The Circular Economy's Fashion Moment Arrives

Direct-to-consumer businesses and the circular economy are already like chocolate and peanut butter --  think about category pioneers from Zipcars to Airbnb to Rent the Runway. Whether D2C brands are built on sharing, renting or reselling, they typically start by finding a relatively small number of people likely to welcome a new way of thinking.

But a new report from Accenture and Fashion for Good finds that while there’s still plenty of opportunity for circular disruption in the apparel industry, there’s also an intensifying amount of innovation coming from established brands.

While they might once have shied away from ideas that could potentially cannibalize sales of new clothing, that’s no longer true, especially in the luxury segment. Both Farfetch, the luxury brand platform, and high-brow Neiman Marcus, for example, have recently announced initiatives to resell luxury handbags.

“If disruptors are going to come in and cannibalize your market, nibbling away at margins, then at what point at you going to take that on and disrupt yourself? Now that awareness is high and the value has been proven, big brands know they need to move,” says Harry Morrison, managing director of Accenture Strategy and co-author of the new report.

“Where secondhand was formerly seen as low value, like what people found in charity thrift shops, there’s a realization that these clothes can be exciting, fashionable and stylish,” Morrison adds.

The circular economy in apparel also continues to attract an impressive number of start-ups. Morrison says high-profile start-ups like the RealReal and Depop are showing “that there are all kinds of innovations and platforms possible.”

In fact, few industries are so desperate for reinvention. The planet’s near-insatiable demand for clothing means that since 2002, global clothing production has more than doubled. The average consumer buys 60% more clothing and keeps each garment for half as long.

Awareness about the negative effect that has on the environment is fast-growing, too, with consumers as well as industry experts struggling to find ways to navigate the industry’s devastating impact on the earth and still sleep at night. At current growth rates, fashion is set to use 25% of the world’s carbon budget by 2050.

So even as consumers snap up more and more clothing, they’re also demanding that brands do a better job environmentally. Accenture research finds that 74% of global consumers want greater transparency in how companies source their products and keep workers safe, while 62% want to buy from companies that are improving the environment.

The report focuses on three models: rental, subscription rentals and recommerce. It finds that rental has the most potential in higher-value goods, while recommerce appears to be the most financially attractive. By segment, luxury presents the most significant opportunity, with the most challenges in the value segment.

"Our research shows that there is really untapped potential in solving this,”  Morrison tells  Marketing D2C Weekly. “The circular economy really can be a win/win industry.”

Next story loading loading..