BoF Insights | The Opportunity in Digital Fashion and Avatars Report

Last week, Facebook announced its rebranding to Meta and committed billions of dollars to building the metaverse, an immersive future state of the internet that would be a natural environment for digital assets like digital fashion or avatars. In the past two months, leading fashion and gaming companies like Balenciaga and Fortnite and Vans and Roblox have announced collaborations that span digital fashion collections and physical activations. And throughout 2021, sales of non-fungible tokens (NFTs) dramatically rose to $10.7 billion in the third quarter from $1.3 billion in the second quarter.

Companies around the world are grappling with the existential implications of this evolution. Digital assets have existed for years, but engagement now seems to be at an inflection point, especially as NFTs — which prove authenticity and ownership and drive scarcity — could increase the utility and value of digital assets.

Are we at the precipice of a new digital frontier? Or are we facing a frenzy of hype, amplified by time spent at home during the pandemic?

BoF Insights believes companies in fashion and retail would be well-advised to understand the shifts taking place, in particular in consumer behaviour and purchase motivations. For an industry slow to adapt to platform shifts like e-commerce, some fashion companies are already taking note, with brands from mass to luxury experimenting with collaborations and activations and digital-first entrants rapidly emerging.

The Opportunity in Digital Fashion and Avatars is the second in-depth report published by BoF Insights, a recently launched data and analysis think tank from The Business of Fashion arming business leaders with proprietary and data-driven research to navigate the fast-changing global fashion industry.

The new report from BoF Insights reveals that:

• approximately 70 percent of US general consumers (Gen-Z to Gen-X) rate their digital identity as important
• 65 percent rate digital ownership as important
• 50 percent are interested in purchasing a digital asset in the next 12 months — whether a digital skin or other item in gaming, digital fashion, digital avatar and/or an NFT.

Interest in purchasing a digital asset in the next 12 months is even higher among US high-net-worth individuals, according to BoF Insights research involving both a LuxuryOpinions® panel assembled by Altiant and a Global Virtual Fashion Panel drawn from the communities of DressX and The Fabricant:

In the report, BoF Insights offers its perspective on the staying power of digital assets, what consumers believe about digital identity and ownership, what motivates consumers to purchase different digital assets, and how companies should engage over the short, medium and long term.

Why this report is a must-read:

• It offers a comprehensive overview of digital assets in fashion — including items in gaming, fashion, avatars and NFTs — which deepens the knowledge of current or would-be industry participants.
• It identifies the underlying technological and social shifts driving interest in digital assets while examining the durability of these shifts.
• It analyses in-depth consumer insights that measure the familiarity with, perceptions of and behaviours associated with digital assets broadly and digital fashion and avatars specifically.
• It provides a playbook that outlines how brands can tactically develop their digital asset strategies, including where and how to experiment within these new environments.

The report is based on proprietary research inputs, including:

30 interviews with founders, chief executives, other senior executives and investors across the following domains:

• Gaming
• Digital-first brands, retailers and marketplaces
• Physical-first fashion and luxury companies

Four proprietary surveys:

• Demographically balanced US General Consumer survey of Gen-Z to Gen-X, facilitated by Altiant on behalf of BoF
• Altiant LuxuryOpinions® panel of US high-net-worth individuals (each with a minimum of $1 million in investable assets) conducted on behalf of BoF
• Global Virtual Fashion panel fielded by BoF across the communities of DressX and The Fabricant
• Senior executive survey of BoF’s global community of fashion professionals

Companies and collaborations covered in the report include Altava, The Aura Blockchain Consortium, Auroboros, Balenciaga, Betaworks Ventures, Boson Protocol, Burberry, Digitalax, The Dematerialised, DressX, Epic Games (Fortnite), The Fabricant, Genies, Gucci, The Hundreds, Improbable, Louis Vuitton, Mythical Games (Blankos Block Party), OpenSea, Palm NFT Studio, Poplar Studio, Ralph Lauren, Retail Prophet, Riot Games (League of Legends), RTFKT, Roblox, Straiqr.ai, Substance, Truesy, Vans and Wanna.

BoF Insights is The Business of Fashion’s data and advisory team, partnering with leading fashion and beauty clients to help them grow their brands and businesses. Get in touch at insights@businessoffashion.com to understand how BoF Insights support your company’s growth for the long term.