- As the crisis disrupted the fashion industry to its core and forced brands to figure out new ways of connecting with customers, many fashion houses invested in the emerging digital fashion space.
- Our analysis found that the most influential companies in the media debate included luxury houses like Gucci, Burberry and Dolce & Gabbana, sportswear brands like Nike and Adidas, and start-ups such as The Fabricant, RTFKT and DRESSX.
- We suggest that brands can turn digital fashion into a reputation edge by using the metaverse to connect with hard-to-reach audiences, making sustainability a key brand attribute and fixing fashion’s diversity and inclusion problem.
People have been putting on digital accessories through social media filters for years, and the gaming skins market—where players of games like Fortnite purchase custom outfits, or “skins,” for their avatars—is estimated to be a multibillion-dollar industry.
However, the idea for “virtual fashion” materialised in 2018, when clothing brand Carlings released an entirely virtual clothing line and experienced a boom in business during the COVID-19 pandemic. The crisis disrupted the fashion industry to its core and forced brands to figure out new ways of connecting with customers – especially in digital-only environments. While digital fashion is rooted in gaming, the pandemic has made it increasingly mainstream.
When a digital version of a Gucci bag sold in May for more than US$4,100 ― more than the physical version would have cost – many journalists started writing about the inevitable rise of digital fashion. According to IBM’s 2020 US Retail Index, the pandemic has accelerated the shift away from physical stores to digital shopping by approximately five years. The world’s biggest fashion companies have also experimented with making virtual clothing, which people’s avatars can wear in metaverse environments.
Digital fashion followed the frenzy over non-fungible tokens (NFTs) – digital assets connected to blockchain ledgers that give buyers and sellers proof of ownership and provenance. Unlike an image that can be endlessly circulated online without belonging to anyone, an NFT is a digital-only item that can be traded much like a real-life artefact. In the fashion industry, this has created a market where shoes and dresses that only exist as digital files sell for couture prices.
Then there’s Facebook’s recent announcement about its plans for a metaverse, which led to many designers creating more reality-bending digital fashion pieces for people to don as ways to express themselves. In fact, digital fashion was one of the main topics in the debate around the metaverse, as our analysis found.
Luxury brands seize the moment
The media conversation around digital fashion is still in its infancy, as there aren’t many articles on that topic yet. However, a number of high-profile outlets started following the trend, as we found out analysing 226 English-language articles published in a set of top mass media outlets like Reuters, the New York Times, Forbes and the Guardian.
We used Commetric’s proprietary ‘media conversation impact score‘ metric to identify the organisations with the biggest impact on the media discussion.
We determine an organisation’s media impact in the context of a topic by looking at its media influence score calculated in terms of coverage by high-profile media outlets, topic relevancy score measuring its contextual relevance, and media visibility as measured by the number of mentions.
Gucci emerged as the most influential company as many publications reported that it’s no longer just designing physical products, but also virtual clothes, shoes, and accessories that exist entirely in the digital realm. It’s part of the brand’s bet that in order for luxury fashion to thrive in the next decade, it needs to be seamlessly integrated into the digital worlds where consumers are increasingly spending their time.
Over the last few years, Gucci has created digital versions of its latest collection for a fashion-themed video game, athletic wear for a popular tennis game, and virtual looks for online avatars. It also launched a platform to let users design virtual sneakers and then put them on their feet using augmented reality.
And anyone whose virtual alter ego is wandering around the Roblox online game platform these days might run into other avatars sporting Gucci handbags, sunglasses or hats. The digital-only items were part of a limited Gucci collection for Roblox, a step by the fashion house that prides itself on Italian craftsmanship to enter an expanding virtual space where many of its youngest admirers already are at home.
Players in the metaverse say the big-name fashion collaboration represents a new era of virtual-real world interplay, a space in which smart product placement meets the desire of consumers to express their personalities in the virtual world. While the Gucci Garden space on Roblox was open for two weeks last month, the platform’s 42 million users could spend from $1.20 to $9 on collectable and limited-edition Gucci accessories, with one particular bag making headlines as it was being resold for over US$4,100.
Gucci is well-known for its experimenting, but other luxury brands have also followed suit and stepped into the media conversation around digital fashion. For example, LVMH-owned Louis Vuitton launched a metaverse game where players can collect NFTs, and also designed outfits for characters in the Final Fantasy XIII video game alongside Prada.
Burberry, on the other hand, is determined to lead the way in digital ownership and gaming. After experimenting with its own games, the British label is now looking to go a step further, releasing its first NFT vinyl toy and digital clothing on Blanko’s Block Party, an open-world, multiplayer game where players can collect, upgrade and sell digital toys.
