Navigating the Circular Fashion Economy

The linear take-make-waste model that has dominated the fashion industry for decades is no longer sustainable. The environmental and social impacts of this model are becoming increasingly clear, with the fashion industry being a major contributor to climate change, resource depletion, and pollution. Since 2002, global clothing production has more than doubled, consumers buy 60% more, and garments are kept for half as long. This has made fashion one of the world’s leading polluters, and it’s on track to consume 25% of the world’s carbon budget by 2050. 

The solution lies in transitioning to a circular economy, which aims to eliminate waste and reduce resource consumption. Achieving a circular fashion industry involves designing new garments, using sustainable materials, implementing advanced recycling methods, and adopting service-oriented business models to create appealing, eco-friendly, and durable clothing.

What is the Circular Fashion Economy?

The circular fashion economy is a sustainable and environmentally friendly approach to the fashion industry. It seeks to minimize waste, reduce the consumption of new resources, and extend the life cycle of products. It contrasts sharply with the traditional linear fashion model, where items are produced, sold, and then discarded as waste. The circular economy operates on three main principles:

Design for Durability: Circular fashion begins with the design phase. Brands must create products that are long-lasting, easy to repair, and upgradeable. By focusing on durability, brands can reduce the frequency of purchases and keep items in use for longer.

Reduce, Reuse, Recycle: This mantra is at the core of the circular fashion economy. Brands should work to minimize waste by reusing materials, repurposing old garments, and ensuring that items can be recycled at the end of their life cycle.

Extend Product Life: Brands are encouraged to offer repair and refurbishment services, as well as encourage customers to buy, sell, or trade second-hand clothing. By extending a product’s life, fashion brands can help reduce the environmental impact.

Transitioning to Circular Business Models

Transitioning to a circular fashion economy requires a fundamental shift in the way brands operate. Here are some key considerations brands could begin to implement into their operational workflow:

Rethink Design: Begin reevaluating design processes and prioritizing quality, durability, and timeless style. Consider using sustainable materials and incorporating modularity in your designs to make repairs and upgrades easier.

Supply Chain Transparency: Knowing your supply chain inside and out. Ensuring that all partners in the supply chain are aligned with the brand’s sustainability goals. This includes sourcing sustainable materials and ethical production practices.

Recycling Programs: Implementing recycling programs, making it easy for customers to recycle old garments or return them to the brand for repurposing. A take-back scheme could also be introduced.

Repair and Maintenance Services: Offering repair and maintenance services for products sold. Encourage customers to repair instead of replace, reducing waste and fostering a sense of longevity.

Collaborate with like-minded Brands: Collaborating with other brands that share a similar commitment to the circular fashion economy. Joint initiatives can amplify the impact and reach a broader audience.

The concept of Re-commerce

Recommerce, the practice of reselling previously owned items, has evolved from an informal, traditional concept into a formal and rapidly growing sector within the fashion industry. Recent data shows that the resale market has expanded 21 times faster than traditional retail in the last three years. The re-commerce model is the most developed circular business model in the fashion industry, with its market projected to reach $51 billion by 2023, growing at an annual rate of 16%. This growth has been driven by enhanced access to second-hand clothing marketplaces, including tech-driven platforms like Depop, which cater to millennial consumers.

Many retailers have started incorporating re-commerce into their business models. These collaborations often involve partnerships between startups and established retailers, such as Worn Wear (a collaboration between Patagonia and Yerdle) and The North Face Renewed (a collaboration between The North Face and The Renewal Workshop). These initiatives focus on reselling post-consumer garments and refurbished pre-consumer, defective, or unsold stock.

Key business principles successful brands are adopting:

• Prioritizing According to Market Segment: Successful retailers must prioritize circular models that align with their industry segment, taking into account the specific needs and desires of both their current and future customer base.
• Matching Business Models to Products: Different product types are best suited to specific business models. Retailers should consider product characteristics when choosing the most suitable circular model. For instance:
• Rental service: For products used infrequently, one-off events, or specific activities.
• Subscription Rental service: For products that require regular refreshing, are regularly purchased, can complement an existing wardrobe, and used for a definitive, short period.
• Recommerce: For high-quality and durable products.
• Getting the Incentives Right: Encouraging customers to change their behavior is challenging, and retailers need to take several steps simultaneously:
• Offering incentives to encourage desired behavior, such as discount vouchers for re-commerce.
• Ensuring a seamless customer experience, investing in frontend interfaces and efficient garment collection and delivery capabilities.
• Ensuring that the business model is financially viable and provides financial value to the customer.

Circular Fashion Success

A number of fashion brands are already successfully embracing circular practices. Here are a few examples:

Patagonia

This outdoor clothing company has long been a pioneer in sustainable practices. They encourage customers to repair their products, offer a Worn Wear program for buying and selling used gear, and make products from recycled materials.

Eileen Fisher

This high-end brand focuses on timeless designs and quality. They have a Renew program where they take back old EILEEN FISHER garments, renew them, and resell them.

Veja

Veja is a sustainable sneaker brand that uses organic cotton, recycled polyester, and wild rubber in its shoes. The brand also has a take-back program that allows consumers to return their worn-out Veja sneakers for recycling. 

The circular fashion economy offers a sustainable and eco-friendly alternative to the traditional fashion industry. Brands that embrace this model can reduce waste, minimize environmental impact, and attract eco-conscious consumers. By following the principles of designing for durability, reducing, reusing, and recycling, and extending product life, fashion brands can make a positive impact on the planet while also enjoying long-term success. The case studies mentioned demonstrate that the circular fashion economy is not just a theory; it’s a viable and thriving model for the future of fashion. It’s crucial for brands to step up and take part in the revolution towards a more sustainable and circular fashion industry.