The Year in Tech, 2024 by Harvard Business Review

Author:Harvard Business Review
Language: eng
Format: epub
Publisher: Harvard Business Review Press
Published: 2023-10-24T00:00:00+00:00

Consumer Engagement Across the Virtual and Physical Worlds

A good example is customer engagement and the retail experience. A couple of decades ago, e-commerce revolutionized how businesses engage customers by adding a virtual channel alongside the physical one. The metaverse offers rich new opportunities for gathering data to improve consumer engagement and experiences. Companies like Meta, Microsoft, and Apple are building AR headsets that will enable consumers to engage in live events such as conferences, performances, and sports games as if they were physically there, with the additional overlay of digital content, data, and messages. Metaverse-enabled technologies could drive the next wave of personalization. And, indeed, companies are already trying out new ways to enrich the customer experience through things like metaverse games with NFT rewards, exclusive drops and experiences to reward loyal “real-world” customers, and digital twins of physical goods. So far, companies have dipped their proverbial toes in the water here by porting the real world into the digital one—for example, virtual burritos, Wendyverses, and re-creating urban districts virtually in places like Decentraland. These are fun, but to date they offer little promise of replacing the rich experience of the physical world.

Such metaverse-enabled technologies would be a sizable improvement over what is available today, but still no replacement for seeing, feeling, or experiencing products and services in the real world. Consumer spending—especially among millennials—continues to shift from products toward experiences, and the enduring lesson from pervasive Zoom fatigue is that screens do not satisfy our desire to interact in person. This is what cities are particularly good at providing. In doing so, they provide platforms for using digital and physical channels as complements that reinforce each other.

Companies, including digital-native ones, have often used physical stores in key urban hubs—whether through permanent locations or temporary pop-ups during peak times—as complements to their digital strategies. Glossier uses its physical retail spaces to engage consumers and promote its brand with a highly Instagram-friendly store design, uniting its physical and digital channels. Nordstrom’s Local model uses small-scale, service-oriented physical locations to augment its e-commerce offerings in key urban hubs like New York City and Los Angeles. Meta is opening a physical store to sell its AR/VR devices to access the metaverse. Instead of replacing actual stores, physical spaces can provide a way for customers to access the metaverse—maybe for the first time—and experience the latest AR/VR technologies. Physical spaces and locations combine with metaverse technology to offer more opportunities to add value by enriching experiences.

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