If the combination of Covid-19 and technologies for remote labour, such as Zoom, has lessened the economic relevance of cities, what might a more potent technology, such as the Metaverse, do? Will this be the significant disruption that finally renders cities and large population densities obsolete? According to Brian Chesky, CEO of Airbnb, Silicon Valley was where everyone wanted to be. It seems like everyone is now flocking to the internet.

The concise answer is no, and there is a fundamental reason for this. Numerous technological advancements, such as the telegraph, the streetcar, the telephone, the automobile, the aeroplane, and the internet, have been followed by predictions of the demise of physical locales and metropolitan regions. This kind of prediction has been repeatedly disproven by later occurrences. And even though the epidemic has affected the areas where people work and their techniques for doing so, the trend of bright individuals, creativity, and economic activity is more concentrated in fewer and bigger “superstar” regions has shown to be enduring. The cities will not vanish anytime soon.

Nevertheless, the Metaverse has a unique atmosphere. Its combination of technologies driven by virtual and augmented reality promises to make the virtual world a far more realistic substitute for the actual world. New technologies for remote work and virtual collaboration, such as Horizon Workrooms by Meta, Mesh by Microsoft, and Arthur, are far superior to Zoom. These new technologies will enable employees to participate in collaborative ideation, communication, and action with colleague avatars. Purchasing various items, including art, fashion, and luxury items will provide a far more authentic customer experience. It is easy to imagine how such advanced technology may render cities and other physical locations meaningless.

However, the reality is that this Metaverse, like every other significant technological advancement before it, is more of an addition to location than a substitute. Even though the Metaverse will be able to create a much more realistic experience of the digital world and will enable us to do many more things online, such as expanding access to rich content and larger talent pools, lowering switching costs between locations and transaction costs in general, and vastly augmenting data-driven decision-making and personalization, it will not be able to replicate the emotional cues, body language, serendipity, and diversity of the real world.

There are just a few important cities in the world that are sufficiently sizable, inhabited, and equipped with communication and transportation networks to serve as global collaborative centres. Significant innovation centres, worldwide corporate offices, flagship shops for premium brands, and the world’s most prominent artistic, cultural, and intellectual institutions will continue to reside in these megacities. Ironically, the Metaverse is likely to reduce the number of relevant locales while expanding the meaning of location and allowing individuals to converse independently of their physical location.

Due to the Metaverse, a company’s physical location will become an even more significant role in its decisions. In some measure, this is already occurring: Cities like Dubai and Shanghai are creating regulations to attract metaverse-focused people and businesses. This may indicate excellent opportunities for marketers to conduct experiments with early adopters who are enthusiastic about their goods. Companies must think more carefully about where to site their offices and innovation centres to attract and link talent, where to establish retail outlets to attract consumers and increase brand recognition, and how to balance their physical and virtual footprints.

The Metaverse and Cities Are Two Sides of the Same Coin

Before thinking strategically about the Metaverse and location, one must grasp how the Metaverse and background complement one another. In this circumstance, it is beneficial to consider both channels because different types of information may be sent successfully via each.

The Metaverse facilitates the dissemination and consumption of vast quantities of information in an easy-to-use format. It enhances and surpasses the capabilities of previous digital channels, including Zoom, email, messengers, chatrooms, and social networks. It will transmit video, music, photographs, text information, simulated movies, and avatars and will have a wide bandwidth. Approximately two million body language records may be made in 20 minutes of virtual reality simulation, according to the results of a 2018 study. This sturdy and comprehensive virtual connection offers a variety of advantageous features. Businesses may now collect more data across more extensive networks than was possible in the real world or through the current digital channels. This comprises developing creative and economically feasible methods that numerous firms may employ to improve their product and customer experience offerings. There is a potential that a portion of this may include virtual reality, but it may also incorporate more accessible forms, such as smartphone-enabled augmented reality.

Even while it is an improvement over what came before it, the Metaverse will not be able to replace the physical world’s integrity completely. It is the difference between seeing a performance online or in person and experiencing it. The physical environment may provide higher-quality social, emotional, and sensory information. In the physical world, it is possible to pick up on people’s emotional signals and exert influence in a room by modulating one’s voice, moving about, and using body language. This interaction is still necessary to build trust and social capital over the long term.

Utilizing the Metaverse as a resource, the physical world may be enhanced. A museum visit will seem far more authentic when paired with metaverse technology. Before deciding to visit the property in person, a person in the market for a new home will have access to a significantly more complete virtual tour of the house and its surroundings. A live event may be supplemented with a layer using augmented reality glasses. For instance, real-time statistics during a basketball game or user comments during a simultaneously live-streamed lecture may be shown. A company may replicate and test a product digitally before creating an authentic version. For instance, the corporation may experiment with a novel shoe design and adjust the final product depending on client feedback. Workers may cooperate online to prepare for more productive encounters on the work site. By doing so, the Metaverse and physical locations are better understood, and strategic actions may be conducted concurrently and in concert with both.

Customer Engagement in the Online and Offline Worlds

Twenty years ago, introducing e-commerce, which added a digital sales channel to the old one, radically altered how businesses connect with their customers. The interaction between the customer and the retail outlet is one such instance. The Metaverse offers an abundance of new data collecting methods that may leverage to increase user engagement and experiences. Thanks to the augmented reality headsets that companies like Meta, Microsoft, and Apple are currently developing, consumers will be able to participate in live events such as conferences, performances, and sporting events as if they were physically present, with the addition of digital content, data, and messages. Metaverse-enabled technologies might be the driving factor behind the next generation of personalization. In reality, several companies are already experimenting with novel methods to enhance the quality of the client experience. The usage of metaverse games that give non-fungible token (NFT) prizes, unique drops, and experiences tailored to reward “real world” consumers for their continuous devotion and digital twins of real-world items are examples of these techniques. Until now, corporations have tested the waters by transferring elements of the physical world to the digital realm. Virtual burritos, Wendy verses, and the digital recreation of urban neighbourhoods in Decentraland are a few examples. There is little chance they can ever replace the gratifying experiences that result from engaging with the real world.

