Resale in Hong Kong Opportunities and Challenges | Redress | PI Apparel

Hi everyone, thank you very much for joining us this afternoon. So I'm Auriane, I work for Redress and I'm the Circular Fashion Programme Director for Redress. So I'm going to be talking a little bit about the resale opportunities specifically in Hong Kong because that's something that we've seen really expanding over the last couple of years and we see an amazing opportunity for all of you retailers around. So first of all, to introduce a little bit more about where is this analysis coming from. So REDress is a charity based in Hong Kong. It's been created over 10 years ago, and we have a really an environmental focus. So we mainly have two very big programs, two very big audiences. On one side, we work with consumers on education awareness. Consumers are from age 6 to all the way to, I don't know, 100 or something. And we, through that, we really promote the reuse, recycling, re-wear of clothing around Hong Kong. And we also have another big program called the Redress Design Award, and through this program we work with designers who are going to have the chance to design the next zero-waste collections. So through this program we work with a variety of audiences and we try to develop awareness and also promote solutions for circular fashion. I'm going to be just giving you a little reminder, just in case that wasn't, you know, too fresh in everyone's mind, but I'm sure all of you probably know the impact of fashion on the environment. And that's a really important one to get started with, because it has— this is why we're here today. So fashion is one of the top 5 most polluting industries in the world. It's estimated to be about 10% of the global greenhouse gases. And just looking at the amazing amount of resources that is necessary to produce simple things as a cotton t-shirt, a pair of jeans, or in that case of oil, a pair of, let's say, polyester leggings. So fashion is creating a huge amount of carbon emissions through the manufacturing, through the extraction and usage of resources. So all of these resources are extremely costly to nature and to people as well. So it's also all of the work that gets into, into, into the making of clothing. And it's not just about what is being used to produce, but unfortunately a lot of this ends up in landfill. So looking at this number of a garbage truck per second, that's literally like, there is one now, And there is another one. And there is another one that is going to landfill at the moment. So the amount of things that goes to landfill, the amount of beautiful items that have necessitated a huge amount of resources, of labor, but that ends up in a landfill is absolutely huge. And this is purely an estimation, meaning that it's even today very difficult to have exact numbers because it's really difficult to measure because there are so many players at, in this game. So looking at how much we are wasting as clothing, as clothing that very often could still be worn or could still be reused, it's also a huge waste of money because there is a huge economy to making sure that this clothing stay in use for longer. So it's estimated to be about $100 billion that we're wasting every day and that we could re-inject into the economy if we're looking at the potential of clothing that are currently going to landfill. So that's what I want to show you a little bit now. Oops. Specifically here in our backyard in Hong Kong, it's 202 tonnes of clothing that goes to landfill on a daily basis. This is 2021 estimation of statistics based on the government statistics. And this is a beautiful mountain that just represents a tiny amount of that 202 tonnes. So 202 tonnes is maybe— if we look at, let's say, this side of the room, this range of seats times 200, that's roughly what it looks like, 202 tonnes. So this is just purely Hong Kong, just here where we live. So let's look at what is it— why should we look at resale? Well, I think this is what I was trying to show, is like all of these resources that exist that currently are being wasted. And we ran this survey in Hong Kong in 2020. What we found out also that it's not just in the landfill, but it's actually coming back to our own closets and wardrobes. One-third of people's clothing in Hong Kong is never or rarely worn. So rarely, I think we said it's something like wear it more than once a year, right? So a lot of it is like really nice and tidy in your wardrobe. And also we learned that 2 in 5 people keep their clothes for less, for a year or less. So it's an abundance of clothes that are still in a really good condition, probably, right, that are still hanging. And I'm sure all of you are like, yeah, Yes, I know what she's talking about. I have that in my closet. So we all have this kind of items in our closets. And then looking back at— interesting type pose over there. What happened? So yeah, so the sentence over there is supposed to be that extending the life of clothes by 9 months can reduce the carbon, water, and waste footprint by 20 to 30%. So just wearing something for 9 more months really has a drastic impact. By 1/3, it's going to cut the environmental footprint of your garment. So just looking at that, given that, okay, we can reduce the footprint by wearing clothes