Online status: If you build a virtual world of fashion, will they come?

Conversations about nonfungible tokens and their role in fashion appear to be running out of steam on the world stage. The arc from initial NFT excitement to eventual burnout has been remarkably short, and in the context of fashion — where the production run of a particular design sometimes tallies less than 100 items — the industry doesn’t need to introduce any artificial scarcity when it has the real thing.

Still, it is probably best not to abandon NFTs just yet, with some of the biggest names in Japanese retail recently announcing plans to engage in the world of digital assets. BEAMS fired the first shot on Feb. 25 by partnering with Rakuten’s NFT marketplace, followed by Shibuya 109’s March 2 announcement of a collaboration with Hong Kong-based digital platform The Sandbox. While both brands have always adjusted their image to remain in sync with the times, both are enduring tastemakers who rarely put a foot wrong when it comes to engaging with young people looking to express themselves.

The late start might make you think that these brands have missed the boat, but what we are seeing now in terms of fashion is a potential long-term strategy. The first wave of NFTs has been characterized by booms, busts and get-rich-quick schemes for the digital age that mimic hyped streetwear drops (the NFT connoisseur’s wardrobe of choice). Such customers are of little concern to a second wave of corporate NFTs, which target younger people whose greatest investment to date is probably their smartphone.

In the case of Shibuya 109, the one-time mecca of the gyaru subculture of the late 1990s, the focus is less on NFTs as an investment than as status symbols and digital modes of expression. Shibuya 109 is also quick to stress that consumers will be able to earn NFTs through online games free of charge — the perfect price point for a generation used to grinding for rewards on smartphones.

It is also part of Shibuya 109’s endeavors to reach international tourists who have been locked out of the market. For many young women — especially those living in East Asia — the iconic building is a destination synonymous with the “Tokyo fashion look,” a reality for a domestic market keen to be taken seriously on the world stage, but one that should have been capitalized on in earnest decades ago.

That said, it is hard to know what to expect from the recent announcements by BEAMS and Shibuya 109. The virtual worlds where these NFTs exist are still in development and the proof-of-concept visuals are a little underwhelming — a cardinal sin in the world of fashion. While BEAMS and Shibuya 109 have telegraphed their NFT ambitions, it is difficult to get overly excited about the final form of the asset — somewhere between “entertainment” and “online avatar” — until more is revealed.

But this is all to frame these developments from a consumer’s perspective. From a retailer’s perspective, this burgeoning metaverse offers an advertising-supported platform to target youthful shoppers. It’s based on an assumption that young people will actually visit these locations in the first place, but for brands whose cultural relevance is everything, it is a cultural turn they need to be part of. Of course, seeing the emerging metaverse as yet another place that is going to support advertising saps even more enthusiasm out of the experience, but it is probably worth reserving judgment until some practical applications are actually ready to showcase.

Having the support of established and experienced companies like Rakuten and The Sandbox is clearly the strategy to avoid the inevitable growing pains that emerge when brick-and-mortar fashion retailers engage with digital real estate, and starting fashionably late allows companies to bet on a metaverse that is already successful.

How successful, you might ask? As a case in point, a plot of land in The Sandbox’s flagship virtual world recently sold for nearly ¥500 million, a sum that would go a long way in buying a physical property space in central Shibuya.

Those looking to visualize this unknown territory can take a look at a new app from 1SEC, the company behind Japan’s first fully digital fashion label 1Block. The app, Metadrip (“drip” being the current slang for haute fashion), allows users to try on NFT clothing using augmented reality technology. Crucially, users can only try on clothes they own as NFTs, and it goes without saying that the NFT must also be compatible with the app for the digital clothes to be rendered.

It is somewhat sad to see brands replicating models of scarcity in a virtual world where true abundance is possible. However, what we are seeing now is only something early adopters can play around with. Once such technology reaches the average customer at Shibuya 109, then we will have really turned a corner.