21.03.2021Blog

Making fashion business circular

Sustainability is written down to most fashion business strategies. It is time to start turning the strategies into action. The circular economy is definitely one of the key ways to sustainability. Companies can adapt different kinds of PaaS (Product as a service) models, like renting, leasing and care services, to increase circularity.

Creating new ecosystems by partnering, using platforms and co-operation between brands are ways to achieve scalable circular business. Brands should start opening new digital and physical touchpoints to connect with their customers. Not only when they return to buy more but make them comfortable enough to return on any step of an apparel life cycle. What if they’d return to repair, to earn by selling or renting their owned treasures and finally to recycle end-of-life textiles. Here are the common patterns and next steps towards circular fashion business and profiting from it.

Making fashion business circular

Design for circularity

Design process of a single item includes multiple decisions with smaller and bigger impacts. It is important to design for the end user’s needs, but also to think about what the impact of a product on a systemic level is. According to Ellen MacArthur Foundation circular economy is based on three principles: designing out waste and pollution, keeping products and materials in use, and regenerating natural systems. Keeping these principles in mind, the fashion industry has to start redesigning not just apparel, but also services, business models, production and the whole value chains.

People now know how to turn their clothes into cash. Buying new, their focus will turn towards products that they know will have good resale value. People learn which brands produce durable apparel that lasts through years of use and trends. Timeless designs that reflect the brand style will surely be more circular. Attaining and maintaining the brand value will increase the resale value and benefit all parties. It is also good to think about the end of an item’s life cycle and make reconstruction, up- and recycling of the materials as simple as possible.

The recycled fabric availability is growing, and it is an easy way of adding circularity to the business. Fabrics made from recycled materials should be prioritised in the purchases. Not only for adding circularity, but virgin material market values are below sustainable levels. The production of virgin materials is often ethically and environmentally problematic. Favouring the virgin material suppliers who can be transparent about their supply chains and fiber origins would add pressure on the urgently needed global transparency and sustainability.

One of the bigger challenges in recycling textiles has been recognising the materials and separating the different types. Before there are technologies that can reliably recognise the materials and their mixtures, care labels are the best way to know which materials were used. Unfortunately, many consumers cut off the care labels by habit and that makes recognition difficult. Textile labels are legislated and mandatory, but the traditional textile labels are not serving the purpose if they are cut off. Labels also include crucial information about the right way of taking care and recycling the apparel. Offering this information in a new practical way for consumers will add longevity and a correct ending to the apparel life cycle.

Making fashion business circular

On-demand production

Overproduction leading to deadstock is economically, ethically and environmentally the biggest problem of the industry. From a circular perspective the worst case is when apparel doesn’t get to be worn even once and unfortunately unsold goods are still being destroyed by the fashion companies.

France has been the forerunner in banning the industry from destroying dead stocks and other countries should follow. The legislation will create pressure on rethinking the production volumes and what will be produced. If the product is not appealing enough for full-price it is often sold on sales. Unfortunately items bought from sales are often bought with less consideration, ending little to unused. This story is common and the opposite of circular.

The volatility of fashion demand is surely high, and it can be rapidly shifted by the weather or a single influencer post. That is why businesses should have a clear vision of data of their supply chains, efficient production pipelines and the possibility to use nearshore production facilities. These would enable fast reaction speed to changes in demand during the season and finally on-demand production. Products without knowledge-based demand should no longer be produced.

Making fashion business circular

Rent

Abroad fashion renting services have proved to be scalable and profitable. Here in Finland renting services can be outsourced to partners like The Ateljé, Vaatepuu, MyClothable and Vaatelainaamo. In 2020 Samuji started renting by partnering with The Ateljé, but also directly to consumers. Samuji Archive includes pieces from old and new collections.

Renting apparel from old collections is a great way to offer people a chance to wear the pieces they missed when they were sold. Renting or leasing is also a good way to sell new collections by giving the customer the possibility to try and carefully consider the real need before buying. From consumers’ perspective renting is also a sustainable option for trend cravings and a practical option with apparel that is needed for only a certain event or time frame like pregnancy, phases of fast-growing child and holidays.

