Fashion Strategy Weekly - 31 Oct 2022
A publication of It's A Working Title LLC
This weekly publication focuses on how business and economics trends, technology, and the drive for sustainability impact the global luxury, fashion, and experience economy industries. Prepared by the staff of content strategy agency and think tank It’s a Working Title LLC, each week’s issue provides a summary of recent trends across the globe and a leader that conducts a deeper dive into content strategy.
Leader - User Personas and the Fashion Metaverse
Leader - User Personas and the Fashion Metaverse
What do customers want from web3 and metaverse experiences?
This is the big question that brands, tech companies, and marketers are facing as they consider the next phase of web3 and metaverse projects.
The so-called “metaverse winter” that we may or may not be in presents a perfect opportunity for brands to take a step back and reassess business goals. It is a good time to do user research and strategize more effective ways to utilize these new technologies to engage customers and inspire them to action, whether that be purchasing products, participating in new experiences, or becoming part of a new community.
As we recently explored in discussing the need for content strategy in metaverse projects, new technology misses the mark for customers when it takes the broadcast approach of traditional marketing. Customers expect dynamic, interactive, and collaborative or community-oriented experiences that encourage discovery and are fun and easy to use.
So, how do brands figure out what customers really want when it comes to web3 and metaverse projects?
One simple approach lies in the basic toolkit of user experience (UX): persona development. In the field of UX, a “persona” is a fictional representation of a real user and is often used in the early stages of product design and development.
Developing personas provides a different lens to understanding user needs and preferences outside of the often-dizzying bevy of quantitative data most brands have at their fingertips. Personas can give key insights into not only what drives user decision making throughout their buying journey but also their blockers and biases when it comes to adoption of new technologies and new ideas.
Let’s look at a quick example for a hypothetical Brand A:
Brand A is interested in collaborating with a major metaverse platform to stage a virtual show for its latest collection, complete with shoppable phygital designs and customer incentives. But, the marketing team behind Brand A is unsure what kinds of incentives will encourage customer participation and drive purchase decisions.
For Brand A, consider two possible personas who represent hypothetical target customers the brand wants to reach with its metaverse event:
In this scenario, Joseph is an inexperienced user when it comes to the metaverse and web3 but is not disinterested. He loves shopping but lacks education and exposure to these new technologies.
On the reverse, Tanya is a web3 evangelist who is steeped in the technology but may find overly-branded or presentation-like experiences frustrating because they lack interactivity and personalization.
These two personas are oversimplifications, to be sure. But, they are highly useful abstractions that present opposite scenarios for Brand A and show different but overlapping pain points when it comes to diving deeper into web3 and the metaverse. Comparing these two personas—and even sketching out their unique buying journey into a full user journey map—can provide key insights to Brand A’s marketing team on how to shape the strategy, content, and design for their metaverse event.
Persona development is just one of many elements in a UX strategist’s arsenal that can help create more effective, intuitive digital experiences for customers. Like its sister content strategy, UX offers many useful approaches that can provide product and marketing teams important insights into how to shape the front end of web3 and metaverse experiences to meet customer needs and preferences.
To put it simply: If brands want customers to be more engaged with web3 and metaverse projects, the user experience across the board needs to be more effective, intuitive, and personalized.
Retailers as a whole, and luxury in particular, focus their product development and marketing on Gen-Z, but is it justified? A column by Women’s Wear Daily questions whether Gen-X women are beauty’s largest consumer base. They marshal the fact that while the industry typically targets Gen-Z and also Millennial consumers, women born between 1965 and 1980 actually spend more money. This question is relevant for all of retail and primarily luxury, which is hyper-focused on Gen-Z consumers. The justification for this focus is that the younger demographic conhorts are larger than Gen-X, have more years of spending ahead of them, and tend to be less brand loyal than Gen-X buyers, making them perhaps more amenable to product innovations and clever marketing.
A panel of 1,000 Gen-Z buys surveyed by the Business of Fashion adds fuel to the fire by finding that younger consumers like to tilt the weighting of their spending towards fashion.
