According to research conducted by the Ellen MacArthur Foundation, circular business models in sectors such as rental and resale have the potential to capture 23% of the global fashion market and $700 billion in revenue by 2030.
The findings were revealed in a new report titled "The Circular Business Models: Redefining Growth for a Thriving Fashion Industry," which looked at the financial possibilities of introducing more circular business models that don't require fresh garment production.
According to the analysis, circular business models in the rental, resale, repair, and remake sectors now comprise a $73 billion market, which is anticipated to grow as consumer attitudes change.
However, it warned that if new models are just considered as "add-ons" to the old take-make-waste cycle, it will ultimately encourage people to purchase more, the environmental benefits would be negligible.
Similarly, rental models that provide clothing that is not meant to withstand multiple wears and washing cycles are more likely to be economically and environmentally unsustainable.
This is a critical issue for rental platforms like Hirestreet, with founder Isabella West emphasizing the need of choosing clothes that can withstand the rental market in a recent interview.
The report outlined four key recommendations for fashion leaders to ensure that economic and environmental benefits may be delivered in circular enterprises.
The first is to discover new ways to gauge performance that aren't tied to product sales, and to use incentives to encourage consumers to consider beyond purchase and opt in for circular services.
The second is to create items that are more durable and can be recycled or recreated at the end of their useful lives.
Third, one-way supply chains must be re-evaluated and re-designed in order to circulate products locally and worldwide, changing them into supply networks.
Lastly, growing circular business models that generate value without creating new items is critical for long-term economic and environmental possibilities.
Marilyn Martinez, fashion initiative project manager at the Ellen MacArthur Foundation, said that not only do circular business models have huge potential to become mainstream, but they also enable new and better growth for the fashion sector. Between 2000 and 2015, the amount of time we spent wearing clothes more than tripled, while the amount of time we spent wearing clothes decreased by more than a third. Circular business models have the potential to help turn things around and establish a successful industry that leads the way in addressing global issues like climate change and biodiversity loss."
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