The document discusses eco-friendly fashion production and distribution. It outlines the environmental challenges of fast fashion, such as waste and worker conditions. Potential solutions discussed are reducing consumption and waste through new manufacturing technologies, reusing clothes through consignment and rental markets, and recycling fabrics. Large companies like Adidas and H&M are engaged in recycling efforts. Li & Fung's sustainability strategy focuses on certified and natural materials across household, apparel, and beauty products. Moving forward, sustainable packaging and balancing consumer and sustainability interests are areas to focus on.
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About the Fung Group
TRADING LOGISTIC
S
DISTRIBUTIO
N
RETAILING
Li & Fung Limited
Listed on SEHK
Global Brands Group
Listed on SEHK
Fung Retailing Limited
Privately Held Entity
Convenience Retail
Asia Limited
Listed on SEHK
Trinity Limited
Listed on SEHK
Branded Lifestyle Holdings Limited
LiFung Kids (Holdings) Limited
Toys “R” Us (Asia)
Suhyang Networks
UCCAL Fashion Group
Privately Held Entities
Fung Holdings (1937) Ltd.
A privately held entity and major shareholder of the Fung Group
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About Fung Global Retail & Technology
• The knowledge bank for the Fung Group
• Focuses on emerging retail and tech trends,
specializing in retail and technology intersections,
and building collaborative communities.
• Based in New York, London and Hong Kong
• Publishes thematic and global market research on
topics such as the Internet of Things, digital
payments, omni-channel retail, luxury and fashion
trends and disruptive technologies.
FUNG
THINK
TANK
RETAIL
TECH
MICRO
MACRO
RETAIL
REAL
ESTATE
THEMATIC
RESEARCH
VR
AI
IOT
DIGITAL
DIGITAL
DIGITAL
DIGITAL
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Our Expertise: A Unique Combination of Retail, Fashion and Tech
• Fung Global Retail & Technology advises retailers, real estate developers and tech companies on projects
situated at the intersection of retail, tech and/or fashion.
• Our team offers a robust knowledge bank and significant experience in the retail, fashion and tech fields. We are
involved in many areas of the business and believe this allows us to offer a unique perspective by focusing on
the future and where the sector is heading.
FASHION TECHRETAIL
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Environmental and Social Challenges from Apparel
• 80 billion pieces of clothing
purchased worldwide each year
• Up 400% from 2 decades ago
• ¾ garments end up in landfills or are
incinerated after short lifespan
• 1/6 of people worldwide work in
garment industry
• Bangladesh is #2 country for fast
fashion
– Garment workers average $3/day
Source: The True Cost (2015)
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Current Climate
• Americans throw out average of 82
pounds of textiles per year
• Only 10% of clothing donated to thrift
stores get sold
– Rest ends up in landfills or flood foreign
markets
• Used garments account for over 50% of
clothing sector by volume in many sub-
Saharan African countries
• Average pair of jeans takes 7,000 liters
to produce
• Average t-shirt takes 2,700 liters
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Fast Fashion
• Produces products in a cost-efficient manner in order
to respond to fast-changing consumer tastes
• Uses concepts from electronics manufacturing to
control production and inventory
• Clothing stays on the shelves a couple of weeks
• A model for the broader apparel industry?
– Responds to changes in consumer preferences
– Better aligns production with demand
– Less discounting
• But… higher social cost and waste
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Back to the 1970s—The 3 Rs
Reduce
• Reduce the amount of garments on the market,
and the materials used to make them
Reuse
• Give already used goods a second life
Recycle
• Find a new purpose for the raw materials of used
goods
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Ways to Reduce…
• New manufacturing technologies have been
developed that enable more on-demand creation of
apparel
• Some also reduce the amount of water or other raw
material used in the manufacturing
• When goods are made on-demand, there is no need
for excess inventory to go unsold
• New manufacturing technologies and techniques
include:
– DPOL
– Electroloom
– Robotic Knitting
– 3D Printing
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Direct Panel on Loom (DPOL)
• Loom attached to computer
• Weaving, cutting, patterning in one step
• Reduce lead times by 50 %
• Save 70-80% of water
• No fabric waste
• Every piece made to fit
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Electroloom
• Mold designed using CAD
• Internal electric field
• Fibers guided in 3D shape around mold
• Fibers bind together
• Seamless fabric items on demand
• Only one step after design
• Raw material converted directly to finished garment
• Still in early development
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Robotic Knitting
• Replaces human seamstresses
• Lower production costs
• Transform raw yarn directly into a final product or near-
final product
• Shima Seiki
– Maximum knitting speed of 1.6 meters per second
– Partnered with Drexel University: Advanced Functional
Fabrics of America
• Thursday Finest
– Manufactures colored and fitted knitted ties using a Shima
Seiki flat knitting machine
– A dress takes 60 minutes to make, a tie takes only 30
minutes
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3D Printing—Examples in Consumer Goods
Orbitrec
• world’s first 3D-printed bike
unveiled at CES
Normal
• Custom-fit 3D-printed
earphones
• Partnered with Rebecca
Minkoff on limited-edition
products
• More sustainable
Mink Makeup Printer
• Sub-$200 desktop printer
can print makeup
Shoes of Prey
• Design your own perfect
shoes
• Design studios in 6
Nordstrom stores
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Ways to Reuse…
Used goods can be given second lives or repurposed
with new marketplaces that are available
• Consignment economy
• Rental economy
• Sharing economy
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Consignment
Online Fashion Resale Marketplaces Show Explosive
Growth
• thredUP, Tradesy, The RealReal, Poshmark, and
Vestiaire Collective, reKindness
• Reasons for success
