Circle Economy – an educational tour on Textiles by the Ellen Macarthur Foundation

The Ellen Macarthur Foundation has created a learning hub on Circle Economy, informing via video on what you can do in view to certain industries. We have picked for our readers what is stated on textiles.

Textiles and clothing are a fundamental part of everyday life and an important sector in the global economy. This learning path explores how the principles of the circular economy can be applied to the fashion industry, beginning by covering why the fashion industry of today is not fit for purpose. Following that, it examines the vision for a new textiles economy through three focus areas that are critical to realising this vision:

  • New business models that increase clothing use
  • Safe and renewable inputs
  • Solutions so used clothes are turned into new

Finally, you will learn about the opportunities that exist for innovative business models that can be employed by the fashion industry, including clothing rental, increased durability, and boosting clothing care.

The fashion industry of today

Changing the system will unlock billion dollar economic opportunities.

Globally, the USD 1.3 trillion clothing industry employs more than 300 million people along the value chain; the production of cotton alone accounts for almost 7 % of all employment in some low-income countries.

Clothing represents more than 60 % of the total textiles used and in the last 15 years, clothing production has approximately doubled, driven by a growing middle-class population across the globe and increased per capita sales in mature economies. At the same time, clothing use has declined by almost 40 %. Both developments are mainly due to the ‘fast fashion’ phenomenon, with quicker turnaround of new styles, increased number of collections offered per year, and often, lower prices.

By moving to a circular system the industry can unlock a USD 560 billion economic opportunity. Realising this opportunity requires new business models and collaboration across the value chain (e.g. production, marketing, and after-sales care), to keep safe materials in use.

Key issues currently within the industry:

The vision of a new textiles economy – Creating business models which are restorative and regenerative.

The overarching vision of a new textiles economy is that it aligns with the principles of a circular economy: one that is restorative and regenerative by design and provides benefits for business, society, and the environment. In such a system, clothes, textiles, and fibres are kept at their highest value during use and re-enter the economy after use, never ending up as waste. A new textiles economy is an attractive vision of a system that works.

Realising this vision of a new global textiles system relies on three focus areas:

  • New business models that increase clothing use
  • Safe and renewable inputs
  • Solutions so used clothes are turned into new

Such a system would have the following characteristics:

Develop business models that keep clothes in use

Ensuring clothing is durable not disposable.

Keeping clothes in use

Designing and producing clothes of higher quality and providing access to them via new business models would help shift the perception of clothing from a disposable item to a durable product. There are numerous opportunities for innovative business models to be employed by the fashion industry, including subscription services, clothing rental, and peer-to-peer sharing.

The following sections delve into detail on some of these opportunities.

Rental clothes models

Rental models can provide customers with access to a variety of clothes while decreasing the demand for new clothing production.

Short-term rental models offer a compelling value proposition, particularly when taking changing customer needs into consideration – examples include short term use, practical requirements, or fast evolving fashion preferences.

New short-term and subscription rental models are already emerging within the industry. We have started seeing examples of specialised garments such as MUD Jeans offering high-quality denim, Vigga offering subscription for baby wear, Rent the Runway targeting working women and offering an ‘unlimited’ subscription service

Make durability more attractive

The case for new business models improves when clothes are of high-quality and durable.

This is because rental or resale models increase. Customers often value high-quality, durable clothes but a lack of information often prevents them from making the best choices . Quality purchases encourage the use of new technologies that provide customisation for maximum customer satisfaction. For clothes that become unwanted but are still usable, enhanced resale models offer an attractive opportunity. For customers who want to retain their clothes for longer, appropriate care should be encouraged and facilitated.

Currently, there are no industry standards to assess garment durability. Transparency could be created through clear and aligned quality labelling or guarantees. Quality is of particular interest in wardrobe ‘essentials’ and ‘staples’ which include coats, jumpers, jeans, t-shirts, socks, hosiery, and underwear, representing 64% of garments produced globally for both women and men. Many customers expect these items to last and often wear them until they have a material flaw, hard-to-remove stains, or have lost colouration.