There is no alternative for physically touching, testing out, or experiencing products and services in their natural contexts, even though this is a vast improvement over what is already available. Especially among millennials, the trend of moving consumer spending away from commodities and toward experiences continues. The essential lesson from the previous two and a half years of Zoom fatigue is that screens cannot satisfy our need for face-to-face communication. This is a service that cities are particularly adept at delivering to their citizens. They do this by offering platforms that may utilize digital and physical media as complementary channels.

Numerous firms, even those born and bred in the digital era, have created permanent or temporary brick-and-mortar locations in major metropolitan centres during peak shopping seasons to complement their digital strategies. Glossier uses its physical retail locations to engage with consumers and promote its brand by using an Instagram-friendly store design. This unifies the physical and digital channels of the firm. In major urban areas such as New York City and Los Angeles, Nordstrom’s Local approach employs service-oriented, small-scale physical stores to supplement its e-commerce capabilities. These locations are in shopping malls. Meta is establishing a physical store where it will sell its augmented reality and virtual reality devices that enable consumers to access the Metaverse. Suppose physical locations continue to play a significant part in the retail business. In that case, customers will be able to enter the Metaverse (perhaps for the first time) and experience the latest augmented reality and virtual reality technologies. When physical venues and locations are integrated with metaverse technology, new opportunities to create value through enhancing user experiences become accessible.

In one’s job, the blend of the virtual and the real.

Additionally, the Metaverse has the potential to revolutionize our working practices by enabling far more complex technologies for online participation and virtual cooperation. Again, this is a significant advancement, but it does not remove the need for people to engage in the same physical spot. The fact that renowned metaverse businesses are not only maintaining but actively expanding their physical presence in leading cities indicates that they are inventing and creating their remote work solutions concurrently. Google and Meta will likely remain their headquarters in Silicon Valley for the foreseeable future, and most metaverse technology companies will probably be located in the Bay Area. In addition to significantly expanding its footprint in New York City, Google is now constructing a large new urban campus in the centre of San Jose. In addition, Meta is creating additional offices in Manhattan. The following is an extract from a 2021 statement published by Google: “Gathering in person to work and build community is fundamental to Google’s culture, and it will play a significant role in our future.”

In this setting, however, the Metaverse has an essential complementary role in expanding access to talent pools. This includes filling specialized and remote tasks, guaranteeing a diverse workforce, and enabling companies to communicate online with job seekers before investing in an in-person encounter. It is also anticipated to play a vital role in corporations handling more mundane communication while providing chances for face-to-face socialization and engagement. As a result of this development, companies will likely need to revise the social contract they have with their employees, allowing them greater freedom to choose where they live while simultaneously increasing the number of opportunities to foster cultural cohesion, mentorship, and learning, all of which are more difficult to achieve virtually. This new social contract may comprise reinvesting the savings earned from reduced remuneration for remote workers towards programs that provide opportunities for individuals to work in these positions.

All of this suggests that firms must give more strategic attention to the duties of their offices and the circumstances in which a physical presence is required. Companies will need a physical presence in significant talent hotspots and better physical locations for interaction and collaboration. Even if they may save money on real estate by giving up some office space, they will need this presence. In the age of the Metaverse, workplaces will be less focused on accomplishing work and more on connecting and socializing; in other words, they will resemble a café or canteen rather than a cubicle farm. These metropolitan areas may even function as “portals” into the Metaverse, allowing people to use cutting-edge virtual and augmented reality technologies at the office far in advance of when they will be available in their homes. Therefore, the Metaverse and the conventional office will increasingly interact rather than compete to facilitate the future of knowledge work.

Future-Conscious Methodologies

When all of this information is considered, it becomes clear that the soon-to-arrive period of the Metaverse means that location will play an increasingly significant part in the success of organizations. To prepare for this, managers must make the place the focal point of the organization’s strategy. In addition to the commercial and technological plans they have established for the Metaverse, they need a locational system. That locational strategy should be elevated to a C-suite priority, emphasizing the benefits complementary to virtual and physical locations and localities. It should address questions regarding sourcing key talent locally and remotely, repartition between talent pools living in “centres of life” and “centres of work,” and the new social contract governing the reciprocal expectations of the employer and employee, assuming that the employee can work from multiple, high- and low-cost locations over the course of their career.

The Metaverse is a significant technological revolution that promises to make the virtual world more similar to the physical world in which we are used to living, buying, and working. It is more significant than almost anything that has been before it. This will not, however, negate the need for a physical presence in metropolitan areas. Cities will continue to serve as centres for in-person connection, engagement, cooperation, and invention — possibly even more so than they already have — even though the Metaverse enables people, activities, and enterprises to spread across physical areas. Companies that can meet people where they are and want to be, particularly in smaller cities and towns, will have access to a broader talent pool and employees who are generally more satisfied with their employment at a lower cost. In the end, though, the Metaverse will undoubtedly drive leading superstar cities to become more influential than ever before. This is because a more dispersed workforce will need locations to assemble and interact in the real world.

Humans are by far the most sociable species on the planet. We cannot operate without one another and must be in the exact location. The Metaverse will never be able to fulfil our basic need for face-to-face contact and connection, not even in a professional setting. This is because the Metaverse may successfully facilitate and increase access to parts of production and consumption, including live events and experiences, digital art, and avatar skins. The Metaverse is not a replacement for actual locales or cities. The two concepts are considerably simpler to grasp and implement when seen as complements.