for longer, and we have clothes we're not wearing, what do we do? This is where the resale really comes into play. And this is from the ThredUp resale report. I think it's a really interesting one because it really shows in data how quickly the resale market has grown. +28% in 2022. Just after COVID, we saw a resurgence of people being, of course, more careful about their budgets because they're a little bit more aware of, like, being more concerned, having lots of clothes that they realized maybe they didn't really want to wear, and also being just more environmentally conscious. That's especially true, as you all know, for Gen Z, but that's not just, like, that's just one generation. There is more people to it. So looking at how fast it has grown, predictions show that it estimated to reach 10% of the global apparel markets by 2024. So there is also really a significant amount of the population, and that's a global survey, significant amount of people who are interested into this resale market. It can be from an economical point of view, it's cheaper, it can be because of the environment, and it can be also because of style, that people enjoy the fact that they can curate their wardrobe and pick items that are not very common. I wanted to show you specifically in Hong Kong because we did this survey. So we did the survey in 2020 and we did another one in 2021 to really evaluate the second— the impact, the attitude towards secondhand of Hong Kongers. What we found in 2020 is that when we asked the question of how likely are you to purchase secondhand in the future, in 2020 it was not that positive. So even looking just purely at people who were really keen or kind of so-so, why not, it was about 17%. But when we moved to 2021, the same question reached out to 70%. So although this is really showing that in Hong Kong at least there has been a shift, traditionally it is not something that is very much enjoyed by most people because of a lot of stigma attached to secondhand clothing. But even in Hong Kong, where there is a strong stigma attached to it, there has been a shift in terms of the mindset. And I'll explain about the actual purchasing situation afterwards. But in terms of the mindset, a lot more people are keen on purchasing secondhand. And we've seen also in the last 2 years especially that there has been a lot more secondhand shops, whether online or offline, that have popped up. A lot of them are tiny, really like, like run from, from someone's living room. But you also have like little shops opening. And that's something pretty exciting for the market. Why are people interested in purchasing secondhand? Remember that this is really Hong Kong focus, and depending on where you come from, it could be quite different answers. But I think for us here, it is really important to realize that people want to know that it's clean. And fair enough, there is of course much higher concerns around hygiene here where we've had SARS, we've had COVID. So people are a lot more careful about cleanliness and hygiene. So making sure that things are clean. And then I think two data are pretty interesting for you is that I can be sure the clothing is not fake. As a retailer, if we start to offer secondhand in your own shop, then you give that proof of authenticity to your customers. And that's a really important one. Whether— and that was true whether it was an expensive item, like a luxurious item, or a more high street retail item. People just want to make sure it's the real thing. The second one, the second one I find quite interesting is that my favorite brand was sold in secondhand shops. So we also reached 23%. Also from the aspect of a retailer, they have this confidence. So having this confidence that I'm going to have the same kind of experience in my favorite shop, in my favorite brand, is something that is going to make people more keen on purchasing secondhand. And moving them away from the idea that secondhand is a thrifting thing, it's in a shop that is like a big bazaar, it's like I have to dig through piles of clothing. So if people are keen keen on this kind of item, I think that makes— drives us also to think that resale from retailers could be quite an interesting model. Opportunities for resale by retailers. When we ask this question about what do— are people keen on that? What do they think about it? Okay, the person is looking okay this time. Good. So when people were asked about purchasing at their current, like, their favorite retail store, so as you can see, overwhelmingly it is quite a positive answer. So people are saying that they are quite likely to, very likely to want to purchase in that store. And we have quite a bit of undecided, but as you can see, actually the amount of people who say no is tiny. And I think that's the most important part, right? We don't want to necessarily convince everyone at the same time, but having people who, like very little people who are saying no, no, no, this is not something I would want to do, is already a big step. We can also see that looking at what is the image, I have discussed with retailers before who were saying, well, isn't that going to damage our image of like saying secondhand in there? This is why we ran the survey as well, to be able to show real data from people. So