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The Future of Fashion Is Circular


The Circular Economy is good for business. Over the next ten years, there is $4.5 trillion of value up for grabs. Therefore, the need to prioritize creating a circular business model is no longer simply a CSR “nice to have”—but rather a significant business opportunity.

The new system stands in contrast to the traditional linear economy of take–make–waste. In a circular economy, “loops” are created—such as refurbishment or increased utilization—to design out waste and pollution from the supply chain system. Driven largely by digital innovation, changing consumer preferences and regulatory amendments, 16% of American companies have adopted circular economy principles, while another 62% plan to move towards circularity.

And fashion, one of the most resource-intensive industries in the world, has a major role to play in creating a circular economy.


Fashion is overcoming a reputation issue

Every second, one truckload of clothing is burned. A few years ago, fashion brands including Burberry, H&M and Nike were under fire for how much waste they were contributing to landfills.

Consumers have demanded more from brands and are willing to pay for it. According to IBM’s 2020 study with NRF, nearly 60% of consumers are willing to change their shopping habits to help reduce negative environmental impact. And of the 80% of consumers who reported sustainability is important to them, 70% would pay a premium for brands that are environmentally responsible and sustainable.

To overcome reputation hurdles and win back consumers, brands have started incorporating more environmentally friendly practices. From H&M’s Conscious Collection to the water-saving techniques of Athleta and Levi’s—brands are inching towards a greater commitment to sustainable practices and a more circular business model.


Sustainability’s new darling child: resale

These changing consumer preferences have led to a rise in the secondhand market. Gone are the days in which you’d only expect to find those on the fringes of fashion perusing a bin at Goodwill. According to the 2019 thredUP Resale Report, 64% of adult women have bought or are willing to buy secondhand products, with millennials leading the way.

The secondhand market has become a $24 billion industry and is expected to reach $51 billion in the next three years alone. As a result, everyone wants in on the game. Traditional retailers and luxury brands alike are embracing secondhand. New entrants like thredUP, Buffalo Exchange and TheRealReal have come onto the scene, offering consumers a more upscale take on buying secondhand.


Traditional retailers join resellers

As resale continues to grow, the make-up of consumers’ closets will drastically change over the next few years. By 2033, the percentage of secondhand sourced items in consumers’ closets will increase from 6% to 33%! Meanwhile, there will be a sharp decline in the number of items sourced from department stores and mid-priced retailers, such as Gap and J. Crew.

To remain competitive, we’ll see traditional retailers continue to get in on the fun.

  • thredUP: thredUP blew onto the scene 10 years ago, offering high-quality secondhand clothing online. In 2019 we saw Macy’s and J.C. Penney ink deals with thredUP to sell used goods in select department stores.
  • Nordstrom: Earlier this month Nordstrom announced “See You Tomorrow,” a resale experiment that features a curated selection of Nordstrom’s own inventory of returned or damaged merchandise.
  • TheRealReal: Luxury consignment retailer, TheRealReal is partnering with Burberry. When customers consign a Burberry product, they will be invited to a personal shopping session and tea at a Burberry location.


The role of resale in circularity

There are opportunities throughout the fashion supply chain to make fashion circular. And one of the most value-retaining circular-economy levers to pull is increasing utilization—or extending the life of a product through re-sale.

As Francois Souchet writes in the thredUP Resale Report, “By helping to increase the use of clothing, resale can play a key role in making fashion circular. Raising the average number of times clothing is worn is the most direct way to design out waste and pollution and capture value.”

Circular fashion, if played correctly, offers an opportunity for retailers, while being good for the environment and consumer’s conscience.

The future is no longer in front of us. It’s circular.