Make resale attractive to a wide range of customers

Designing clothes to last and creating innovative resale models.

As the average quality and durability of clothing on the market increases, so will the opportunity of capturing its value through new business models. Clothing resale is already widely adopted across the world. The latest figures from the ThredUp Resale report 2019 show that resale has grown 21 times faster than retail over the past five years. In fact, 56 million women bought second-hand products in 2018, up from 44 million in 2017. Therefore, if clothes are increasingly made to last, introducing attractive resale models suited to a wider customer base locally (i.e. in the same countries where clothes are being discarded) could significantly increase clothing utilisation. To achieve this, innovative resale models, partnerships, and the harnessing of digital technology are all required. Stella McCartney’s ongoing partnership with the Real Real and the Reformation partnership with ThredUp are examples of successful collaborations.

An example – Case study: The Real RealGiving luxury a new life

We changed what consignment looks like. We are the circular economy.- Julie Wainwright, CEO – The RealReal, 2018 Summit

The RealReal is an online marketplace for authentic luxury consignment which includes products such as clothing, jewellry, watches, fine art and home decor. Consignment is a business model in which a business (often referred to as a consignee) agrees to pay a seller (or consignor) for merchandise after the item sells.

Founded in 2011 by Julie Wainwright, the RealReal had raised USD 288 million in venture capital funding by July 2018, proving that giving new life to used products is a viable business opportunity.

Issue: Over the last 15 years, the amount of clothing produced has doubled, however, the amount of time clothes are worn before disposal has fallen by almost 40%. This is an extremely ineffective use of the material, labour, and energy that goes into making the products in the first place.

What they offer customers: The RealReal offers customers access to high-quality, authentic, pre-used luxury products. This not only lowers the cost of access for customers looking to purchase these items, but also provides cash-back to the original owner when it is sold on.

Circular solution: By creating a marketplace for pre-used luxury products, The RealReal is keeping these products and their materials in use for longer than they would be in a linear economy. Additionally, by selling these products on to a new owner, these products do not become waste and are kept out of landfill.

Business success story: In 2017, The RealReal grew beyond being a purely online marketplace, opening its first permanent retail store in New York City. It also went on to open pop-ups in San Francisco and Las Vegas. In 2018, it opened its second permanent retail location in Los Angeles.

In 2018, the company expected to reach top line revenue of USD 700 million and, according to CEO Julie Wainwright, expects to reach USD 1 billion in revenue in 2019.

Further information: Read more about The RealReal on their website.

Boost clothing care

Support the efforts of customers to maintain their clothes for longer.

Accessible services and widespread support for users to maintain their clothes for longer (e.g. through repair, restyle, washing, and storing) could help to keep clothes at their highest perceived and actual value. Clothes that hold high physical and emotional durability would in turn increase demand for repair services. This could open up opportunities to introduce more clothing services, such as garment restyling or consulting, advice on upgrades, customisation, and mending at home. Retailers could provide repair and other services in-store and form partnerships with repair and restyle providers based in local communities. Several brands already offer in-store repair and incentivise users to keep their garments well maintained, in particular, outdoor clothing brands such as Bergans, Jack Wolfskin, Patagonia, Salewa, and Houdini, all offer repair services for their used products. Patagonia operates the largest (and still growing) repair facility in North America, repairing about 50000 pieces per year.

The role of the individual

What actions can the individual take to help make fashion circular?

In a video, Francois Souchet – lead of the Ellen MacArthur Foundation’s Make Fashion Circular initiative – describes some of the ways that changing mindsets can contribute to the creation of a circular fashion system. To learn more visit Google’s Your Plan, Your Planet tool.

The fashion industry of the future

By adopting new business models and designing out waste from the offset, today’s fashion industry has the potential to unlock billion dollar economic opportunities across the globe.

Visit the Make Fashion Circular webpage if you are keen to learn more about the initiative and to dig deeper into the findings of the New Textile Economy report.

Discover the Learning Hub here

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