Close up of woman hand choosing thrift young and discount t-shirt clothes in store, searching or buying cheap cotton shirt on rack hanger at flea market , stall shopping apparel fashion concept

A collection of major fashion brands, including Ted Baker, Farfetch and FW, are to begin trialling circular economy business models in London this month.

Working with the London Waste and Recycling Board, the retailers will employ a range of customer initiatives, including clothes hire, repair and resale services. In Australia, Zara and H&M now recycle old clothes, accepting garments that cannot be resold or reused to repurpose them for other uses, such as insulation for the construction industry.

Every industry is coming under pressure to improve their environmental records. In the world of retail, clothing ranks as one of the most significant contributors to global pollution. This early initiative is the first of what could become the industry’s normality in the future, both from an environmental and business standpoint.

Sustainability and the circular economy

The circular economy is a term that has grown in popularity over the last few years. It is an alternative to the linear model used by the majority of producers and manufacturers since the invention of mass production. For generations, companies have created products which have been used by customers before being thrown away: the linear model. The circular economy aims to eliminate that final part, creating a system where disused products are repurposed or recycled into new goods.

The advantages of transforming industries into a circular system are apparent. Significant reductions in waste would not only help support environmental efforts, but more raw materials in the market can also reduce production costs for businesses. In many sectors, this perfect world is a long way from being realisable due to technology and a range of other factors. However, the textile industry is one where many believe such a model is achievable.

The circular fashion value chain explained in a diagram.

Circular Fashion Value Chain – McKinsey & Company

The fashion environment

As mentioned above, the fashion industry has a history of being environmentally damaging. However, recent changes in consumer expectations have increased the pressure on textile companies to find a solution.

A report published by the Environmental Audit Committee (EAC) in February said that the fashion industry was perfectly placed for developing a circular economy. That may be correct from a production point of view, but the industry as a whole faces a unique stumbling block in its consumers. Often the pushers for environmental change, the popularity of fast fashion and ‘wear once’ behaviour has led to further eco deficiencies in the sector.

Australians are the world’s second largest consumers of textiles, buying on average 27 kilograms of new clothing and other textiles each year, twice the global average of just 13 kilograms per person per year. New companies are profiting off ‘fast fashion’, meaning that any change will have to find a way of working with these new, influential players in the market.

New profits for struggling retailers

While some fashion companies are making a success of the current model, many retailers have struggled to adapt to changing times. High street stores are closing down at an alarming rate, and the broader industry risks further losses if it cannot find a new model. This necessity for change is why companies such as Ted Baker are trialling the circular economy.

The environmental benefits are clear, but research suggests that there are also financial incentives to a circular model. According to the Ellen MacArthur Foundation, an industry-wide switch to the circular economy could add $160bn to the industry by 2030. This transformation occurs through new markets such as resale, which is growing at around nine times the speed of traditional retail, according to a recent report. Combined with other methods such as repairs, this can help to create further brand loyalty, promoting future sales while reducing the company’s environmental footprint. In this way, a circular economy model is win-win for everyone concerned.

Here at Expense Reduction Analysts, we have been helping major retailers evaluate their expenses for over 25 years. We have experts in a range of areas, including waste expense management, who can help refine your procurement strategies and prepare for long-term change. The circular economy could transform waste management in the fashion industry. Therefore, if you would like to begin preparing for this now, why not get in touch with our experienced team today and see what we can do for you?