– Heavy venture capital investment in online
consignment industry (over $300 million)
– Retail brands’ resale programs encouraged
consumers’ sustainable consumption habits
– Consumers are convinced by great quality of
secondhand apparel bought via online platforms
– Societal shift toward less ownership—
the art of decluttering
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Online Consignment and Rental Marketplaces
• thredUP—Buy like new clothing, and send in your old
clothing to get paid for every item that is sold
• Tradesy—Snap a photo and sell clothing and
accessories with free shipping
• The RealReal—Online luxury consignment
marketplace
• Poshmark—Shop from other people’s closets and
sell what’s in yours
• Rent the Runway—Rent rather than buy new
clothing to wear something new for any occasion
• reKindness—Take an item to give an item in the
community closet
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Sharing Economy
• Millennials Like Sharing Plans, but Want to Own a
Car
• 20% of millennials take public transit once a week or
more, compared with just 7% of Gen Xers and 10%
of baby boomers
• 35% of millennials indicated that they plan to
purchase a vehicle in the next 12 months, compared
to 25% of all US adults surveyed
• Millennials lease cars more than any other
generation, and are leasing 50% more often today
than they were five years ago
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Sharing Economy—“Uberifying” Virtually Every Industry
• Disruptors:
– Uber, Airbnb, Lending Club, WeWork
• Valuations of sharing-economy companies have
skyrocketed
• Revenues are projected to catch up to aggressive
valuations
• Sharing-economy market:
$15 Billion
2013
$335 Billion
2025
CAGR: 29.5%
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Ways to Recycle…
Take waste material and turn it into something new
and usable
• Adidas making recycled shoes
• H&M “closing the loop”
• New startups on the scene to assist with recycling
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Adidas: Recovering Plastics
Material source: fishing nets, easier-to-reach beach
trash and marine plastic waste
"Knitting in general eliminates waste, because you don't have to cut out the patterns like on
traditional footwear… We use what we need for the shoe and waste nothing.“
- Eric Liedtke, Head of Global Brands and Member of Executive Board at Adidas
Sneaker Prototype made of recycling
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H&M: “Closing the Loop”
H&M encourages customers to recycle clothing, which is then reused or
turned into new clothes
2013
– Customers can to drop off garments from any brand, no matter the
condition, to any H&M location and receive a discount.
2014
– 38 million t-shirts worth of material was donated
– H&M launched the “Close the Loop” clothing line, made using recycled
fibers
2015
– “Recycling a t-shirt saves 2,100 liters of water.”
— H&M’s 5 million-views “Close The Loop” Video
• “We have set the vision of becoming 100% circular.”
--Anna Gedda, Head of Sustainability at H&M
2016
• — H&M says it has recycled 25,000 tons of unwanted clothing since 2013
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Startups Engaged in Recycling
• Optoro works with retailers and
manufacturers to manage and resell their
returned /excess merchandise to achieve
sustainable commerce
• Worn Again creates goods from recycled
materials to solve challenges of textile
waste
• RecycleBank rewards people for taking
everyday green actions with discounts and
deals from local and national businesses
• Bionic Yarn is making fabric from recycled
ocean plastic
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Sustainability Is Integral to our Business
“The Li & Fung approach is to work with
customers, suppliers and industry partners to
further the adoption of standards and best
practices. We’ve met customer requests for
sustainable sourcing across our different
verticals.”
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Household
• Household items, furniture and packaging made from
FSC or PEFC certified wooden/paper materials
• Household items made from natural materials:
– Bamboo, roots, spent rubber trees
– Items made of recycled plastics
Household
Certified
PE
T
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Apparel
• Sourcing organic cotton meeting GOTS
standards
• Using recycled yarn, polymers, leather and
shearing
Apparel
Standards met
Partner
Campaign participator
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Beauty
• Biodegradable items
• Silicone, sulphate, paraben and colorant free
• Items not tested on animals
• Toothpaste was first to be organic certified
Beauty
First toothpaste
certified as organic
in the world
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Steps Forward
• Work on more sustainable packaging and production
• Balance consumer desires for brand vs. sustainability
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Sustainable Packaging—Hot Trends
Coca-Cola introduced the world’s
1st 100% bio-based PlantBottle in
June 2015
Edible Packaging100 % Bio-Based PET Novel
Bioplastics
LumiLid by Toray includes greater
than 50 % renewable feedstock
content
WikiCells has developed self-
contained edible packaging with
chocolate, dried fruit, nuts and
seeds
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Brands vs. Sustainability
Sources of Pressure
• Global consumers willing to make personal sacrifices
to address environmental issues (Cone
Communications and Ebiquity)
• Celebrities are more invested in environment
campaign: Leonardo DiCaprio
• Millennials are environment-conscious: 88% of UK
and US Millennials and Generation Xers believe
brands need to do more good, not just ‘less bad.’”
(Positive Luxury)
• “Clean Label” trend
• Answer to stockholders: in 2015, a Morgan Stanley
analyst raised the price target on Nike based on its
sustainability performance.
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Summary
• Consumerism and fast fashion pose challenges for society and the environment
• There are new companies and new solutions to reduce, reuse and recycle, including
– New manufacturing technologies
– Consignment
– Sharing economy
• Several large companies are engaged in recycling
• Li & Fung has a well-developed sustainability strategy
• Brands are developing new packaging methods
• Citizens are uniting to further environmental concerns