From Linear to Circular: How Fashion Brands are Closing the Loop
With the rise of an environmentally conscious Gen Z, it seems the fashion industry is now starting to rethink how it operates, moving further and further away from the “buy, use, dispose” mindset that has dominated the industry for decades, which in turn, not only leads to environmental harm but also a lot of products that are left on the shelf due to overproduction. Instead, many popular brands have now started incorporating circular business model into their operative systems, a much smarter and sustainable approach that mainly focuses on reusing, repairing and recycling materials to keep them in use for as long as possible.
What exactly is circular business model? For starters, this business model is specifically designed for longevity. The products are designed to last longer with more durable materials that are used during the production phase. However, it’s not the only way circular economy can be achieved. Converting “old” clothings into brand new products or repurposing the waste materials obtained from those clothes are also two other ways that are attributed to this business model. Some brands have also started encouraging their customer base to bring their damaged or distorted clothes to be repaired through in-house services, as well as organizing several workshops.
Circular business model is not simply about recycling, there are a lot more attributes. Some brands have incorporated a completely new system that enables their customers to access their products without owning them, thus reducing overconsumption. Then what exactly are people paying for? Well, customers pay a recurring fee to access a selection of clothing or accessories each month. The “rental model” enables customers to rent some items for a fraction of their retail price. Whereas the subscription model uses some specific services such as Rent the Runway or Nuuly that allow users to choose the items, wear and then return them for cleaning and redistribution. This is a brilliant business model for it discourages impulse buying and minimizes the production of new clothes. Customers can now access a variety of products without having to commit to ownership.
The circular business model also encourages the brands to take responsibility of the proper disposal and the recycling of the materials they use. Instead of letting old garments end up in major landfills, brands have to decide the fate of the fabrics for themselves. Some brands, a notable instance is the rapidly growing brand H&M, have drop-off boxes in their stores for old clothes to be returned. The products that are returned are then broken down and turned into new products. For instance, jeans are turned into handbags or other accessories.
Patagonia’s “Worn Wear Program” is a notable example of sustainability in action, offering repair and resale services to extend the life of their products, mainly outdoor clothing. Customers can trade their used Patagonia items at stores or online in exchange for store credit. They also encourage their customer base to shop for the returned second-hand items from their “Worn Wear Platform” at a lower price. It not only takes us a step forward in terms of sustainability, but also offers the cost-conscious customers a convenient shopping experience in terms of the prices.
The circular business model depends on revenue generation by focusing on long term value creation rather than one time sales. Subscription and rental services provide steady and predictable income, while resale and reselling the pre-owned garments unlock new streams of revenue from the already existing products for the brands.
The fashion industry is finally getting a much-needed makeover through the circular business models becoming more and more relevant for many brands around the world. However, this business model is not just a trend, it stands a chance at revolutionizing the industry, blending style with creating a future for the generations to come after us where people’s wardrobes don’t cost the earth. As brands and shoppers embrace this new shift, the message is clear: looking good and doing good can, in fact, go hand in hand.