And in September, Dolce & Gabbana announced it had sold at auction a nine-piece collection of digital NFTs alongside some actual couture for a total of 1,885.719 Ether (Ethereum cryptocurrency), or the equivalent of nearly $5.7 million.
Some commentators remarked that the digital world’s cancellation of Dolce & Gabbana after a series of offensive statements about race, sexuality and size (which reached its apogee in 2018 when the fashion house released a video in China featuring a Chinese model clumsily eating spaghetti with chopsticks) appears to have reached a multimillion-dollar end.
In the meantime, Ralph Lauren got under the media spotlight as it is pitching popped collars and sundresses to a new generation of avatars as it moves into selling digital apparel inside of the metaverse. The company has designed a virtual clothing line inside of Zepeto, the South Korean social network and its 200 million users that interact in a virtual world.
Apart from luxury houses, some sportswear brands also managed to become influential in the media debate. For example, Nike looks set to create a range of digital fashion products after filing a range of trademark applications for virtual trainers and clothes.
Many media outlets reported that the American company filed seven applications with the US Patent and Trademark Office for use on “downloadable virtual goods” and “online and in online virtual worlds”. The brand’s widely recognised tick logo and basketball player logo have been included in the application as well as its Just Do It slogan.
Meanwhile, sports brand Adidas and supermodel Karlie Kloss are working together with digital fashion brand The Fabricant to create a digital version of the Wind.RDY Parka Jacket from the Adidas x Karlie Kloss fashion line. Creators can make digital interpretations of the actual clothing, and the twenty best creations will be auctioned on the digital marketplace Known Origin.
Emerging start-up competition
The media discussion also featured a number of start-ups specialising solely in digital fashion. One of the first on the scene was namely The Fabricant, a digital fashion company that got media attention in 2019 when it sold an NFT dress, featuring iridescent shimmery fabric worn over silver trousers, for $9,500.
In addition to its aforementioned collaboration with Adidas, The Fabricant was also mentioned for launching an online design studio in which users can create exclusive virtual garments to trade and wear in the metaverse. Named The Fabricant Studio, the platform was developed to make virtual fashion design accessible to anyone, anywhere in the world.
Another start-up, Auroboros, earned its influence in the conversation as it became the first digital fashion brand to show at a major global fashion week in London later this year. The “science-meets-fashion” label creates hyperfuturistic, real-life couture garments and digital-only, ready-to-wear garments that crystalise and metamorphosise over time. The brand says that one in 10 people admit to buying clothes “solely for social media” and that those outfits can now be digital-only, which “produce 97 per cent less emissions that physical items”.
And in March 2021, after a year of lockdowns, streetwear-focused brand RTFKT sold $3.1m worth of digital sneakers in just seven minutes in a collaboration with 18-year-old artist Fewocious. RTFKT used that momentum to secure $8m in venture capital funding in May.
DRESSX, a two-year-old start-up that offers “digital-only collection”, came under the media spotlight when it partnered with Crypto.com, a marketplace for collecting and trading NFTs. The partnership will establish a DRESSX NFT store on Crypto.com/NFT to ensure purchasing and trading the unique files of digitally wearable clothing is a seamless transaction. The inaugural DRESSX virtual clothing collection includes styles inspired by Elon Musk’s private aerospace manufacturer SpaceX.
Interestingly, the second-hand trend has also found its place in digital fashion. BNV, a retailer that fancies itself “the Farfetch of digital fashion,” sells the digital equivalents to both new and second-hand clothes, allowing customers to search for newly minted NFTs while reselling their old ones. Launched in 2016 as a fashion tech R&D outfit, the company pivoted to NFT retailing in 2019.
Digitally dressed influencers
While established luxury houses managed to dominate the media conversation thanks to the power of their brands, the most influential spokespeople in the debate were actually start-up founders, with Auroboros founders Alissa Aulbekova and Paula Sello emerging on top.
Alissa Aulbekova and Paula Sello were quoted as saying that Auroboros’ strengths lie in its ability to marry nature with tech tools and software to create eye-catching designs for modern life. “Our ideas were so aligned in terms of creating a positive vision for the future,” said Aulbekova of the duo’s mission to use technology to create a “powerful, utopian and accessible” future.
Sello was also cited as pointing out that there are 2.7 billion global gamers and 69% of them are most likely to spend their money in-game on skins and cosmetics. According to her, digital fashion already is vast and it’s just that the fashion industry is now adapting to it and understanding its reach and creativity.
Meanwhile, Daria Shapovalova, the founder of DRESSX, explained that her company appeals to GenZ and Millennials who want variety and of-the-moment styles at an affordable price for their social media posts.