Only imagination is the limit in creating strategies for renting. Anything from fully outsourcing to in-house, from broad selection to limited specials, from renting to leasing and from business to peer owned goods could work. Brands have to test and validate what kind of model would work for their customers.

Making fashion business circular

Recommerce

The forerunners like Patagonia and Levi’s have launched second-hand dedicated eCommerce sites also called recommerce. Finnish brand Arela has a section in their regular eCommerce for 2nd hand goods. These brands offer gift cards in return for used products of their own brand.

Used apparel is often called second-hand, thrift, second-cycle, pre-loved, or when they have reached a certain age and value milestones as vintage. Until now these products have been sold at flea markets, vintage shops and peer-to-peer markets, offline and online. Some brands might have been trying to buy back models earlier, but the right momentum is starting now.

Spending more time at home during the pandemic people have had the time to reflect on how much they own, and this includes what is in the wardrobe. According to Finland’s biggest marketplace Tori.fi 2020 was a record year for the peer-to-peer market and new international fashion-focused reselling apps like Tise, Depop and Vestiaire Collective are gaining popularity. At the same time, traditional fashion retail had a rough year due to pandemic. The second-hand fashion market was growing before and will continue to do so. ThredUp estimates the second-hand market to grow in the US from $28B in 2019 to 64 billion US dollars by the year 2024. That would mean over doubling the market size in five years.

Not everyone is ready to put their time and effort into the peer-to-peer market hustle but would be interested in selling their items. This is where the most effortless second-hand selling services will collect the profits. If a brand was acting as the middleman, the money from the sales could again be easily directed towards new collections. Another benefit from the second-hand offering is the lower price-point that can make the brand accessible for more people and new target groups. Exclusive brands may not like it, but it’s happening with or without them. So why not benefit from it.

Making fashion business circular

Care and repair

If and when there will be more data about fashion items’ life cycle and length it will give a new measurement of sustainability for brands to compete with. Many brands are known to be responsible for their timeless and durable designs with well-picked materials. Helping and educating customers on how to take care of their products will benefit all parties and make the apparel last longer.

In Finland forerunner brands like Arela and Sasta have been offering care services for an additional cost. Also, big international players like Levi’s have participated in the repairing business. Collecting data and communicating about this kind of reunions with old collections could prove how incredibly durable clothing has been made and grow trust towards the brand. Offering a warranty will create safety in investing in higher price-point products. Finlayson’s Jesus bed linen with a 50-year warranty is a great example and statement on how long our textiles should last. Seasonal storage is not a new idea and that could be a wonderful add-on service for outside-the-season products like shoes or coats. With little maintenance, the owner could get a feeling of picking up brand new goods when the season is up again.

Making fashion business circular
Up- and recycle

Taking back the broken gear and upcycling them to new products shows how highly brands value the natural resources that are put into making their products. Patagonia Recrafted concept is a great example of this kind of refurbishing business.

When apparel is worn out to be recycled it is the last step on an apparel lifecycle where the brand and the consumer could meet and start again on a new path. Of course, this recycling should happen long after the original purchase and after numerous circulations in use. Recycling should be the very last option after all the options mentioned in this post. Companies are the experts of their own materials and the best party to correctly recycle their products. Only if the materials can be recycled, the journey will become fully circular.

2021 turned with a lot of hope and good news for the Finnish textile ecosystem. The first end-of-life textile recycling plant will be piloted in Paimio by Lounais-Suomen Jätehuolto. EU has regulated that textile waste must be separately collected by the year 2025. Finland aims to be in the group of forerunners and collect textile waste already by 2023.

Where could the brand enable circularity as the expert of their own collections? Where could new profitable business models be found? We at Solita are here to help brands create and validate new business models and services that are appealing to their customers. We also help you to successfully implement them both in digital and physical.