Yet, WWD points out that the flaw in this argument, at least for the moment, is that Gen-X significantly outspends all other generations: 18 percent more than Gen-Z. Moreover, Gen-X saw their net worth increase by 50 percent during the pandemic, more than other demographics. Gen-X may not make buying decisions on the basis of digital marketing to the same degree (78 percent of Gen-Z buyers have purchased a product after seeing it on a social platform), yet online shopping is still wildly popular. Gen-X is seldom the target of brand messaging or storytelling, and this may represent an opportunity for brands willing to break the demographic group think mold.
Following on from LVMH’s strong Q3 performance, Kering also reported strong revenue growth as the luxury industry continues to defy global economic headwinds, for now. Kering’s Q3 sales rose by 14 percent as strong sales in Europe and a supportive exchange rate offset slower sales in China and weaker than expected sales from Gucci. The market expected Gucci, which comprises about half of Kering’s total revenue, to grow by 11 percent year-over-year, and its 9 percent growth disappointed but was offset by 30 percent growth at Saint Laurent. Quarterly sales in North America and Asia fell 5 and 2 percent, respectively, as compared to last year’s levels yet growth in Western Europe was up 5 percent. Luxury goods continue to be in strong demand despite slowing global economic growth, rising interest rates, and decades high inflation. Typically, demand for luxury goods will fall in slowing economic environments but will lag the slowing experienced in lower priced segments of the retail market.
After surging during the pandemic, second-hand watch prices are coming off their peaks though investment returns remain well above that of most other asset classes. Like many other luxury goods, demand for second-hand watches surged during the pandemic, particularly for the ‘big three’: Rolex, Patek Philippe, and Audemars Piguet. According to McKinsey, the market will grow by 166% from 2018 to 2025 to hit $30 billion. The majority of this demand has come from younger consumers, particularly Millennials.
Yet, global economic headwinds have slowed demand for watches with the second-hand prices of the 30 most traded Rolexes falling 8 percent in Q3 while prices for Patek and Audemars have fallen 19 and 15 percent, respectively. Second-hand watch inventories are building up as demand slows and prices are expected to continue falling into 2023. The ROI remains strong, however, as returns for second-hand watches is 21 percent since January 2021 as compared to a 34 percent decline in the S&P 500.
L’Oréal, Meta, and HEC Paris have announced a new metaverse innovation accelerator program, based in the metaverse. While some may wonder whether the metaverse hype is growing too extreme and we have entering a ‘metaverse winter’, luxury continues full steam ahead. This accelerator program will operate exclusively in the metaverse and offer financing and mentorship to five firms focusing on 3D creation, AR, VR, mixed reality, avatar creation, portability in user experience, token economy, and other web3 projects. Like much of the luxury industry, L’Oréal is leaning heavily forward on web3 applications and a number of its brands have recently introduced initiatives, including YSL Beauty, Lancôme, Mugler, Armani Beauty and Nyx Professional Makeup.
A report from Bain & Company finds that while a lot of consumers are already concerned about the sustainability of the clothes they buy, a lack of transparency makes it hard to tell what is really sustainable fashion. The report reveals some shifts in consumer behaviors towards global fashion brands that are, or claim to be, more sustainable. A survey of almost 6,000 consumers in China, France, Germany, Italy, Japan, UK, and the US revealed that 33 percent regularly prioritize sustainability concerns when making clothing purchases and another 32 percent will occasionally consider sustainability. These figures are higher for younger shoppers. Yet, a major problem for all shoppers, regardless of their shopping habits, is telling the difference between sustainable and unsustainable garments. The study concludes that closing this information gap will be key to locking the loyalty of those already interested in shopping green and deepening the market. Beyond the information gap, however, is the actual product offering. Survey respondents flagged that they did not buy more sustainable garments due to availability, range of product offerings, and price.
Burberry and Minecraft agree to a collaboration in the latest of a long line of connections between games and luxury brands. The multi-faceted collaboration will take on phygital properties as it will feature a customized in-game adventure, Burberry: Freedom to Go Beyond, as well as an IRL clothing capsule collection. Gamers will be able to explore Burberry’s new, and no doubt heavily branded, digital universe and download 15 skins based on what the collaboration organizers called, “fashion, fantasy, and adventure.” According to Web Tribunal, the Microsoft-owned Minecraft has 126 million day users with the majority being male, in their mid-20s, and based in the U.S. or U.K.