Apparel giants like Ralph Lauren and adidas are spending millions on the Metaverse

At a time when the news headlines talk about retailers decreasing budgets and pulling back on spend, there’s one category that’s seeing the exact opposite — yes, I’m talking about the Metaverse. While Facebook’s Metaverse play might be on ice right now, innovative brands like Ralph Lauren, adidas, Lacoste, Tommy Hilfiger and more are doubling down and keeping the money flowing at a time where these exact companies are cutting budgets in so many other areas.

So how much money are these retailers investing in the Metaverse? Millions, and in some cases more likely tens of millions of dollars as brands like Ralph Lauren are buying islands in games like Fortnite.

“It’s an amazing opportunity to stretch the teams and try something new,” says David Lauren, Ralph Lauren’s chief branding and innovation officer. “To be able to look into cyberspace for inspiration is pretty cool, and to build out the world is a new paradigm.” (Source — Vogue Business)

Along with their own island in Fortnite, one of the most active Metaverses in the world right now, Ralph Lauren also introduced a digital item with a physical twin — the P-Wing boot. Only 300 physical boots were made, and yes, they sold out fast at a price point of $250. The digital version sells for 1,500 V-Bucks, around $15 in Fortnite and has an unlimited supply but will only be available for a certain time period.

So how much does it cost to have your own island in Fortnite?

While the exact number isn’t floating around out there, we do know that advertising in the Fortnite World Cup cost brands $25M, five times the cost of a Super Bowl ad (Source — CBS Sports). So it’s likely that Ralph Lauren spent millions if not $10M+ on their island.

Alongside Ralph Lauren in what seems to be an almost unlimited budget for Metaverse is adidas, who launched an entire division dedicated to the Metaverse alongside a popular NFT project aptly titled — adidas Into The Metaverse.

Like Ralph Lauren, adidas decided to partner with another major player Metaverse player, Bored Ape Yacht Club, the iconic NFT project led by Yuga Labs and backed Andreesen Horowitz and valued at $4B in it’s first year in business.

Deviation from Ralph’s move, adidas decided to make their own NFTs that can be owned as collectibles and bought and sold through popular NFT marketplaces like OpenSea.

adidas also introduced their own digital-only collection back in December of 2022, garments which will owners will be able to wear in multiple Metaverses. While they might look a bit wacky, that’s the beauty of the Metaverse, the sky is the limit when it comes to design.

While you definitely wouldn’t wear something like this in real life, in the Metaverse you can move just as freely in this as you can in a t-shirt.

In addition to digital clothing, adidas is also making a play at the red hot NFT PFP (profile picture) space, here’s how they’re defining it:

“Embarking on a new era in the adidas web3 journey, we are reaching the third and final phase of Into The Metaverse with ALTS by adidas: your identity and PFP — an interactive storyline which will culminate with the reveal.” (Source — adidas)

With the meteoric success of projects like Bored Ape Yacht Club, adidas is looking to establish itself not just as a partner, but as a core player when it comes to owning and defining your unique Metaverse identity.

To support all of the different Metaverse initiatives adidas has, they have built a 22-person task force within the company. And the end-goal is to connect NFTs with physical product, similar to what Ralph Lauren is doing in Fortnite, here’s the scoop from adidas VP of Marketing Erika Wykes-Sneyd:

Each step in the journey gets the brand closer to selling real merchandise and virtual wearables and tokens through web3 channels. The plan is for Adidas to build secondary revenue on merchandise by including an NFT with each individual item sold. When pairs of Adidas shoes are resold, the NFT’s blockchain will record that transaction. And built into that blockchain will be an agreement that awards Adidas a cut of those secondary sales. (Source — MarTech.org)

In both cases it is very likely both Ralph Lauren and adidas have budgets north of $10M focused on Metaverse expansion. While some might see it as a risky bet, I see it as two companies getting a significant head start in what will be the future of commerce.

For the last one-hundred years we’ve shopped from home using a catalog-based format. The modern websites of today aren’t that different from the Sears catalog from fifty years ago, but they are strikingly different from the in-store experiences you get when you walk into a Ralph Lauren or adidas store.

There is no doubt in my mind that shopping at home will being to more closely mirror the in-store experience as the Metaverse gains popularity. Yes, it takes time, but for brands investing now, when the time comes, they’re going to be far ahead.

Congrats to Ralph Lauren and adidas for making bold moves — I’m watching and I know millions of others are too.