May 14, 2019

Driving Circular Business Models in Fashion

Driving Circular Business Models in Fashion

Fashion for Good, in collaboration with Accenture Strategy, today launch a new report, “The Future of Circular Fashion: Assessing the Viability of Circular Business Models“, that for the first time explores the financial viability of circular business models in the fashion industry. The study looks into three different models – rental, subscription-rental and recommerce, to assess the financial viability of each when adopted in four different market segments – value, mid-market, premium and luxury. With established brands and retailers being slow to adopt circular models, the report presents further incentives for implementation, helping to identify where circular models are attractive today and the critical levers to enhance their viability in future.

“We believe this study can drive the implementation of circular models and trigger much needed indepth discussions around this topic by presenting businesses with actual quantified opportunities related to the adoption of circularity by fashion brands.”  Katrin Ley, Managing Director; Fashion for Good.   

“With consumers increasingly buying from brands that have a strong purpose that aligns to their personal values and beliefs, particularly on environmental and social issues, it is imperative that retailers take action to create a more sustainable industry. Circular business models can deliver tremendous value to retailers, enabling them to eliminate waste, drive positive impact across the fashion value chain and improve their competitiveness.”  Harry Morrison, managing director; Accenture Strategy. 

The fashion industry is not sustainable in its current form; raw material consumption, pollution and waste contribute to the accelerating environmental footprint. Driven by the urgent need for a transition towards a more circular system, Fashion for Good in collaboration with Accenture Strategyhave launched “The Future of Circular Fashion: Assessing the Viability of Circular Business Models” report  

The report aims to help accelerate industry transformation by addressing one of the main barriers: an understanding of the financial viability of circular models for established retailers. All three of the models explored can be financially viable for existing fashion retailerspresenting a strong case to build circular business models.  

Brands and retailers can use the findings to gain a deeper understanding of each model, helping them to build and scale new circular economy services. There has never been a better time to commit to the circular economy. Technological advances, infrastructure improvements, innovative start-ups, new circular design practices, shifting consumer preferences and increasing regulatory pressure are creating an environment where established fashion retailers can pursue circular economy initiatives with confidence. 

Several of Fashion for Good’s corporate partners active in the field of circular fashion, as well as innovators and multi-stakeholder initiatives, contributed their experiences to the research, producing a comprehensive analysis 

Leading up to the Copenhagen Fashion Summit on the 15th of Maythe report will be presented on the morning before the opening. Katrin Ley, Managing Director of Fashion for Good, and Harry Morrison, Managing Director at Accenture Strategy, will highlight key findings to signatories from the Global Fashion Agenda. Comprising of industry leaders and key decisionmakersthe presentation is expected to provide insights on key levers for success for retailers preparing for circular business models.  

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“The Future of Circular Fashion: Assessing the Viability of Circular Business Models” report can be found here: 

fashionforgood.com/circular  

Read the foreword from the report below. 

The Future of Circular Fashion: Assessing the Viability of Circular Business Models 

Driven by an insatiable consumer appetite for newness and variety, the model of how we make and purchase fashion has rapidly changed. Today, more than ever, consumers are buying more clothes and keeping them for less time. Global fashion production has more than doubled in the past 15 years, while the associated impact on the environment is increasing. The fashion industry, as it currently operates, is not sustainable.  

We need to create a circular fashion system. A system that combines new business models with innovative design, technologies and materials that eliminate waste and pollution and drive positive impact across the fashion value chain.   

There is a growing recognition of this need. The industry has started to transform; new sustainable materials have emerged, circular design principles have been incorporated, and take back and material recycling schemes have become more conspicuous. Global fashion brands have committed to circularity and some governments are creating legislation to help accelerate circular adoption. Fashion for Good is at the centre of this systemic change and drives the acceleration and scaling of innovative solutions, to move away from the linear ‘take-make-waste’ model towards a circular approach.  

It is in this context that circular business models have emerged as a key area of focus. In transforming how fashion brands and retailers create value, circular business models present an opportunity to fulfil consumer demands, drive innovation and simultaneously reduce environmental impact.  

Meaningful progress has been made and disruptive start-ups are implementing a wide range of circular models. However, established brands and retailers have been slower to act with hurdles inhibiting large scale adoption. These include the perceived risk of cannibalisation, operational complexity of new models and uncertainty on the financial viability.   

For this reason, Fashion for Good and Accenture Strategy have collaborated to produce this report, combining our unique expertise of the circular economy and fashion industry, to explore the financial viability of circular business models. 

Our analysis, which explores the economics of circular models at a garment level, is the first of its kind in the industry. We have undertaken a detailed analysis of three circular business models; Rental, Subscription-Rental and Recommerce, across four industry segments; the Value Market, Mid-Market, Premium and Luxury. The results help identify both where circular models are attractive today and some of the critical levers to enhance their viability in future. 

We would like to extend our thanks to the dozens of fashion retailers and innovators that have helped us to develop this report – their detailed input has allowed us to build a robust analytical framework and substantiate our findings with detailed insights. Our hope is that this report can accelerate the journey towards large-scale adoption of circular business models in fashion.  

The time to commit to a circular economy transition, is now. 

For their engagement and support throughout the project we would like to thank: adidas, C&A, CaaStleCircosForDays, Kering, Patagonia, Renewal Workshop, Stella, StuffstrStyleLend, Tommy Hilfiger, VF Corp, Yerdle, and Zalando.  

We would also like to thank the C&A Foundation, and organisations involved in their Bridging the Gap initiative, for their helpful guidance on the report outcomes.Page Break 

About Fashion for Good
Fashion for Good is the global initiative that is here to make all fashion good. It’s a global platform for innovation, made possible through collaboration and community. With an open invitation to the entire apparel industry, Fashion for Good convenes brands, producers, retailers, suppliers, non-profit organisations, innovators and funders united in their shared ambition. 

At the core of Fashion for Good is our innovation platform. Through our Fashion for Good-Plug and Play Accelerator we give promising start-up innovators the expertise and access to funding they need in order to grow. Our Scaling Programme supports innovations that have passed the proof-of-concept phase, with a dedicated team that offers bespoke support and access to expertise, customers and capital. Our Good Fashion Fund will catalyse access to finance to shift at scale to more sustainable production methods. 

 Fashion for Good also acts as a convener for change. In October 2018 the Fashion for Good Experience has opened: the world’s first interactive tech museum dedicated to sustainable fashion innovation. In its hub in Amsterdam, Fashion for Good also houses a Circular Apparel Community co-working space, creates open-source resources like its Good Fashion Guide about circular apparel.  

Fashion for Good’s programmes are supported by founding partner C&A Foundation and corporate partners adidas, C&A, BESTSELLER, Galeries Lafayette Group, Kering, Otto Group, PVH Corp., Stella McCartney, Target and Zalando.  

About Accenture 

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions — underpinned by the world’s largest delivery network — Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 477,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives.  

Accenture Strategy combines deep industry expertise, advanced analytics capabilities and human-led design methodologies that enable clients to act with speed and confidence. By identifying clear, actionable paths to accelerate competitive agility, Accenture Strategy helps leaders in the C-suite envision and execute strategies that drive growth in the face of digital transformation.