Xbox Live users will be able to buy branded items for their avatars, such as T-Shirts, from game publishers. Microsoft also noted that gamers might be able to dress their avatars to look like a particular game character, and that traditional fashion brands might also be incorporated into the store.
Microsoft is also planning unlockable avatar items based on in-game achievements.
"Our vision for these in the future is well and truly tied to game releases, and us working with publishers very closely to encourage rewards from those games to be tied to your Avatar," said Xbox Live product manager Robin Burrowes.
The Xbox Live avatars will go live on November 19, along with the rest of the New Xbox Experience.