The circular economy and fashion: an alliance needed to get out of the crisis?

30/04/2020

Nearly two months of forced shutdown, closed stores, plummeting sales, high fixed costs… The entire fashion industry is facing an unprecedented situation and the health crisis is hitting the clothing trade hard.

According to experts, large retailers with a large network of stores with few online sales will be the hardest hit. On the front line, the “fast fashion” brands: Inditex, the group that owns Zara, is already announcing a very significant impact on its sales. Similarly, the company announced a 46% decrease in March 2020. According to Les Echos, a month of closure of Galeries Lafayette or Printemps will result in a shortfall of 83 million euros….

To recover from the crisis, clothing brands are forced to change their model, rethinking their entire supply chain and focusing on short circuits. Add to that the trend towards de-consumption, which was already present before the Covid-19 crisis and the loss of purchasing power — the apparel industry faces enormous challenges.

Can the circular economy save the fashion industry?

An accelerated transition to circular fashion?

Indeed, circular fashion, which has been gaining ground in recent years, relies in particular on short circuits and the reuse of raw materials. These two points have proven to be weak links for traditional economic models.

To cope with restrictions, mitigate the adverse effects of the pandemic and adapt to economic and consumer changes, companies need to introduce new tools and strategies along the value chain to improve operational agility, boost productivity and set up business models to test the future.

In terms of consumer attitudes, their mindset was already showing signs of change before the pandemic. Forced de-consumption resulting from containment could accelerate some changes in consumer behaviour, such as growing distrust of waste-producing business models and increased expectations for environmentally sustainable actions.

Indeed, new “conscious” and “digital native” consumers, concerned with ethics, ecology and transparency appeared long before the health crisis, prompting brands to review their copy. These millennials are asking fashion players for a real commitment to sustainability. They do not just make statements of intent, but demand concrete action.

Can the big fashion brands draw on existing models to make their transition?

How do you move from linear to circular fashion?

The circular fashion industry is defined as a regenerative system in which garments circulate as long as their maximum value is retained, and then return safely to the biosphere when they are no longer in use.

Circular fashion products must be designed with resource efficiency, non-toxicity, biodegradability and recyclability in mind. They must also be produced with priority given to recyclable sources and ethical practices.

Several French brands have put circular fashion in their DNA. In France, around 100 brands gathered around the “Make Friday green again” movement have called for a boycott of overconsumption and Black Friday. Initiatives in favour of the circular economy are multiplying. The French Slip, for example, decided to replace Black Friday with a special operation by donating 10% of its sales on the day of November 29 to the Moncoton project. The latter, initiated by the recycled fashion brand 1083, aims to develop a recycled yarn made locally, from old clothes to make new products and create a real local circular economy.

Some traditional brands have also taken the plunge. In January 2019, French shoe manufacturer Bocagelaunched a new shoe rental offer that offers customers a pair of shoes every two months. At the end of the rental, the customer can buy the shoes at a preferential price. Otherwise, the shoes are reconditioned in a French workshop and offered for sale on the “As new” platform to give them a new life.

For its part, Nike has launched “Adventure Club”,a subscription to children’s shoes, with the possibility of recycling with the “Nike Grind” program, a circular model of the production of sports surfaces with materials created from recycled sneakers.

The subscription model appears to be a suitable solution to make the transition to a circular model.

The transition to circular fashion is no longer an option

The transition to a new model began before the health crisis. With ecological awareness, consumers are redirecting to alternative consumption patterns. In France and in fashion, the second-hand market is growing exponentially and this trend is expected to increase. Vinted, the used fashion site between individuals, weighs France between 700 and 800 million euros annually in transaction volumes. Until then, this market had completely escaped the brands.

Ecological awareness is accompanied by a change in consumption habits. Today, consumers are no longer attracted to owning a property, but to the use they can make of it. He prioritizes experience over possession. His perception of novelty has changed: he no longer needs to buy a new garment to renew his wardrobe.

On the other hand, each crisis brings new economic models to light. The last financial crisis brought out the D2C (direct to consumer)model, which has a proven track worth of meeting the needs of a new generation of customers. This model relies primarily on online sales to reach customers directly, which significantly reduces costs.

Becoming omnichannel is no longer an option: today’s health crisis should lead to more consumers buying online and in more categories than before.

Do you have a plan to transition to a sustainable business model?

Find out how ZIQY can go with you. Ask for a demo.


(*) McKinsey and Company (April 8, 2020)

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