A new normal? A look into business models of the future

By Jade Wilting

Following a fabulous Fashion Week in Helsinki, with numerous sustainable brands showcasing the latest and most creative haute couture translations of what it means to be circular, we are held captive by the question of how to sell these innovative garments.

We know that the fashion industry has a waste problem (the EU textile industry generates an estimated 16 million tons of waste per year, most of which ending up in landfill) and only 1% of clothing bought today comes from recycled material, thus the opportunity is rife and the time is now!

Circle Economy’s Gwen Cunningham, recently spoke about the opportunities of alternative business models in the circular landscape, and with recent headlines of luxury brands burning stock seeming to be standard practice, surely new luxury brands can learn from this and implement new models fit for circularity. To achieve real change we need a new commercial framework and that framework must look beyond recycling and take-back to alter the basic models on which businesses operate. Luckily there are a few trail blazers to learn from:

Circular Business Models

Circular business models turn waste into a resource, through either a Closed loop model, a Reuse model or a Recycling model. The Dutch vertically integrated recycler Wolkat’s business model is an example of a Recycling model. The family run business recycles post-consumer textile waste into vilt and thread suitable for the apparel industry using no added dye stuff. Recover in Spain primarily work with post-industrial, and are also able to generate an array of colours with no added dye stuff. These business models are often concerned with the cycling of products or materials, and need a supply chain different to the linear one.

The poster child of turning waste into a resource is second hand and vintage shops (Reuse model), and what’s fantastic about the gradual uptake of this opportunity is that brands are starting to incorporate resale into their current business model. Filippa K has an entirely separate second hand store (in Sweden only) and invite consumers to bring in used Filippa K clothing. Recommerce sites like Vestiare Collective, Style Tribute, and The Next Closet keep luxury fashion items in the loop for as long as possible, sometimes marketing the influential person whose wardrobe is available to shop.

Service Based Business Models

As we make the shift to the circular economy, so the modus operandi of products being bought only to be consumed once, must change dramatically. In service based business models importance is placed on access rather than ownership. Here we see one product have many different owners as access is granted through renting or leasing models. What’s exciting here is that certain product categories are better for leasing than others, for example evening or babywear. These garments have naturally short use cycles, meaning that they are only worn for a brief period of time. A prime example of evening wear leasing is Rent the Runway, a US based company that allows consumers to temporarily use a luxury garment. Vigga is a brand built around the speed at which babies grow and offers young parents a subscription to supplement the wardrobe or their growing babies. Parents return the clothing, upon which they get the next size up, and so it continues. The returned clothing gets washed and returned to the shared closet.

A more disruptive model still, is the Amsterdam-based LENA Fashion Library — a fashion library that offers consumers two ways to borrow clothing; either on a one time basis or with a subscription model, they also offer consumers the option to buy clothing they rent. While in its infancy now, LENA’s ambition is to make borrowing the new normal, not just by expanding their own business but by inspiring and enabling borrowing hubs throughout the Netherlands.

Sufficiency Based Business Models

What remains the elephant in the room, is the rate at which consumers are consuming. Through education and engagement, sufficiency based business models aim to curb the hunger consumers have for ‘new’. Here we see a focus on well built products or garments that serve a need rather than a trend. Increasing the emotional and physical durability of products erodes two of the consumer society’s foundational pillars — the need to replace worn out items and the desire to own the latest trends. Garments made for this business model are able to be worn for longer and repaired more easily.

Brands can incorporate this business model by producing on demand, In fact, ecommerce heavy-weight Amazon has patented an on-demand clothing manufacturing warehouse aimed at increasing efficiency and reducing post-industrial waste in the apparel supply chain. Mass customisation is another translation of this model with sportswear giant Nike pioneering the process with NikeID.

A stellar example of a brand challenging the traditional pace of consumption is Patagonia, who has since its inception incorporated durability into their business model, as well as pioneering the use of organic and recycled fibres. They famously warned, ‘Don’t buy this jacket’, for a Black Friday campaign in 2011, asking businesses to make fewer products, but of higher quality, and asking customers to think twice before they buy those products.

What’s the hold up?

Despite the existence and clear frontrunners in each of the alternative business models, it’s not mainstream yet. There are two leading causes for this lag, namely linear design and a lack of circular infrastructure.

Currently most garments are not built for circular business models- in terms of fiber content, construction, quality and style. It is important that circularity is taken into account from the outset, at the design stage, when a design first puts pen to paper. There are various design principles that enable products to be used for longer, such as modular design. On a fabric level, more than half of the clothes today have a high percentage of blends, which further prevents high volume garment recycling- there needs to be a phasing out of complicated blends that do not have current or future recycling solutions.

The lack of infrastructure is a pressing issue on the uptake of circularity and its accompanying business models. High volume collection, sortation and recycling need investment and development from the entire ecosystem of stakeholders in order for us to successfully transition to a circular economy.

By tackling these issues collectively and seeking disruptive business models, to replace the old linear style models we move closer to implementing circularity through decoupling our reliance on virgin resources, capturing the lost value of textiles and displacing the growing mountain of textile waste.

What can I do?

As a consumer there are many ways to engage with and advance circularity;

• Be critical when you buy something, ask yourself if you really need it
• Avoid buying blends. Check the label when you buy clothing, if it’s a blend of more than 2 fibres, it’s going to be very difficult to recycle afterwards
• Don’t throw old textiles out. Once your clothing or any home textile has come to the end of its useful life cycle, donate it. The collection and sortation organisations prevent textiles from going to landfill and will make sure it has the best possible second use.

As a designer, here are five concrete steps to help you on your way to circularity;

• Be the demand; create demand for recycled fibres, and actively encourage a sourcing culture and buying standard that support recycled content. The good news is: they already can, and so can you.
• Design out waste; design for emotional and physical durability as well as cyclability- repair, redesign and recycling.
• Be the supply; include a take-back scheme- an excellent partner to have in this is Repack who manufacture reusable packaging geared toward return logistics.
• Shout about what you’re doing; educate and communicate with your consumer about their role in the transition towards circularity.
• Invest & collaborate; investment and collaboration is needed to accelerate the transition to a circular economy.

This article is written by Circle Economy. We are working with sorters, collectors, recyclers and brands to make business models of the future, a reality. To become a member email jade@circle-economy.com