Do Retailers Need a Digital Fashion Strategy? 5 Brands Designing for the Metaverse

Fashion is a universal language—one spoken by many but truly understood by few. The way we dress serves as one of our purest forms of self-expression, often giving others a window into the core beliefs and values that sculpt our identities. For decades, from design and production to shopping and styling, fashion and technology have been closely intertwined. As technology advances, so does the average shopper’s consumer behavior. Most recently, the rise of Web3 technologies like blockchain and non-fungible tokens (NFTs) have sparked a noticeable shift in the consumer psyche. Within the last 24 months, major brands and retailers have invested heavily in building out their digital fashion and metaverse presence, signaling a much broader trend. Retailers of every size need to be prepared to adapt accordingly.

Fashion is a universal language—one spoken by many but truly understood by few. The way we dress serves as one of our purest forms of self-expression, often giving others a window into the core beliefs and values that sculpt our identities.

Behind every article of clothing you are currently wearing, there is a conscious, emotionally powered decision, made by both you and the creator of the garment, to bring it to life.

And that in itself is a beautiful thing.

For decades, from design and production to shopping and styling, fashion and technology have been closely intertwined. As technology advances, so does the average shopper’s consumer behavior.

Most recently, the rise of Web3 technologies like blockchain and non-fungible tokens (NFTs) have sparked a noticeable shift in the consumer psyche. As digitally native consumers influence the purchasing power in households across the globe, we are entering a new age of digital ownership.

In the same way that millennials shifted from material goods to experiences, digitally native shoppers are moving from the ownership of physical goods to digital, specifically in the fashion industry. 

According to a BOF Insights report:

• 70% of U.S. general consumers acknowledge the importance of their digital identity.
• 50% are interested in purchasing digital assets (digital skins/gaming items, digital fashion, avatars, or NFTs) in the next 12 months.
• 65% rate digital ownership as important

Within the last 24 months, major brands and retailers have invested heavily in building out their digital fashion and metaverse presence, signaling a much broader trend. By 2030, Morgan Stanley estimates that the digital fashion market could be worth $50 billion.

Retailers of every size need to be prepared to adapt accordingly. 

What is digital fashion? 

Digital fashion is 3D clothing and accessories designed to be worn by both humans and digital avatars. Relative to traditional fashion, it solves many of the issues that have plagued the fashion industry for years:

Expensive manufacturing costs

Designed in programs like Blender and CLO3D, digital fashion requires little labor and incurs virtually no production costs. Therefore, it’s wildly profitable. 

Sustainability

The production of a digital garment yields 97% less CO2 than that of a physical garment, and the end product never end up in a landfill. Many retailers are already experimenting with digital sampling of new designs to reduce wastage in the production process. 

Design and fit limitations

Digital fashion lets designers create garments that could never exist in the real world, unlocking true creativity and self-expression. You can create a suit with flames or a glowing rock dress with smaller rocks orbiting the outfit. The only limit is your imagination. 

Long production timelines

Retailers usually need to predict color and style trends years in advance. By the time the garments are produced, some styles may be outdated. 

But beyond the garments themselves, the true beauty of digital fashion lies in its ability to form a stronger connection with shoppers, and to offer unique customer experiences in both the physical and virtual worlds. 

With technical bottlenecks around interoperability still limiting the immediate potential of digital fashion, the approach of merging physical and digital, also known as phygital, has become a much more practical model for retailers. In addition to selling physical garments, many retailers are now including a digital twin, or are selling NFTs that are redeemable for IRL physical goods. 

How do shoppers wear digital garments? 

Digital dressing, while still very limited in use, can be broken up into two main categories: digital tailoring and augmented reality. 

Digital tailoring involves the editing or rendering of digital clothing onto existing photos or videos. This plays into the consumers’ and influencers’ desire to “flex” on social media; from a sustainability perspective, this is a lot more practical than buying a dress to wear once in a photo and return later on. It’s also proven helpful for ecommerce companies who, alongside models, spend significant amounts of time, money, and effort on shoots for product and collection pages.

Meanwhile, augmented reality provides a much more immersive and interactive experience. Already widely used on platforms like Instagram and Snapchat, augmented reality lets consumers overlay digital clothing and accessories directly onto their bodies in real time. Digitally native retailers and applications like DRESSX and ZERO10 also offer this technology. 

Outside of digital dressing for solely cosmetic purposes, AR-powered virtual try-on has been a huge lever for retailers like Ray-Ban, Warby Parker, Farfetch, and most recently, Amazon. Giving shoppers an opportunity to try on ecommerce offerings before purchase has resulted in increased sales and reduced return rates. Last month, AR leader Snapchat, announced the release of free access to its AR shopping technology, encouraging retailers and brands of all sizes to expand their digital offerings. 

According to Jackson Bridges, NFT Project Advisor and Showcase Guide at ALTERRAGE, augmented reality will play a large role in the evolution of digital fashion. 

“Overlaying digital fashion on top of oneself [via augmented reality]  is an easier concept for people to grasp because we already use similar filters in apps like Snapchat, Instagram, and Zoom,” he says. “As augmented reality smart glasses grow in popularity, we will see our physical wardrobes shrink and our digital wardrobes increase. Digital fashion can already be worn via augmented reality through any webcam.” 

While much of this may seem overly technical and far-out, these concepts have actually been around for years. Think about dressing your Bitmoji and Apple’s Memoji. Although Bitmoji and Memoji digital garments and accessories have remained free to use, they demonstrate peoples’ desire to build a digital identity that represents the human version of themselves.

On the flip side, some people use the internet as a way to “escape” the real world. The one rule of digital fashion is that there are no rules: it empowers you to be anyone you want to be. 

