The Future

Olga Chernysheva of DRESSX
Akhil Sivanandan of Green Story at his desk in Utrecht

Sustainability in luxury fashion has a long way to go. The data around the harm that the fashion industry causes the environment are still eye-opening. Technology will need to play its part in solving some of the issues, alongside regulation and attitudinal change to power those things

“As consumers place more and more emphasis on conscious consumption, brands and retailers will continue to invest deeper in practices enabled through technology to provide further purpose to luxury purchases and prolong their longevity.

Recent studies highlight that 80% of consumers seek transparency when making a purchase. Similarly, 57% of Gen-Z consumers consider resale value before purchasing a luxury item – pointing to the increased relevance of 'product passports' that catalog the entire supply chain process of valuable items, and act as authentication registers to retain a product's value in second and third cycle consumption.

In the future, we also expect to see a rise in the adoption of digital dressing, whereby digitalized garments are worn on either virtual or physical identities. The opportunity is huge as luxury consumers look to balance the need for self-expression and creativity with environmental concerns about overconsumption.”

Vishal Katelia, Senior Head of Customer & Retail Strategy, Future Retail, FARFETCH
Data sources: The EY Future Consumer Index, Bain

01

The evolution of circular thinking in fashion

Luxclusif is a business, recently acquired by FARFETCH, that offers luxury fashion brands and retailers an out-of-the-box resale solution, either via a B2B marketplace or buyback program, handling the technology and operations. We sat down with Guilherme Faria, Luxclusif's co-founder to get his view on how important the circular thinking that his company pioneers will become in the future for luxury.

“Luxclusif has been a great partner, for a long time. They initially helped us launch our FARFETCH Second Life re-sale service.”

Thomas Berry, Senior Director of Sustainable Business at FARFETCH

02

Sustainability data made accurate and accessible through technology.

Founded by Akhil Sivanandan and Navodit Babel, Green Story offers fashion businesses the ability to increase trust in their consumers by delivering a solution that measures and enables communication of the environmental impact of individual products, with the ability to then offset their carbon footprint. We spoke to Akhil to get his view on the benefits for both businesses and the consumers they serve.

"With a simple tech integration, Green Story will enable us to enrich the product information with all sorts of sustainability data."

Hélder Oliveira, Vice President of Product, FARFETCH Platform Services

03

Digitalization of the luxury industry

One of the luxury industry's hot topics is the digitalization of fashion and what it may offer in the way of sustainability. Olga Chernysheva is Chief Sustainability Officer at DRESSX, a business that believes part of fashion's current overconsumption can be addressed by creating some of it in purely digital form. We sat down with Olga for a deeper insight into how brands and retailers might benefit.

Olga Chernysheva of DRESSX

"FARFETCH and DRESSX collaborated on a first-of-its-kind campaign by digitizing 20 pre-order looks and digitally dressing a selection of the FARFETCH influencer community in new-season pieces."

Carol Hilsum, Senior Director of Product Innovation, Future Retail, FARFETCH

DRESSX is all about creating your own wardrobe of digital fashion. Can you expand on the key use cases, particularly when considering luxury businesses like brands and retailers?

“We built DRESSX as a meta closet or digital wardrobe: an ultimate destination for both consumers and digital and traditional fashion brands to enter the metaverse. DRESSX not only sells virtual clothing, but also offers the whole spectrum of services, starting from digitizing physical collections or creating digital clothes from scratch, to adding another layer to fashion NFTs, allowing collectors to wear those in augmented reality through the DRESSX app.

We believe that in the future every fashion brand – luxury, haute couture, streetwear, everyone – will own a digital fashion line. It will be the same as high-fashion luxury brands having perfumes or accessories. With a difference to the physical item's price point, digital fashion will become a new way for customers to enter the high-fashion world, discovering a new way to shop luxury, reducing their environmental footprint, and experiencing the same excitement from wearing designer pieces in digital. NFTs will add yet another layer, providing a sense of belonging, a scarcity effect and a luxury feel, which would not be otherwise achieved in the digital world.

Having our lives in digital and actively building our online selves via various virtual platforms, we need clothing that is created for our digital presence. Today that is mostly on social media, but gaming, video calls and the new domains and metaverses are growing. Of course, the format of digital-only outfits will not completely replace physical clothing, but it will definitely exist in the industry, becoming an integral part and taking a certain market share.”

