A Metaverse-Driven Transformation Is Coming to Retail

Liz Aviles Vice President of Strategy and Cultural Insights

A Conversation with Liz Aviles, VP of Strategy and Cultural Insights, Upshot

By R. Larsson, Advertising Week

Retail is rewiring and it’s happening before our eyes, says Liz Aviles, Vice President of Strategy and Cultural Insights for creative agency Upshot. As the metaverse opens up new opportunities for retail, she notes, “the lines between commerce and other forms of digital content such as social media, entertainment and gaming blur and our digital identities will power how and where we shop.”

Advertising Week discusses all of this and more with Aviles, including her tips for crafting the best shopping experience for customers.

Q: What is “Retail Rewired”? And broadly, how does retail look different compared to just a few years ago?

It’s the idea that today’s best retailers are combining the pandemic-accelerated innovations of the past two years with the power of technologies like 5G and AR and the emergence of the metaverse to meet new shopper demands both online and offline. Supply-chain issues aside, it’s a powerful moment in retail right now as retailers finally deliver on the promise of truly everywhere, anytime shopability combined with IRL store experiences meant to draw us back into stores as the social, inspiring and engaging spaces they should be.

Q: What’s the most provocative thing you can say about ‘Retail Rewired’? What’s the argument against it?

‘I shop, therefore I am.’ By this, I mean that we live in a consumerist culture where concepts about ownership and access to goods are rapidly evolving to hew to our individual identities. In a mobile-first and digitally driven marketplace, today’s shoppers can discover and purchase products in a near-instant. And increasingly, those purchases are entwined with our social, digital identities. As the lines between commerce and other forms of digital content such as social media, entertainment and gaming blur, our digital identities will power how and where we shop.

In this sense, the argument against this sort of digitally driven world of retail that’s often cashless, app-driven or inclusive of digital assets such as NFTs is that today it tends to exclude older and lower-income consumers. I see this already with older members of my family who struggle with digital aspects of both in-store and online shopping. This digitalization of shopping is only set to expand. Case in point: as more retailers experiment with accepting bitcoin and other forms of cryptocurrency, the potential benefits of these new currencies may be limited for less tech-savvy shoppers without easy access to them.

Q: Post-covid, are more retailers thinking ambitiously? Or are they more in a ‘hunker down’ mindset to get through this year of supply-chain issues/inflation?

We definitely see more ambition and imagination in the marketplace despite the real supply chain and inflationary challenges that retailers are facing. Over the past fifteen years or so, retail experiences have leveled up across all channels and shoppers are not willing to compromise on discovery-driven and inspiring shopping. Options abound (and Amazon looms), so they’ll take their carefully managed dollars elsewhere if they don’t get the service, assortment and experience they expect.

Q: Talk about phygital: what is it and how are retailers implementing it? Any specific examples you can think of?

Phygital is simply the intersection of the physical brick-and-mortar experience with digitally powered interactions to improve that experience, making it more efficient, seamless and often delightful for the shopper. Amazon Go and Apple’s mobile-powered, cashier-less stores are good examples but I’d also recommend looking at L’Oreal’s newest flagship store in Shanghai as a harbinger of phygital experiences to come. Similar to how Nike has created connectivity between some of its store environments and its apps here in the U.S., the L’Oreal store offers a variety of interactions powered by the brand’s WeChat mini-programs. Via the app, the brand can offer shoppers personalized recommendations and enable digital in-store fun like an immersive bike ride through the streets of Paris.

Q: You mention direct-to-avatar (D2A) as it relates to the metaverse. What are brands doing to improve their digital strategies in 2022?

Recognizing that digital avatars are another identity outlet for some consumers, more brands are entering metaverse environments like Roblox, Decentraland, the Sandbox and Fortnight every day. When done well, they’re recognizing the opportunity to enhance consumers’ experiences in these virtual worlds versus merely disrupting them. To enter these spaces, brands need to ensure that they’re creating attention-worthy destinations and engagements and offering digital goods that allow participants to augment and express their avatars’ identities and statuses to others in those environments.

Q: Some are skeptical about the metaverse’s broader sales implications—that it will likely remain the domain of gamers and more a niche retail play and not a real driver of sales. What do you think the metaverse looks like a year from now? Five years from now?

