What: While digital advancements push for a stronger virtual presence, physical retail locations will remain an important part of omnichannel sales.

Why it is important: Despite concerns that shifting further into a virtual world will eliminate the need for physical locations, the metaverse has highlighted the enduring importance of key cities and in-person experiences.

Following the pandemic, people continue to value real-life experiences and in-store shopping. The metaverse proposes a substitute for the physical world, however, it is unlikely it will fully replace physical stores. With more opportunities to live and work remotely, companies should be more strategic in locating their corporate hubs in key cities.

The metaverse is meant to enhance physical retail by improving the virtual shopping experience for consumers through more realistic visuals and functionality, such as virtual try-on. Its benefits can be seen in the ability to expand the content offer, improve personalization, optimize data processing and decision making, as well as lower location switching costs and transaction costs. However, body language, serendipity and human interaction, which create a great selling and working environment, remain reliant on real-world experiences.

Some cities have already begun to establish themselves as hubs for innovation, global corporate headquarters, flagship locations and leaders in the world’s artistic, cultural and research institutions. The metaverse is beginning to become another factor in these cities’ appeal. Cities like Dubai and Shanghai are launching strategies aimed at attracting metaverse-focused businesses and people. This will strengthen the need to establish physical presences in the best locations for experimentation to attract enthusiastic early adopters, recruit and connect with talent, and ultimately balance a company’s physical and virtual footprint.

The metaverse can also assist in real-world product development through the ability to collect richer data across broader networks and improve processes in cost-effective ways through virtual testing. Virtual reality and more readily accessible smartphone-enabled augmented reality can assist in improving the user experience and company performance.

Physical stores can act as a portal for customers to access the metaverse by providing the proper hardware and education to facilitate customer understanding. This combination can offer more opportunities to add value by enriching experiences and drawing clients in-store. In addition, the metaverse has an important complementary role in broadening access to talent pools by filling specialized and/or fully remote roles, ensuring a diverse employee base, and allowing employers to connect with job candidates virtually before investing in in-person meetings.

Thus, companies need to think more strategically about what the office is for and where physical presence is required to optimize all processes from work collaboration to customer retention.

The Metaverse won’t replace physical retail