3D Virtual Design Update - Li & Fung · Design & Development Visual Planning & Assorting Digital...

Sean Coxall, President – Supply Chain Solutions

3D Virtual Design Update

Investor Day 2019 LI & FUNG Sean Coxall 1

• Consumers increasingly consider online options their one-stop-shop

• The shift to online is accelerating • Online businesses focus on growth, not profits

The Online Effect• Multiple combinations of on- and off-line offering =

seamless customer experience• Assortment complexity with channel specific

products• Wholesale channel conflict

Omni-Channel Acceleration• Speed and agility increases margins more than

ever before• Fast Fashion retailers lead in profitability • Off Price retailers gaining share

Speed to Market Wins• Rising wages • Greater margin pressure • Inventory risk

Rising Costs

• US-China tariffs• Emergence of new lower cost markets• Foreign exchange fluctuations

Changing Global Economics• Environmentally conscious and socially

responsible• Increasingly more influential and opinionated• Use of social media to voice out

Consumers Demand More• Big Data now fueling precise product and

marketing decisions• Better able both to predict and to respond

Data, Data, Data… Digital!

Need improved product & design to

counter online channel’s scale

advantage

More SKUs, lower order size and

MOQs

New speed models and calendar

impact

Need to optimize sourcing footprint,

leverage scale and eliminate waste

Sudden and unpredictable shifts in

global trade – need geographic agility

Sustainable and ethical sourcing, eco-

friendly practices, traceability

Integration of consumer analytics

into design and supply chain

Retailers face headwinds with sales and margins under pressure How to drive growth?

How do retailers combat these headwinds?

3D Virtual Design is one way

LF 3D Virtual Design is Changing the Game


LF 3D Virtual Design | Our Vision

● Innovate | Ideate● First Insights Tests● Visual Size Sets

● Reusable Assets for E-com● Virtual Stores● Virtual Try-On

Design & Development Digital SellingVisual Planning & Assorting

● Visual Line Planning● Assort ● Virtual In-Store Environments

TRANSFORM how we develop, assort, buy & sell product. Leverage best in class digital & virtual rendering technology through all aspects of our merchandising model.

Transformational Impact on: SPEED, INNOVATION, SUSTAINABILITY, SAMPLING OVERHEAD

Board | 3D Apparel

Brand


LF 3D Virtual Design | Our Value

We help our customers take the Digital Leap and Integrate Digital Design and Product Development into their business processes

Create Demand-side Critical Mass

Educating the retailers and suppliers is KEY

Understand current process, create digital process, define metrics

Phase 1 – Kick OffGain Traction

Achieve Economies of Scale and Exponential Growth

How can we better collaborate to build scale?

Modify Standard Operating Procedures, execute, scale up

Phase 3 – Roll OutRide Momentum

Achieve Critical Mass and Provide Value-added Services

What are customers looking for? What are the specific needs?

Identify project champions, get buy-in, trial-error-calibrate

Phase 2 – Pilot(s)Cross Tipping Point


LF 3D Virtual Design | Our Evolution

3D Virtual Design CoE

3YP(2017-19)

Team Kickoff

Sep 2017

25%LF Customer

penetration rate

5xSigned up digital-only customers

20XNumber of current

customers transforming into

3D

4XAdoption rate

2019

25%Increase in LF

designer productivity

6X# of Categories


LF 3D Virtual Design | Team Growth

Team Formed

1.5x

4.5x

6.5x

• Hong Kong• Shenzhen• Shanghai• Seoul• New Delhi• New York

• Hong Kong• Shenzhen• Shanghai• Seoul• New Delhi• New York

• Hong Kong• Shanghai• Seoul• New Delhi

• Hong Kong• Shanghai• New Delhi

Sep 2017

Jan 2018

Jul 2018

Apr 2019

*Including 3D Product Developers, team leads, interns

• Hong Kong• Dongguan• Shenzhen• Shanghai• Seoul• New Delhi• New York

Jul2019

7.5x


Evolution of LF 3D Virtual Design Services

Sep 2017

LF

3D

Vir

tua

l D

esig

n S

kills

et A

ccu

mu

latio

n

Dec 2019

We work with our customers on all aspects of digital product

development, collaborative design, and product innovation:

• Technology and geography agnostic

• Experts in digital design, digital fitting, pattern making, 3D modeling,

3D animation, digital visualization and rendering

• Standardized processes, ability to scale

LF 3D Virtual Design Skillsets

Customer Adoption of 3D


LF 3D Virtual Design | Key Impacts

S P E E D T O M A R K E T

4 7 %Reduction of

E N V I R O N M E N T A L

5 5 %Reduction of

*Results are based on comparisons between traditional vs. digital sampling of one product each for two customers

Reduction of

E C O N O M I C

6 8 %



S P E E D T O M A R K E TI M P A C T

Comparison between traditional and digital sampling process of one garment/style

O v e r a l l l e a d t i m e 4 7 %

T o t a l a m o u n t o f w e e k s f r o m 1 5 t o 8

A f u l l s a m p l i n g r o u n d 1 r o u n d

D a y s o n i t e r a t i o n s 1 4 t o 2

T o t a l s a m p l e s f r o m 3 1 t o 1 4

A R E D U C T I O N i s m e a s u r e d o f :




Comparison between traditional and digital sampling process of one garment/style based on cost of physical sample


E C O N O M I CI M P A C T

S a m p l i n g c o s t s a v i n g s ( a l l v i r t u a l ) 6 8 %

S a m p l i n g c o s t s a v i n g s ( s e m i - v i r t u a l ) 1 0 - 3 0 %




Comparison between traditional and digital sampling process of one garment/style based on cost of physical sample


T o t a l c o s t p e r c e n t a g e 6 8 %

T o t a l p r o d u c t i o n c o s t 2 . 6 %

C o s t o f p h y s i c a l s a m p l e s $ 8 2 0f r o m $ 1 2 0 0 t o $ 3 8 0

*Results are based on comparisons between traditional vs. digital sampling of one product each for two customers. Costs of digital sampling not taken into account.


E N V I R O N M E N T A LI M P A C T

E n v i r o n m e n t a l f o o t p r i n t 5 5 %

C a r b o n e m i s s i o n s b y 8 1 0 k g C 0 2 e q

F o s s i l f u e l b y 5 2 7 k w / h

W a t e r c o n s u m p t i o n 1 5 m 3

Comparison between traditional and digital sampling process of one garment/style

B E N C H M A R K S :810 kg C02eq = round trip from London to Vancouver527kw/h = 1,405 laundry washes15m3 = 231 showers



LF 3D Virtual Design | Flexible Pricing Options

SERVICES

Market-competitive pricing as benchmark with flexible models available according to business need

Vendors

• Sample Costs

• Fitting Costs

• Design and Product

Development

Retailers

• Marketing

• Ecommerce, Publishing

• Design and Product

Development

DPD

Sourcing Design

$ / style

Digital Platform

Subscription

CHARGED BY SAVINGS

We are now starting to generate revenue


The Way Forward


Leveraging 3D Capability with Current Customers• Use 3D services to open up strategic conversations with customers

3D as Value-Add with New Customers• Continue to sign customers willing to pay for digital services

Transform the Industry• Lead with our knowledge, experience, end-to-end solutions and scalability


LF 3D Virtual Design


…the future is closer than you think…



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