Examples of retailers exploring digital fashion 

Nike

With perhaps the most extensive digital fashion strategy in all of retail, Nike has made numerous moves to establish its presence in the metaverse and cement its brand as a digital fashion trailblazer.

Within the last twelve months, Nike has acquired RTFKT, built virtual retail stores in Roblox, released CryptoKicks (a patent that was first filed in 2018), started hiring virtual material designers, and has filed numerous trademark applications around using its branding on digital goods.

Nike has also hinted at incorporating NFC chips into their physical sneakers, as a way to quickly verify authenticity. 

Prada

After launching its first NFT collection with Adidas earlier this year, Prada has continued to expand its approach into Web3. As part of its annual Timecapsule collection, Prada will be pairing its physical garments with  corresponding free NFTs that unlock access to broader benefits and experiences, including Prada’s Discord server “Prada Crypted.” 

“Many people in luxury made the mistake in the past thinking that it was not so relevant,” said Prada’s corporate social responsibility and marketing leader, Lorenzo Bertelli in an interview with Vogue Business. “Like social media, I don’t think that NFTs are good or bad, but they are a digital tool and it depends on how you use them.”

American Eagle  

Deepening its push into the Gen-Z market, American Eagle partnered with digital fashion native retailer DRESSX on an exclusive collection of three Earth Month-inspired jeans.

Modeled after AE’s sustainable, Real Good jeans, each digital garment offers unique augmented reality waterfall effects when tried on virtually through the DressX app. In addition to the virtual try-on, purchasers can submit a photo to DRESSX to be digitally dressed in the garment. 

Tommy Hilfiger 

In partnership with Boson Protocol, Tommy Hilfiger made a huge splash at the first-ever Metaverse Fashion Week hosted by Decentraland. At its metaverse pop-up store, visitors were able to buy digital fashion NFTs for their avatars or purchase physical items from within the metaverse.

Once purchased, the NFTs could be redeemed for physical garments which were shipped directly to the shoppers’ doors. Further experimenting with gaming and other digital worlds, the brand recently launched Tommy Play, a Brooklyn-inspired Roblox world for community members to “play, share, imagine, and socialize.” 

“When I founded my namesake brand in 1985, I never imagined I’d see a time when fashion weeks would be held in a 3D, fully virtual world,” Tommy Hilfiger said in a company statement. “As we further explore the metaverse and all it has to offer, I’m inspired by the power of digital technology and the opportunities it presents to engage with communities in fascinating, relevant ways.”

Gucci 

Driven by Kering Chief Client and Digital Officer Gregory Boutte’s goal to be “Web3” pioneers, Gucci has made substantial progress innovating in this new environment.

After purchasing land in The Sandbox and experimenting with the Gucci Garden, the brand’s first Webby award-winning immersive Roblox experience, Gucci has recently established a permanent Roblox destination called Gucci Town. Gucci Town will serve as a digital town square to build meaningful experiences with consumers and the Gucci brand.

Complete with a virtual boutique, art exhibits, and an experimental concept store, Gucci Town has been visited over 18 million times, with many consumers outfitting their digital avatars head to toe in digital Gucci wearables. The brand has also experimented heavily with digital fashion NFTs and collectibles, including a recent partnership with SUPERPLASTIC. 

How can retailers explore digital fashion for their brands? 

As shown in the examples above, there are a handful of ways to approach digital fashion and Web3 as a retailer. Ultimately, it boils down to available investment, risk tolerance, and technical know-how. Some retailers may choose to build out teams in-house, while others will leverage their IP and partner with a Web3-native organization to bring their ideas to life. While either method is reasonable, the most important aspect is to take an authentic long-term approach. 

Bridges urges retailers to enter the space with an open, collaborative mind and put the customer experience at the forefront of every decision.  

“Retailers interested in digital fashion should examine how they can create an easier shopping experience for their customers,” he says. “It’s always great to see retailers engage with the digital fashion community to learn from digital fashion natives' first-hand experiences and embrace collaboration.”

Magnetic Capital co-founder and digital fashion expert Megan Kaspar also shared a similar sentiment. Megan, the first person to ever wear NFT fashion on live TV, reiterated that right now is the time to explore the space, market to younger generations, educate users, and improve UX/UI. 

“Right now, it’s still so early. There’s an extremely low number of people that are participating with NFTs and hold wallets. All brands should, and likely do, understand that digital fashion will evolve into a much more convenient environment than we currently have, but the current environment is a good stepping-stone for brands who want to be recognized by these communities.”

Digital Fashion FAQ

What is the digital fashion?

Digital fashion is a term used to refer to a trend in fashion that incorporates digital technology, such as 3D printing, wearable technology, and virtual and augmented reality. It also includes the use of social media and other digital communication platforms to market, promote, and sell fashion. Digital fashion is often seen as an innovative way to create, experience, and consume fashion.

What are digital fashion products?

Digital fashion products are fashion items that can be accessed and experienced online. Examples include digital fashion magazines, online clothing stores, virtual fashion shows, online styling and fitting services, virtual fashion styling tools, virtual fashion “try on” services, and online fashion design tools.

How big is the digital fashion industry?

The size of the global digital fashion industry is currently estimated to be worth over $3 trillion.

Is digital fashion the future?

Digital fashion is certainly a growing trend, and has the potential to be an important part of the fashion industry’s future. With the rise of virtual fitting rooms, 3D printing, and augmented reality, digital fashion is an exciting space to watch. However, traditional fashion is still the mainstay of the industry, and it is likely that digital fashion will take a while to become ubiquitous.