showing that generally people find it quite a lot more positive, and actually the a lot negative is that 1% over there. So the a lot negative is actually extremely small. So from that perspective, we want to show you that we don't think there is a high risk in trying it out, in trying to propose this secondhand resale to your customer. Now, looking at what has been happening on the ground, if let's say in specifically in Hong Kong, where have people been purchasing? So some of you may know that in Hong Kong we don't have a huge offer in terms of secondhand. We don't have that many shops yet. A few of them have really developed through COVID and afterwards. So I'm thinking about JPA, for example. We have— The RealReal has been around for some time, but that's an international one. And these are more like kind of the usual suspects of the more easy ones to find. As you can see from here, it's a big mix between online and offline. So there is not a clear tendency of like where do people want to buy. From our experience of running secondhand shops and secondhand pop-ups in Hong Kong. We do believe that it may be easier to run it as a physical shop first, because it will be easier to transition, for people to transition from buying new things from your shop to buying secondhand things. It will be an easier way to build that trust, to build that storytelling also around how did you gather the clothes, how did you sanitize them, why are you doing this as a brand. So it's a really good opportunity very key from a brand perspective to have it in a physical shop and to also bring in the current employees, current retail staff, to look into why is secondhand an interesting part of the sales. So just to show you an idea of like where are people currently buying. So Carousell is a big one, right? Online platform, you can buy everything and anything. I think this is a pretty interesting one because definitely has the strong convenience, people can buy easily and it's very cheap, you can find extremely cheap things. But that's just for people who are currently buying secondhand. So I'm showing you this because this actually, although it doesn't cover all of the secondhand in Hong Kong, it covers quite a bit. And so it means there is still a big gap of like, there is still a lot of room for more secondhand to exist in Hong Kong. Top reasons for consumers to purchase secondhand clothing. So why are consumers purchasing secondhand clothing mainly? Well, top reason, not surprisingly, that it's cheaper, but it's pretty closely related to it's environmentally friendly or ethical. So we see the main two, the two main reasons again. So how can we further help people to kind of make good on what they want to do? We know that there is a big divide between what consumers say they want and what consumers can actually do. So secondhand has this big advantage of being usually more cheaper than, let's say, more sustainable brands that may not be accessible to every single consumer, while also offering definitely an environmentally friendly option. And then yes, we can find like, like a bunch of different reasons, but I think this is also to show that different customers can have like different options, and different brands can also find their own niche in terms of finding out which one is going to be the key target customer to buy the secondhand. So we want to have an interesting— going on over here. So our customers really welcome the efforts of take-back. So we, when we interrogated— so take-back as a principle of, as a brand, to collect unwanted clothing either from your own brand or from just general brands. We run take-back programs in Hong Kong for the past almost 3 years now, and we We really encourage our retail partners to continue to do that, whether it's for their own or for all of the brands. Simply because when we ask consumers, 88% see that as very positive and see that as really added value to a brand. Whether it's the brand that they really favor and they are used to go to the shop, it's also something that could help to move on to a new brand. Generally, it is very positive because people also see this from their point of view. That it's very convenient for them. They can just bring back their clothes and purchase something from the shop at the same time. We've worked with some partners here for a very long time who also confirmed that, although, you know, we ran the statistics, but they also confirmed that this is the impression they have from their own customers here. So this is what I wanted to finish on, that we have— customers are ready and we feel that there is a lot of room for retailers to follow and to propose solutions. So the take-back is currently something that is of course necessary if you want to start reselling secondhand. Having it whether physical or online is really depending a lot on the supply chain. But in Hong Kong, given the really tight network of shops, it's something that could easily be started as a physical activity. Then to move on to having secondhand resale, We see there is a lot of interest, and right now no retailer is offering this solution at the moment in Hong Kong. So there is also perhaps the potential for the first mover to really, to really open the market to that. In the US, in Europe, we've seen a