There is a lot of attention for the circular economy at the moment. I recently read the report from WRAP. This report asks the question whether there is a business case for circular business models in the clothing sector. Let me share with you the findings.
Traditional business models are vulnerable to rising input costs and particularly raw material costs. (p. 9) Consumer goods businesses have developed business models that are predicated on cheap raw materials and labour costs. Fashion businesses have globalized sourcing raw materials and labour from low-cost countries in order to make a profit. (p.10) Now new roads need to be explored in order to have a feasible and profitable business in the future.
When produced in low cost labour countries, the true costs of production have not been completely factored in. (p.11) In the report they mean costs like water use, which are rarely monitored in these countries, but I think they should also mean the low salary and poor conditions the factory workers are working in. These workers pay with their lives for your garment.
The business models that are explored in this report are models that extend the life of clothes and increase the proportion of garments that are re-used instead of being discarded prematurely. (p.3) These models are examined on commercial viability and scalability.
The following models are explored:
Traditional business models are vulnerable to rising input costs and particularly raw material costs. (p. 9) Consumer goods businesses have developed business models that are predicated on cheap raw materials and labour costs. Fashion businesses have globalized sourcing raw materials and labour from low-cost countries in order to make a profit. (p.10) Now new roads need to be explored in order to have a feasible and profitable business in the future.
When produced in low cost labour countries, the true costs of production have not been completely factored in. (p.11) In the report they mean costs like water use, which are rarely monitored in these countries, but I think they should also mean the low salary and poor conditions the factory workers are working in. These workers pay with their lives for your garment.
The business models that are explored in this report are models that extend the life of clothes and increase the proportion of garments that are re-used instead of being discarded prematurely. (p.3) These models are examined on commercial viability and scalability.
The following models are explored:
- Retailers or manufacturers providing repair and upgrading services for their own garments;
- Retailers providing radical new large-scale leasing services;
- Retailers providing radical new large-scale services for one-off hire;
- Retailers offering a re-sale section for pre-owned own-brand garments within their store; and
- Peer to peer exchange.
In the figures you see the summary for the conservative scenario. There is also a tipping point scenario, which you can see in the full report.
Conclusion
The models that have the most financial potential are model 3 and 4.
The models that have the most resource potential are model 1, 2 and 4.
This means that the model which has the most financial and resource potential and which has commercial viability and scalability is model 4: The buy-back and resale of pre-owned own-brand garments.
Let me take this model a step further. All models are made with the current prices of garments in shops. But these prices are not always fair-trade, because not all true costs are factored in. I think model 4 could work very well with fair-trade prices for fast fashion shops. This is my idea:
Benefits:
Everybody happy!
Or is it a bit more difficult? Please let me know what you think!
You can give your reaction in the comments section below.
The models that have the most financial potential are model 3 and 4.
The models that have the most resource potential are model 1, 2 and 4.
This means that the model which has the most financial and resource potential and which has commercial viability and scalability is model 4: The buy-back and resale of pre-owned own-brand garments.
Let me take this model a step further. All models are made with the current prices of garments in shops. But these prices are not always fair-trade, because not all true costs are factored in. I think model 4 could work very well with fair-trade prices for fast fashion shops. This is my idea:
- A collection is sold in the shop for fair-trade prices. A customer can buy these garments if they want to be up-to-date with the latest fashion.
- After the items are not wanted anymore the customer will bring it back and gets a discount voucher to buy the latest collection (again for fair-trade prices)
- The garments that are brought back are cleaned and go back into the shop for a lower price. These garments can be bought by people that like to look nice, but do not really care about the latest-fashion.
- A good example of this model in the Netherlands is lease a jeans.
Benefits:
- The brand will earn their money twice with the same garments,
- Everybody gets a fair price and value for their money, (the early adaptors pay more for the collection, but the extra value they get is that the garment is in-fashion which is important for them)
- Garments will not be thrown away so quickly,
- We use less raw materials.
Everybody happy!
Or is it a bit more difficult? Please let me know what you think!
You can give your reaction in the comments section below.
Click here for the full WRAP report:
Evaluating the financial viability and resource implications for new business models in the clothing sector.
Evaluating the financial viability and resource implications for new business models in the clothing sector.