Explorium 2.0: Creating Smart Supply Chains for the New Retail Era On September 1, the FGRT team was in Shanghai to attend the soft launch of Explorium 2.0. 1) Explorium 2.0 is Fung Group s value-generating ecosystem for commercial enterprises, where technology and business model innovation come together on an experimental platform for developing a full range of consumer products, supply-chain solutions and services related to branding and retailing. 2) The platform will facilitate the incubation of companies whose ideas, innovations and technologies are relevant to the Fung Group s businesses, and allow for the rapid prototyping of new business models, products and retail technologies through experimentation and partnerships with external partners. 3) Explorium 2.0 has a strong focus on collaborative innovation with various partnerships such as Microsoft Accelerator, TechNode and the Beijing Institute of Fashion Technology as well as the mandate to showcase the rich capabilities the Fung Group has developed over the course of the company s 111-year history. The History Explorium was a 23,000-square meter retail omniplatform lab, consisting of a physical space and an interconnected digital network of services, which provided brands and retailers with the opportunity to observe in real time how customers interact with new technologies, products and environments, and to gather valuable insights into customer behavior. The lab was open for over 12 months, during which time, retailers, including Toys R US, Gymboree, Build-A-Bear Workshop, Stride Rite and Hello Kitty, experimented by leveraging data analytics tools supplied by IBM and a number of retail technologies from various startups. 1
Explorium 2.0 Explorium 2.0 is different from Explorium the new concept builds onto the learnings from Explorium in alignment with the Fung Group s strategic vision to build the supply chain of the future. Showcasing the Supply Chain of the Future The goal of Explorium 2.0 is to move away from the traditional to provide a balanced visitor experience between content and interaction. The space showcases the full breadth of product categories that the Fung Group operates in, as well as the retail channels served, with an emphasis on importing brands and retail concepts into China. In this sense, Explorium 2.0 is there to serve the supply chain end-to-end, while Explorium was focused on front-end retail. The new space features the following elements: 1) A fabric library for apparel manufacturing that is equipped with the latest digital tools allowing 3D product rendering and virtual sampling. 2) A photo studio for products tailored to e-commerce business models as well as a Style Shoots 3D photography studio. 3) A 3D printing studio which is a 3D-printing experimentation platform based on the premise that, in the future, 80% of a product will be mass-produced and the remaining 20% will be customizable. 4) A multifunctional space for product launches, demos and sample sales called The Maze. 5) Showrooms for Macy s China a joint venture between Macy s and the Fung Retailing Group and Fung Omni, Fung Group s omnichannel solutions provider, which helps foreign brands enter the Chinese market. Source: FGRT These spaces fall within the recurrent themes of the Fung Group and Li & Fung digitalization, innovation and speed and will be open to strategic external collaborations with partners such as the Beijing Institute of Fashion Technology. 2
Building a Globally-Connected Innovation Platform in China The Fung Group s goal is for Explorium 2.0 to become the go-to platform for retail innovation, connecting with stakeholders all over the globe from the lab in Shanghai. For that purpose, Explorium 2.0 has already established a number of partnerships with key players in the innovation and technology ecosystem in China such as the Microsoft Accelerator, GBLab and TechNode. These partners will leverage the Explorium space and the Fung Group s expertise in supplychain management, logistics and retail to create synergies for the technology startups amongst their portfolios, as well as the Chinese ecosystem at large. At the same time, the goal is for Explorium to also become a Source: FGRT bridge for technology companies entering the Chinese market and for Chinese startups that are ready to venture out into global markets, such as the US and Europe, where the Fung Group has strong distribution capabilities. The Ceremony Fung Group Chairman Dr. Victor K. Fung delivered opening remarks on-site to about 100 invited guests from the Fung Group and its partners in the project. Dr. Fung began his speech by describing the transformation presently under way in the world of retail and how Explorium not only benefited the Fung Group, but also confirmed the Group s prediction that the future of retail lies in omnichannel a trend that we are increasingly witnessing today, with moves into offline retail made by Amazon and Alibaba, as well as the moves by traditional brick-and-mortar retailers into the online space. Dr. Fung further highlighted the importance of continuing to invest in technology and innovation to create more value across the entire supply chain, leveraging the capabilities of all businesses of the Fung Group that have a part to play in helping to shape the future of the industry. Dr. Fung s opening remarks were followed by an address by Ka-Man Chang, Managing Director of Fung Business Intelligence and Head of the Explorium 2.0 project. Chang underscored that Explorium is a place for cooperation with a wide range of internal and external stakeholders, such as technology incubators, brands and retailers, the government and academia. Transitioning into its second iteration, Explorium 2.0 is uniquely positioned to serve as a global connector that leverages the Fung Group s capabilities and history to create value for all stakeholders and potential customers. The ceremony continued with presentations from representatives of the partners of Explorium, including Li & Fung, the Beijing Institute of Fashion Technology, Microsoft Accelerator, TechNode and Sinopec, on how their businesses and organizations can benefit from the second iteration of the project. 3
Explorium Tour Following the opening remarks, attendees were given a tour of the facility. They stopped by the different spaces, including the Fabric Lab, the photo studios and showrooms, as well as the co-working spaces, where seven startups were showcasing their products for the soft launch of Explorium 2.0. The companies had been carefully curated by Microsoft Accelerator and GBLab to showcase innovations in supply-chain management and retail. The Startups Black Lake Technology is a startup which focuses on providing cloud-based data collaboration, monitoring and analysis tools for manufacturing companies. The company strives to bring cutting-edge technology to the manufacturing sector, by providing use cases of technology for collaboration, information sharing and data analytics at low costs. Clobotics is a company which builds computer-vision technology for industries such as renewables and retail. At Explorium 2.0, Clobotics showcased a solution which tracks shelf space and provides real-time insights to store associates. Source: FGRT 4
NEXTTAO is a service provider of data applications in the retail industry, focusing on improving the management of retail stores by automating inventory management. Quicktron aims to become the market leader of smart warehouse robotics. The company has already partnered with a number of large Chinese companies, including Cainiao, China Post, JD.com and Vipshop, for automated warehouse projects. Sight + AR provides augmented reality (AR) technology and services, aimed at promoting AR applications and gamification. Partners include Alipay, China Merchants Bank, Xiaomi, Gome Electrical Appliances, KFC, Unilever and many other well-known corporations. Techsun provides artificial intelligence (AI) solutions and services to new retail enterprises, including the smart camera and computer-vision system Samantha, and the face-recognition and natural-language processing system Eva. The company also has developed a big data platform R2D2 for analyzing human faces and user behavior data. Yimian provides real-time, precise and comprehensive data analytics for decisionmaking through machine learning, natural-language processing and data science. 5
Deborah Weinswig, CPA Managing Director FGRT New York: 917.655.6790 Hong Kong: 852.6119.1779 China: 86.186.1420.3016 deborahweinswig@fung1937.com Kiril Popov Senior Analyst Hong Kong: 2nd Floor, Hong Kong Spinners Industrial Building Phase 1&2 800 Cheung Sha Wan Road, Kowloon Hong Kong Tel: 852 2300 4406 London: 242 246 Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0)20 7616 8988 New York: 1359 Broadway, 18th Floor New York, NY 10018 Tel: 646 839 7017 FungGlobalRetailTech.com 6