How Roblox Is Coming for Real-world Retail

Fashion and retail are part of the Roblox DNA — and now they’re about to power the next phase of the gaming platform’s evolution.

Roblox has been giving users ways to style their game characters, or avatars, almost since its launch in 2006. Over the years, it steadily expanded its users’ digital style options with new features, projects and partnerships from some of fashion’s best-known names.

Although some brands may be rethinking the whole virtual thing, given the decline of metaverse hype, there’s no whiff of that at Roblox. For Winnie Burke, global group director of fashion and retail at the gaming company, the opposite is true.

“We’re having a very hard time keeping up with the volume,” Burke told WWD, referring to partnerships. “The volume is increasing, and the relationships are getting deeper. They’re becoming multiyear relationships.”

Fashion’s latest Roblox push, a digital necklace from a creator collaboration with Adidas, sold for 2 million Robux — roughly $20,000.

Adidas has more in the works, but that one will be tough to beat: The necklace was the highest-priced limited virtual item ever sold on Roblox, taking the crown from Lamborghini. The luxury car brand pulled in 1.5 million Robux, some $15,000, for three virtual mask-like hats inspired by the automaker’s golden bull logo.

Limited-edition items — or “limiteds” in Roblox-speak — didn’t exist before last year, at least not from brands. Limiteds only came from the developer before they were opened up to the broader world in April 2023.

That kind of growth is just part of the hustle and bustle of a gaming ecosystem teeming with 77.7 million daily active users, as of the first quarter.

That’s more than the entire population of England.

Keeping a huge crowd engaged isn’t easy for anyone — doing it for 18 years is something else entirely. Roblox’s formula relies on a technical backbone and user experience that are constantly iterating, a highly engaged creator community and the company’s long-standing relationships with world-class brands.

Over the past year alone, Roblox has been a key destination for Walmart, L’Oréal, Hilton Hotels via Paris Hilton, Versace, Hugo Boss, LoveShackFancy and Givenchy, among many others, including Adidas.

And yet, for all of the bustle, the platform needs to hustle a bit more.

Roblox says that more than 1.6 million digital products were sold on the platform between January and September 2023, a year-over-year increase of 15 percent. But its latest first-quarter earnings report signaled that user spending is slowing, worrying investors. Although revenue for the quarter jumped 22 percent, landing at $801 million, it fell far short of the $923 million analysts expected.

Put another way, the pressure is on for Roblox to find new revenue streams.

The effort has already begun. In April, the Roblox Marketplace ditched its application process, so digital items can be sold by anyone who meets the eligibility criteria. Last month, the company launched video advertising via virtual billboards.

Its next stop: Retail — and not just for avatar fashion and accessories.

Apparently its pilot with Walmart, which has been testing both physical and virtual commerce on the platform, has been enlightening, because the gaming company is now coming for real-world retail.

In a conversation with WWD, Burke discussed the relationship between Roblox and fashion, how it’s growing and the opportunity in the game’s latest commerce and ad moves.

WWD: Roblox has had fashion partnerships for a long time now. The latest one was Adidas. How did you work with them?

Winnie Burke: Adidas is a really thoughtful and progressive brand in their approach to this space. We worked really, really closely with the Adidas team, helping them to strategize and stay on top of trends on the platform, and giving them a consultative approach in how they’re managing their virtual economy, their virtual business on Roblox and the items that they’re creating.

WWD: How many fashion brands are you working with at that level?

W.B.: It’s a lot, dozens and dozens probably. We have over 300 brands across categories who we’re working with.

Our vertical alone in fashion and retail is pretty endemic to the platform, because self-expression and digital identity are so important to our community. We’re working with brands, from traditional retailers like Walmart up to luxury fashion brands like Burberry and Gucci and everyone in between, including Adidas and Nike and Puma, and fast fashion. The list goes on and on and on.

[We] provide them with a lot of consultative support and approach when they’re creating content and different types of activations — whether it be persistent experiences or virtual items or shops, like Adidas is doing, all the way through our newest offering: advertising.

This is more traditional advertising for brands who just want to reach a really highly dense population of Gen Z consumers through video ads, and other traditional ad products.

WWD: Roblox often gets lumped into the metaverse bucket. But as an isolated game or virtual world, you’re not reliant on other ecosystems, so you’re insulated from that bubble popping, right?

W.B.: I would agree with that. But you know, “gaming” can also feel limiting. What’s enjoyed most about our platform, on the content side, is that it’s a hybrid between gaming, entertainment, socialization and all of those activities you can do and experiences you can make with your friends.

