To make real, tangible progress against stated sustainability ambitions the fashion industry needs to extend the lifetime of clothing by adopting more circular business models that focus on: repair, resale and recycling. But, knowing how to drive this change can be difficult.
Brands in the fashion industry are increasingly focused on recycling clothing and producing items with more recycled content. Although this is progress, to have an even greater impact on the environment, brands should instead look to circular models with a focus on repair and resale to reduce production altogether.
Models of resale tend to deliver substantially improved environmental outcomes versus increased recycling but it’s clear that some brands are more likely to profit from resale than others. Premium and luxury brands with a higher price point tend to retain more value compared to more affordable high-street brands that often struggle to attract enough value in the secondary market to meet the costs of resale.
“Embracing circular thinking means that organisations will need to reinvent their business models. Regulatory pressure is driving a lot of the change but circularity can also be a source of significant commercial value.“
Tom Beagent
Sustainability Partner, PwC UK
There are three things that fashion businesses can do to support the economics of resale and accelerate growth.
Resale channels that provide added value through services such as product authentication, product repair and curation of a range command up to five times more value than similar items sold on more simplistic resale channels such as peer-to-peer (P2P) platforms or charity stores.
Many mainstream brands have started to establish resale propositions but they have a long way to go before realising the full value potential of the secondary market. To do this, further development of value-added resale propositions is needed.
Reducing the costs of resale is key for the growth of the secondary market. Costs covering logistics, sorting, quality control and storage will need to be reduced over time. In particular, the highly labour-intensive nature of the reverse supply chain in clothing today and its inherent location ‘onshore’ mean that labour costs typically account for over 50% of the cost of resold clothing.
Technology has the potential to reduce the labour required in the secondary value chain with Radio-Frequency Identification (RFID) tags, flexible integrated circuit chips and QR codes offering potential future solutions to increase the speed, reliability and cost of the sorting and authentication of products.
For the cheapest items of clothing on the market, retaining the value for resale proves more difficult. The overproduction and overconsumption of cheap fast-fashion items continues to pose a challenge for the environmental footprint of the fashion industry. To address this, a wider shift in the market is required, moving away from cheaper, microtrend-led items towards more timeless styles, and durable products.
“The economics of fashion resale can be challenging - but brands can improve profitability from offering value-added services to reducing labour costs across the value chain”
Jacqueline Windsor
Head of Retail, PwC UK
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