lot of big players like Lululemon, Doc Martens, Patagonia, who opened their secondhand resale in the last year or just really recently. There has been a huge surge in 2022 of the number of brands who've started their own or managed by third party, but having resale system. H&M is also trialing something. So that also goes to show that it's not necessarily about the price point of the brands, because like brand like H&M or brand like Lululemon can make that a system, whether it's profitable or not. We've been discussing with retailers, and although I'm not going to name like which one is doing really good, really good money-wise on that, We know it's not an easy, like, it's not smooth sailing for sure, but it's something that they see often as a really huge value added to their customer, a really good way to keep customer loyalty, especially in a time where customers have even more brands to choose from. So, and that has been the feeling from both a more luxury side as well as the high street. So that's it for me. I would really welcome your questions. And I think we have a little QR code if I do this. Yes, great. So we have a QR code. Thank you. Um, so we welcome questions, uh, to— if we want to discuss, or if anyone is happy to share if they've tried this in Hong Kong or in another country, I think it would be really interesting for everyone to learn about, you know, your experience as well. So feel free to scan it, and I should have questions over there afterwards. Okay, yeah, so first one, so about the feedback from brands. So in Hong Kong, we haven't worked for a brand who does their own directly at the moment. We know of someone doing it, but they are not necessarily reselling it afterwards. Again, in Hong Kong, that doesn't exist just yet. What we've done is on like small samples, we have selected clothing for some specific brands to look at the quality of what they were getting from the take-back and to try to, to see whether they would be likely to, you know, have enough quantity and enough quality to start their secondhand, their own secondhand retail. It's still something that is in progress, I would say, at the moment. So there is no— it has not happened yet, but this is something we do on a sample, on a sample. We know that this is something more a lot more popular and a lot more developed in the US and in Europe, where a lot of brands are proposing this, this solution at the moment. If you look at Lululemon, for example, this is something they are really pushing forward right now. And having the take-back, of course, for only their brand, it's certainly easier in a way because they can better control what they are getting without having to, you know, sort through everything else they are receiving. But it also has, of course, the need to probably work with either a third party or train their team properly to be able to identify the quality that is necessary, the minimum quality necessary from what they are getting. And how can we start working with you? Well, I have my contact over there down. So what we do for brands, we can propose to support you in take-back systems, in stock starting that and also you're starting secondhand resale in your own shop or through pop-up activities. So we really want to work on like a unique solution basis. So we don't have like a solution that is one fit for all. We've been working with several retailers around here that we— that are, let's say, we've been working with the Inditex Group for many years of having the take-back system in place with them. And we are working with a few on like maybe trialing the secondhand. So shoot me an email. Thank you. And the benefits on resale, okay, seems to be customer side. What the point for— what's the point for a company? Is there a real successful case? Well, I think it's a bit too early to tell. Like there is only a few people who have moved on to this field at the moment. I don't think that I would be able to quote someone to be like confidently saying yes, this This is the success story, go and do the same thing. At the moment, a lot of brands are still just starting this, trialing it, so I think it's too early to say. But just like when, you know, brands started to, you know, to let's say phase out plastics from their packaging, that's something we saw a couple of years ago, right, of like brands moving on to having more paper-based, more sustainable packaging. Now it's a lot more common. If you ask this question 15 10 years ago, a lot of brands probably would have said it's really complicated to phase out plastic. So I think it's the same thing. It's really new, it's still very new, so I don't have a very good successful, successful case just yet, but I hope maybe you're part of the next one. Incentives that we need to give customers. So that's something we've often discussed, and I think at least to get started, it does seem fair to have a system of incentives. Incentive. Something we would tend to be more promoting is having an incentive that promotes to buy— customer to buy secondhand from your brand, meaning that if they return, you know, a t-shirt, then they get a percentage of the, you know, the secondhand collection that you have. That may be more meaningful to do it in that way because then, you know, you promote also your secondhand