Sure, it’s traditional gaming, role-playing experiences, “beat-the-clock” and other things along those lines. But it is also attending a concert, meeting an artist, connecting with people who are like-minded on private servers, participating in a fashion show or dressing up your avatar.

Dressed to Impress is one of our top experiences on the platform currently.

WWD: Roblox is pretty much a self-contained environment. But if I spent $20,000 on a virtual outfit, I might want to wear that in other places. Is interoperability with other games or platforms of interest to you?

W.B.: We’re a company that’s built for the community, and when or if the opportunity for them to take [items] off platform is resonant with the community … it’s currently not something that we have plans for, but it is a space that we’re always watching.

I think the difference with Roblox is that the utility for those items exists on the platform. If they want to be seen wearing that or [showing it] as a status symbol, they can do that on Roblox with a massive audience and with their peers. That’s where the self-expression component really gets to be displayed.

We have nearly 78 million users … and there are millions of experiences. So while the platform is confined, the experiences are decentralized, so you can have that utility throughout all those branches.

WWD: Tell me about fashion’s trajectory on Roblox. What does that look like, from where you sit?

W.B.: Luxury fashion was an early mover in this space. At that time, when we first saw Gucci coming in three years ago and creating that awesome Dionysus bag that sold for more on Roblox than it does in the real world, that was a moment.

[In 2021, Gucci’s digital Dionysus bag with Bee set off a frenzy of secondary sales, leading one buyer to pay roughly $4,115, beating the physical bag’s $3,400 price by over $700.]

It created a moment that opened the door for other luxury fashion brands to experiment. Some still took a wait-and-see approach. This happens in the industry. It happened with social, back in the day. But it just opened up the floodgates, and very similar to social platforms’ trajectory 10-plus years ago, those who were ready came quickly thereafter — and they still felt like they were late.

Even brands who we’re meeting with now and who are activating now for the first time feel like they’re late. But nobody is late. This is definitely a space that is evolving. They’re meeting consumers where they are.

WWD: And with advertising …

W.B.: With advertising in a more traditional way, we have a way for brands to activate without a ton of, not just [financial] investment, but time investment on their side. They can use it as a more traditional channel.

WWD: Let’s talk e-commerce and real-world products at Roblox. In terms of your journey here, how have you come to it, as a platform?

W.B.: In the last 18 months or so, we’ve really been listening to not only our community’s needs, but also our marketers’ needs, and the brands who are on the platform — in terms of helping them tell their stories and allow their customer to complete the lifecycle to complete the purchase.

We have such a massive audience who’s spending so much time on our platform that we want to enable brands, and also our users, to participate in e-commerce on Roblox, if they so choose, without having to leave the platform. And we’re seeing all platforms moving in this direction, like Instagram, Pinterest and TikTok.

Everyone’s been doing this, experimenting and moving into a more established business model. We have such a captive audience. It sort of makes sense in such a robust brand ecosystem.

WWD: Like your tests with Walmart?

W.B.: We did the pilot with them. Last month, it was three highly resonant and trending products within the Walmart ecosystem that they were able to offer for e-commerce. [In] the translation of those items on Roblox, the virtual item was slightly different. And I think that’s OK. You’re sort of inspired by it.

Like Adidas doesn’t produce that necklace in the physical world. But maybe they should, right? Is this a platform for them to test and learn and see what’s resonating? Like using Roblox as an R&D?

I’m not suggesting that they are, but this is how brands are thinking about Roblox.

We saw that with Fenty last year, where users created different versions of a lip balm, and that will be produced into a physical product, chosen by Rihanna based on the Roblox community’s participation. Forever 21 did this as well with the black beanie. So there are a lot of examples of [phygital] coming to fruition.

I think we’ll definitely see more of it.

WWD: Adidas’ virtual necklace came with physical sneakers, and the Lamborghini Golden Bull hat unlocked a trip to Lamborghini’s HQ in Italy. So is Roblox venturing into “phygital” or physical-digital goods and experiences?

W.B.: We are experimenting with a lot of different formats of this, and yes, the goal is that our technology will ultimately enable anyone to be a seller on the platform. It can be brands who wish to sell digital goods within [Roblox] experiences.

We want to make it easy for brands, and also easy for creators to host physical product within their experiences with a digital companion. So it really is meant to be for everyone to participate in, and we’ll be experimenting with a few different formats of that this year, while we establish a more formal solution.