Circular business models have potential to grasp $700 billion opportunity by 2030
Research by the Ellen MacArthur Foundation has revealed that circular business models in sectors such as rental and resale have the potential to claim 23% of the global fashion market and grasp a $700 billion opportunity by 2030.
The findings were published in a new report called "The Circular Business Models: Redefining growth for a thriving fashion industry", which analysed the revenue potential of introducing more circular business models that don't require the production of new clothing.
Circular business models in the rental, resale, repair, and remaking sectors already represent a $73 billion market, said the report, which is only expected to increase as consumer attitudes are shifting.
It also warned, though, that if these models are purely seen as "add-ons" to the existing take-make-waste model and ultimately encouraged people to purchase more, the environmental benefits would be negligible.
Similarly rental models that offer clothes not designed to withstand many wears and cleaning cycles increase the chances of that model being economically and environmentally unviable.
This is a key consideration for rental platforms such as Hirestreet, with founder Isabella West highlighting how important it is to select clothes that will be able to endure the rental market in a recent interview.
To ensure that revenue, as well as environmental benefits, can be achieved in circular businesses, the report outlined four key recommendations for fashion leaders.
The first is to find new ways to measure success that are not bound to product sales and encouraging consumers to think beyond purchase and opt in for circular offerings through incentives.
The second is to design products with enhanced durability and that allow to be recycled or remade at the end of their lifecycle.
Thirdly, one-way supply chains need to be re-evaluated and designed to circulate products locally and globally, transforming into supply networks.
Lastly, scaling circular business models that create value without producing new products are key to generate economic and environmental opportunity in the long term.
Marilyn Martinez, fashion initiative project manager at the Ellen MacArthur Foundation, said: “Not only do circular business models have massive potential to become mainstream, they provide new and better growth for the fashion industry. Clothing production doubled between 2000 and 2015, while the time we use clothes fell by more than a third. Circular business models can help turn this around and create a thriving industry that takes a lead on tackling global challenges such as climate change and biodiversity loss.”