resale at the same time, so pushing them to, to move to that part of your collection. Although we don't provide— we don't really promote having an incentive for normal take-back, which is like every brand take-back, because then that would just be like encouraging overconsumption. If it's your own brand, it's quite different, because what you're trying to do is to invite people to keep things in a good condition and take the time to bring it back to your brand, and you want to build that brand loyalty. So at least at the beginning, yes, probably it's going to be interesting to have some kind of incentive. Incentive. Whether that incentive is a discount on the next, let's say, secondhand item they buy from you, or if it's a voucher. It could be also something else, you know, it could be an access to a special loyalty program. It could be also that they get a percentage of the resale price of that item. It could be built in different ways, depending on how much you want to involve your customer into that resale process. But probably, yes, that's going to be essential to get the program Do we have capability in Hong Kong for customization of secondhand clothes? Well, yes. Well, yes, and basically in Hong Kong we don't have like major giant manufacturing. What we do have is a lot of very talented designers and tailors who are very, very amazing and capable, and they have lots of ideas. And that's the basis you would probably want to work with to have this kind of tailoring, this kind of customization. So from the Redress Design Award, with Redress, we work with a lot of amazing designers, and we know there is a lot of talent out there. So having, let's say, designers, tailors work with your brand to offer customization service, repair service, that's something that is totally doable. It's just about supporting these people. We have the people who have the idea, we even have here like small workshops, especially with a social impact very often, who are able to do this kind of small customization work, and that's something that is really an untapped potential in Hong Kong. So definitely, yeah, definitely support this idea of trying to find these people to work with you. Challenges in collecting take-back items. So hygiene concerns, yeah, very often this is a question that comes up. Yes and no, because what we do for take-back is that basically it's a box and you ask your customer to drop things in the box. So your staff doesn't have to touch it. Then it, you know, from the box it goes into a carton. So what you need to do is like pack the carton, then maybe probably send it to your warehouse where you could choose to have things sanitized before, after. And actually most of the time you can also ask your staff to wear gloves if they want to. You can spray disinfectant if you want to. But just by the fact that also the box will, you know, stay there for some time, like there is actually very little germs that we find that go through clothing. On our side with Redress, we don't have at the moment, it's hard for us to have the financial means and technology to sanitize the clothing, but that's something we're continuously looking into improving. So we also would love to make things that more hygienic and better for both the people sorting and the final customer. So yeah, rental fees, I agree. 'And we have no choice to throw away the old clothes to get place for new clothes.' Well, so that's the thing. We propose Take Back program because we realize of the one of partly this issue of like we don't want people to throw away their clothes. We want to be able to provide them a take back system so that these clothes can keep being used by people. So what do— what advice do we give? If I give this advice to consumer, what I would say is of course to, you know, be more mindful about their own closets. To wear what they have, to exchange with friends, or to try to look within your own, you know, your own circle of how you can get rid of your unwanted clothes. If I talk to a retailer, that's more— that's like a different question, right? When we have to— the throwing away, we don't have space for throwing away anymore here, right? Like, we— the space taken by the landfill is taking space for housing. So I wouldn't say that throwing away actually frees up more space. So looking— I would really advise to look into swapping system, giveaway, giving away to many of your friends first, people around you, and then you can give away to charities, people in need. You can give to us and we take care of that. But there are a lot of solutions before things end up in the landfill. I know it's a bit more work, and that's why all of us have to, you know, if we are aware, we have to to tell our friends that there are solutions out there to make things easier. And the more people are aware of other solutions, the more we can provide the solution to more people. So it's really a circle, and we need to get the word out there that we can do some— something to make sure this clothes don't end up in landfill. Workshop offered to company to learn more about Redress? Well, I think not exactly workshop, but yes, we'd be happy to meet you and to share with you what we we can do and how we can potentially support this take-back or secondhand, if you want to. Yeah. Thank you.