She also noted that GenZ and Millennials are also much more engaged than Baby Boomers and older generations around issues related to climate change, and DRESSX eliminates overproduction without eliminating the joy and fun of interacting with fashion. And Crypto.com’s Senior Director of NFT Acquisition, Jeremy Lewis, described DRESSX as a partner that shares synergies and brand ethos that stress the intersection of NFTs and sustainable fashion.
According to James Gaubert, founder of digital-only luxury fashion brand Republiqu, digital fashion is still a very new concept but in the next 12 months, there might be a shift from education to adaptation as more people uncover the possibilities”. While most fashion digital companies currently accessible are inclined to offer ‘cosplay’ or hyper futuristic designs, Gaubert thinks there’s a market for street-inspired digital garments that are reasonably priced.
Kerry Murphy, the founder of The Fabricant, elucidated that the Direct-to-Avatar (D2A) economy (a business model selling products directly to avatars) as consisting of “digi-sapiens” who are made up of Gen Zs and young millennials with more than 55% of the total spending power. Digi-sapiens “are trendsetters, trend chasers, and early adopters of any technology that upgrades and frees up their existence.” They also care about the environment, scarcity, authenticity, and exclusivity.
Describing daily digital habits such as dressing your avatar every morning, Murphy was cited as saying that we start to see interactive experiences that have daily functional value outside of gaming and in areas including work and socializing, and pointed to video calls, LinkedIn profile images, and social media avatars. These kinds of experiences are starting to push virtualised daily habits like picking out a digital outfit into the mainstream.
How can brands turn digital fashion into a real trend
Just like fashion brands started to utilise social media in the early 2010s, brands in the 2020s will need to start setting up metaverse teams that will help them enter the era of Web 3.0. Entering the metaverse might become a necessity for brands, as the virtual economy could become as important as the physical economy. In this regard, here are a few tips based on our analysis and our work on the fashion industry.
- Use the metaverse to connect to hard-to-reach audiences. In today’s highly-fragmented media landscape, luxury fashion in particular has a hard time making an impact on younger generations. The metaverse presents a great opportunity for these brands, as many metaverse-based platforms are dominated by younger audiences. Roblox Games, a massive user-created gaming platform, has over 42.1 million daily active users—and a whopping two thirds of them are under the age of 16. By effectively and authentically becoming a part of the metaverse, brands can execute strategies to not only become noticed by younger audiences, but to change the perception of their brand among this much-valued cohort. As we saw, Gucci has already started doing that with its digital-only items that were part of a limited collection for Roblox.
- Make sustainability a key brand attribute. The last few years have seen a growing public awareness of fast fashion’s environmental impact – journalists, scientists, academics and industry representatives regularly raise concerns. Now, many commentators think that the acceleration of the use of digital services within the industry will facilitate the sustainable paradigm shift which will persevere even after the crisis. For a large number of consumers, the pandemic has brought sustainability to the fore, as they have been shopping more consciously, supporting companies that convey strong mission statements. Brands like The Fabricant and Tribute market themselves as pro-sustainability, while DRESSX’s own “Sustainability” page claims that “Production of a digital garment emits 97% less of CO2 than production of a physical garment.” Read our analysis on sustainable fashion for more insights.
- Fix fashion’s diversity and inclusion problem. According to DRESSX founders Daria Shapovalova and Natalia Modenova, digital fashion is more inclusive because it eliminates the size issue, while also giving consumers access to clothes that were not accessible before. In this regard, a growing number of fashion brands are trying to reframe their narratives so as to attract fresh clientele from the ranks of Generation Z and millennials, which are perceived to be the most important retail consumers, accounting for $143 billion in spending in the next four years. And brands like Victoria’s Secret, built on skinny girls and scantily clad lingerie, is now largely perceived as inadequate for a time when consumers’ preferences have moved away from sex appeal and towards empowerment, inclusiveness and comfort. Read our analysis for more insights.
- Don’t forget to engage with the real world. Existing in a digital world doesn’t mean forgetting about the real one and addressing its problems via corporate activism. Our recent analysis showed that political activism – a new territory for the fashion industry – can actually bring very favourable media coverage for brands. Around the 2020 US election, some fashion houses did a good job of making their campaigns non-partisan and managed to engage users in discussions about the importance of voting. As such, the fashion brands we analysed demonstrated that corporate activism doesn’t always have to mean taking sides. Moreover, non-engagement brings risks too at a time when consumers, especially millennials and Gen Z-ers, expect brands to take stands, with more and more US shoppers starting to understand their purchasing power not just only in economic terms but also as an enactment of practical ethics. For fashion houses, corporate activism could bolster their reputation when it authentically aligns with their pre-existing brand values, even in the digital world.