized result thanks to Séan Garnier's 5.6 million followers on Instagram.

Tezos is a scalable platform for developing smart contracts around cryptocurrency. It is also a platform committed to biodiversity and global warming reduction. Naturally, Decathlon turned to this platform for its NFTs. 

The example: La Nouvelle Cave

La Nouvelle Cave, a new concept of wine shop that intends to rejuvenate an aging conceptLa Nouvelle Cave has been a forerunner in innovation. The brand, created in 2019, aims to democratize and make the best wines accessible to consumers. It relies in particular on many digital innovations (chatbots, virtual cellar, ...). It is a laboratory of experience for the group.

After the successful launch in April 2022 of the first immersive virtual store, in which the customer can find product sheets with 3D models that allow him to handle the bottles "as if he were in the physical store", thehe wine merchant has proposed 15 NFTs in collaboration with Maison Bouey (a Bordeaux wine merchant) for the wine fair.

The NFTs are dropped at the wine fair and can be purchased in euros at La Nouvelle Cave's store and on the e-commerce website. These NFT are materialized with QR codes and a reproduction of the wooden bottles that allows access to information about the wine. The bottles purchased will not be physically present at the point of sale but stored in the cellars of the Bouey house. The NFT acts as a certificate of authenticity and a guarantee of storage in the best conditions. 

The operation was a success: almost all the grands crus were sold in NFT. 

Moreover, the results of the virtual store speak for themselves:

  • the implementation of the virtual showroom generated 15% additional traffic in the 3 months following the launch
  •  the virtual store alone generates 10% more sales since its creation
  •  the virtual store increases the average shopping basket by 35%. 

Conclusion: Retail and the Metaverse

The metaverse will continue to disrupt our consumption patterns. The objective is clear for brands: to stay close to generation Z and Alpha, to build loyalty and awareness among their young customers.

The positioning of Retail VR: Retailers in the Metaverse

At Retail VR we are convinced that the metaverse, 3D commerce, virtual reality and augmented reality uses are the future of digital commerce.

In a pragmatic approach, we offer our customers sales experiences that facilitate engagement. We continue our partnership strategy and now offer integration of our solutions with the largest CMS & CRM available on the market.  

We are proud to accompany our customers, retailers and industrialists towards the commerce of tomorrow by proposing ever more innovative solutions. 

Our technical and commercial teams are at your disposal to study your projects.