Is fashion's love affair with the metaverse over?

The diminishing enthusiasm of the fashion industry for the metaverse appears to align with a broader trend, where companies are increasingly directing their focus towards generative AI rather than the realms of immersive internet and digital avatars.

Data from S&P Global Market Intelligence Kagan shows funding rounds involving 278 metaverse companies raised roughly 530 million dollars in 2023, down 87 percent from 4.09 billion dollars of investments in 2022.

For fashion businesses, developing virtual fashion experiences and investing in immersive technologies require substantial resources, for which many are yet to see a return. The industry is carefully evaluating whether the current level of consumer interest justifies these investments.

Technological issues are also a barrier that limit the seamless integration of the fashion industry into the metaverse. Issues such as virtual fitting accuracy, realistic fabric representation, and the overall quality of virtual experiences present challenges for the industry to overcome before fully embracing the metaverse.

Most important, retailers and brands are catering to their audiences. Many consumers still prefer the traditional in-store shopping experience, where they can try on clothes, feel the fabrics, and receive personalised assistance. The metaverse, being a relatively new concept, has yet to gain widespread acceptance and trust from consumers.

A report by EY analysing metaverse investments said technological bottlenecks, hardware limitations, and concerns about privacy and security are among the issues challenging the metaverse's potential.