Yes, for many brands, the metaverse today is primarily equity driving, signaling their willingness to innovate, explore and experiment in these digital spaces. However, fashion brands like Burberry, Nike and Adidas among others are already monetizing the metaverse through the sale of skins, NFTs and other digital goods. And now we’re seeing a brand like Chipotle creating an engagement in Roblox whereby visitors can win “burrito bucks” to spend in IRL restaurants. This sort of loyalty- and transaction-driving engagement is only going to grow as brands become more adept at navigating metaverse platforms in ways that actually appeal to consumers.

Yet the future of the metaverse actually hinges on how you define it today. I would argue that much of the skepticism it has garnered is the result of so many brands announcing metaverse forays merely for the buzz factor and stunts like Facebook rebranding itself Meta and touting a VR-based definition of metaverse that hinges on its investment in Oculus. The amount of press dedicated to that particular FB-driven vision has narrowed how many predict its future.

If instead, we define the metaverse, as many digital analysts have, as a version of the internet where your unique digital version of yourself, your avatar, can move across different but linked online platforms, then you’re closer to what the future promises. A great example of the potential for this can be seen in South Korea, where the government announced that it is developing a government-backed Metaverse Seoul where citizens will be able to manage public services and attend civic events. If you combine today’s metaverse, one that is primarily centered on entertainment and gaming, with one where you engage in the more mundane aspects of daily life, say a combination of Metaverse Seoul and Fortnight, you have a vision of what the metaverse may actually look like in five years.

Q: In terms of in-store, what does experimentation and innovation look like? What are the challenges?

Discussions about experimentation and innovation in retail often center on digitally enabled changes to front-end experiences or retail operations. However, the true magic lies when digital innovation is combined with human-centered, intuitive experiences, whether online or off.

Take Apple, for instance. I recently replaced my iPhone and chose to do so in-store since I expected the move from my old phone to my new one to be complicated. In the store, I was promptly matched with a salesperson who was not only consultative but entirely focused on completing the necessary steps to ensure that the ‘universe of me’ that existed on my old phone wasn’t lost. In minutes, I had a new phone ready to go. In a sense, the power of Apple’s cloud in making this process (including the actual purchase transaction) so intuitive and friction-free is an example of how tomorrow’s metaverse will be experienced, as a seamless blend of the real world backed by a powerful digital backbone. There’s magic in that.

Today’s tight labor market and a recharged move towards retail unionization (including Apple’s own retail teams) present a challenge for many retailers looking to meet shoppers’ elevated expectations with traffic-driving innovations and service. Other challenges vary based on the particular retail channel in question. For instance, we know that grocers have been hard hit by supply-chain complications, the labor market and their ever-present tight margins. Yet Amazon and Walmart continue to chip away at their share of Americans’ food dollars, creating a new incentive to invest in their stores and make the shopping experience one that’s sensorial, convenient and inspiring.

Q: What 3–5 things can retailers do to better connect emotionally with shoppers returning – hopefully – in mass to IRL shopping?

First, invest in their people. No amount of digital wizardry can make up for poor service. We’ve seen an erosion of the customer-service experience in many department stores contributing to their inability to connect with many of today’s shoppers.

Also, ensure that the in-store experience delivers on something that online can’t replicate. Especially in higher-engagement categories, people still love a great, curated store experience. Retailers need to focus on the emotions that their store environments evoke. Are they energizing, calming, delighting or entertaining their shoppers? So much of retail is theater, so deliver the show that’s grounded in your unique store brand. And if that store also facilitates additional services, acts as a gateway to a broader online assortment and promises personalized interactions, the modern shopper will reward it with their dollars.

And finally, remain attuned to shoppers’ rapidly evolving expectations of retail brands. Today’s shoppers, especially younger, Gen Z shoppers, are applying their values to their purchases. They’re looking for retailers that deliver on a commitment to social issues and sustainability. Retailers who underestimate this powerful element in today’s marketplace will ultimately fail.

Liz Aviles is the Vice President of Strategy and Cultural Insights at Upshot, a Chicago-based marketing agency. Identifying insights and crafting strategy at the intersection of culture and commerce, she has worked across a variety of categories including retail, technology, food, beauty and home. With a focus on emerging shifts across the marketplace and culture, her annual trend report helps brands understand the forces rewriting the rules of business in today’s dynamic and complex marketing environment.