In terms of sustainability, what could be the benefits of using your technology for those luxury businesses? And for consumers?

“Our research shows that the production of digital garments emits 97% less carbon than the production of the physical garments. Also, the production of the digital garments doesn’t require any water – except the water our designers drink during the day. However, the production of physical garments required on average 3000l of water per item – for denim, it’s 7050l per pair of jeans.

A user can archive your photo or video with a digital look if they don’t need it anymore. With physical garments, most of the time they end up in landfield, degrade over time and create microplastics. Studies show that 30% of the microplastics in the oceans are caused by degradation of textiles with polyester in them. Last but not least, there is no usage of any chemicals during the production of the digital garments.

By switching to digital for some use cases, such as a purely digital marketing campaign, brands can significantly reduce the environmental impact of the campaign. Our practice shows that the carbon emissions of digital marketing campaigns are 97%-98% less than physical campaigns.

Creating digital twins of the physical items allows brands to reduce the production of the physical collection and implement an on-demand production model. This will decrease the current overproduction in the fashion industry, which is one of its biggest issues.

From the consumer perspective, even the earlier studies of the consumer reaction to digital fashion show that buying digital garments can fulfil the need of buying new clothes. Digital try-ons allow the elimination of excessive online shopping with a lot of returns. Thus, digital fashion changes the behavior of consumers and helps to promote more sustainable consumption.

For content creators, who need to shop for fresh looks to create content, digital fashion is also a tool to reduce the consumption of physical clothes to switch to a more sustainable solution. Our calculations show that if we replace the production of physical items with digital by only 1%, annually we will reduce the carbon emissions from the fashion industry by an amount equal to the annual carbon emissions of Denmark.”

What advice can you offer a luxury brand that may be just starting out on its sustainability journey and wants to consider using digital technology? What initial approach should it take and what should be its priorities?

“First of all, I would not suggest running into NFT and blockchain strategies. They require understanding of the marketing, the drops, the established community. Moreover, NFTs are not the most sustainable solution in the digital ecosystem. To make them more sustainable also requires knowledge. And this year and going forward, NFTs are all about utilities. Some utilities are off-chain solutions.

I think the easiest way for brands to start their path in digital fashion is off-chain solutions. Creating a purely digital collection – very creative – adding AR or VR solutions.

Alternativately start introducing to the customer the 'phygital' products — then the physical clothes have a digital twin which can be put on the avatar or on the client's photo. Clients can try-on in AR, enter into a VR space created by the brand for the further immersive experience with the client’s avatar wearing the digital twin.This early adoption of the digital garment for luxury brands will allow them to test different strategies and understand what works for their clients, and build a community of digital garment users.”

Key takeaways that our data suggests

Innovation in data and technology will be key in helping luxury businesses make their practices more conscious. Third-party powered, out-of-the-box solutions are increasingly emerging and can become enablers for this.

Positively FARFETCH

We're on a mission to become the global platform for good in luxury fashion — empowering everyone to think, act and choose positively. We hope the Conscious Luxury 22 report will help the industry in understanding and acting on key drivers of change. It's all part of what we call Positively FARFETCH.

Important note:

This conscious luxury 22 report (the “Conscious Luxury 22 Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Conscious Luxury 22 Report that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our 2030 goals, expectations about our business and the luxury industry, our environmental, social and governance goals and initiatives, including with regard to diversity and inclusion and responsible sourcing, planned activities and objectives, our strategic priorities and objectives, future and current trends in the luxury fashion industry, the preferences of consumers and luxury sellers concerning environmental, social and governance matters, demographic trends, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate,” “likely,” “see” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the impact of the COVID-19 pandemic on our business operations, the increasing impact of and focus on environmental, social and governance matters could increase our costs, harm our reputation and adversely affect our financial results, and the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (“SEC”) for the fiscal year ended December 31, 2021, as such factors may be updated from time to time in our other filings with the SEC, accessible on the SEC’s website at www.sec.gov and on our website at http://farfetchinvestors.com. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. You should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this Conscious Luxury 22 Report relate only to events or information as of June 16th, 2022, the date of this Conscious Luxury 22 Report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

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