Building a profitable circular economy

Our current global economy hinges on the production and consumption of consumer products that are typically discarded after only a handful of uses, in a linear economic model. The apparel sector is a classic example: globally, consumers spend $1.8 trillion annually on apparel. The low price points of the fast fashion movement drive rapid consumption and contribute to remarkable waste. According to the U.S. Environmental Protection Agency, the U.S. puts about 21 billion pounds of textile waste into landfills every year, 70 pounds per person. This is what a linear model of produce-consume-discard looks like. 

The circular economy -- one that is restorative and regenerative by design -- aims to keep products, components, and materials at their highest utility and value at all times. This circular model preaches resource responsibility but how does a company profitably pivot away from the profitable linear-style consumption? 

According to McKinsey and the Ellen MacArthur Foundation, the market is likely to reward companies with an edge in circular business practices. For apparel companies to move toward a circular model, every aspect of business must be designed for durability and reusability, and at the end of life materials are reused, repurposed, or recycled. This will require new supply chain capabilities and necessitate a marketing campaign to nurture new buying preferences in the customer base. 

Many hurdles stand between realizing these new capabilities and buying preferences, including: 

  • Low quality in new products
  • Fears around cleanliness of second life apparel
  • The lack of logistics in place to accommodate take-back, collection, and redistribution
  • Customer perceptions of new apparel being better

We believe the linchpin to adopting circular business practices in the textile industry starts with addressing fiber, fabric, and garment cleanliness. At each step of apparel's life, materials must be cleaned in order for them to be useable, impregnated with technical functionality, and achieve longer life. Addressing fiber, fabric, and garment cleanliness will drive greater durability and usability, and thus value and profit. 

Cleanliness drives durability, and durability means profitability. Some large global companies already appreciate the relationship between durability and profitability. Industrial laundry companies aim to maximize useful life for rental pieces like corporate workwear and high-tech personal protective equipment (PPE) since this drives financial success. According to TERSUS research, the textile rental companies could capture 4% increased profit margins in the industrial laundry segment by extending garment life through more gentle cleaning in TERSUS®. 

A similar rental model is beginning to emerge in the fashion industry. Companies like Rent the Runway and GetOutFitted are moving towards more durable apparel through garment care, collaborative consumption, and reuse/recycling, cleaning becomes crucial for three reasons: 

  1. Cleaning keeps materials usable
  2. Appropriate cleaning cleaning extends garment life
  3. Clean garments build trust with customers, increasing the appeal of the service

The broader impact of cleanliness? Creating apparel with a longer lifespan starts with appropriate, regular cleaning. Repairing garments to further extend their life unlocks additional economic opportunities. 

As companies move toward this Model of Clean for apparel, we believe three economic opportunities emerge: 

  1. Increased resource efficiency in manufacturing generates cost savings
  2. Garment life enhancing services, such as superior cleaning and repairs, will add economic and environmental value
  3. Increased customer loyalty will support premium products, while value added services will increase the number of retail touch-points

McKinsey and the Ellen MacArthur Foundation estimate renewing clothing and extending the life could create $71 billion in material savings. Likewise, creating cleaner, more durable apparel stands to deliver substantial environmental benefits. At TERSUS we believe "clean" delivers an improved product with an improved environmental footprint, with enhanced financial returns. 

For more information on TERSUS Clean Model -- technical, environmental, and financial -- please contact us!

Brit GibsonComment