The State of Circularity in the UK Fashion Industry

Measuring the State of Circularity in the UK Fashion Industry

Measuring the state of circularity in the UK fashion industry

A report from the Circular Fashion Innovation Network

January 2025

Contents

Executive summary Introduction Part 1: sustainable fashion, unravelled Part 2: the circular initiative

Part 3: closing the loop

Conclusion

Credit: LFW CWC AW22

Executive summary

Credit: LM

Executive Summary

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Part 2

Part 3

Conclusion

Part 1

The Circular Fashion Innovation Network The Circular Fashion Innovation Network (CFIN) is an industry-led programme managed by the BFC and UKFT in partnership with UK Research and Innovation (UKRI) to accelerate the UK towards a circular fashion ecosystem. The network brings together industry, innovators, NGOs, academia and broader stakeholders through an action-led roadmap. CFIN’s framework for change is split across six different themes, namely - Circular Business Models (CBMs), Recycling Infrastructure, Sustainable Manufacturing, Novel Technology, Diverse and Futureproof Workforce, and Green Growth. The Advisory Board spans luxury and high street businesses, as well as representatives from UKRI, Academia and NGOs. CFIN is a key initiative within the Institute of Positive Fashion (IPF)

British Fashion Council The British Fashion Council is a not-for-profit organisation that aims to further the interests of the British fashion industry and its designer businesses. Based in London and formed in 1983, the British Fashion Council is funded by industry patrons, commercial sponsors and the government including the Mayor of London and the European Regional Development Fund. The British Fashion Council promotes leading British fashion designers to an intensely competitive global market. It is the central co-ordinating body for London Fashion Week, organiser of the British Fashion Awards and has developed several support schemes for emerging design talent in London.

Newton Newton partners with clients in strategic delivery across the public and private sectors, unlocking complexity to create meaningful and lasting impact. Newton has throughout its 20+ year history shaped and delivered programmes across over 100 public sector organisations, multiple defence and infrastructure organisations, and leading retail and manufacturing supply chains. This work has delivered real and lasting impact, including better value offerings for consumers, over £1.5bn savings on a national defence programme, and over £1.6bn savings in the public sector while also improving outcomes for thousands of people. Newton believes so strongly in what can be achieved together with clients that it stands by the founding idea of Newton – guaranteeing its fees against delivering real, measurable outcomes. This commercial approach is what sets it apart from many others in its field.

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Executive Summary

Part 2

Part 3

Conclusion

Part 1

Measuring the state of circularity in the UK fashion industry About this study In 2024, the CFIN team partnered with Newton to conduct an industry-wide survey aimed at understanding and measuring the state of circularity in the UK fashion retail sector. The survey specifically sought to identify the challenges to scaling circular business models and circular design within the industry.

Surveying industry The research included 49 fashion organisations in the UK, representing approximately one-third of the UK fashion market based on annual revenue. It covered a variety of markets and business models, with responses from over 10 retailers each generating over £1bn in annual revenue. 1

Interviewing fashion professionals

The survey data was supported by over 20 qualitative insight interviews with business leaders. Interviewees represented nine brands ranging from small boutique brands to multi-billion-pound organisations, were carried out between April and June 2024.

Supported by

External research Desk-based research was conducted, reviewing existing literature, international regulations, and retailer customer propositions. A range of case studies was also prepared, covering various circular initiatives and markets. 3

Executive Summary

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Part 2

Part 3

Conclusion

Part 1

Executive summary This report aims to serve as a foundational resource for organisations seeking to accelerate their circular initiatives. It provides in-depth analysis and insight into the current landscape, identifies three key principles to setting a circular strategy, and outlines four areas that organisations can address to scale up their CBMs initiatives.

Principles to setting a circular strategy

Four areas of business impact

Intention vs. reality

Making the business case stack up

Despite positive intentions, brands are unable to implement and scale circular business practices.

Securing and maintaining a competitive margin on circular goods and initiatives.

One size doesn’t fit all

Rallying brand support

The attractiveness and perceived relevance of each CBM varies across value segments.

Collaborating with Marketing & PR to help customers connect circularity with brand proposition.

No silver bullets

Embracing complexity Working closely with third-parties to improve infrastructure and processes to unlock greater agility and profitability. 3

The blockers to CBMs success are consistent and comprehensive.

Weaving circularity into everyday practices

Integrating sustainability teams with BAU functions to find mutually beneficial solutions and prioritise circularity.

Credit: Chylak

Executive Summary

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Part 2

Part 3

Conclusion

Part 1

The research has identified nine actionable recommendations for businesses operating any circularity model to support their ability to scale:

Research findings

Regulatory Requirements and Legislation Change

of brands with a customer-facing circular business model (CBM), state they have the confidence or plans to scale.

Financial Incentives

Brand Campaign Support

82%

of organisations have already implemented at least one circular initiative.

Customer Education and Awareness

51%

Investment in Infrastructure

of UK brands and retailers embed circular design principles in their product ranges.

Transparency in Value Chains

50%

of UK brands and retailers said limited financial margin is a barrier to circular initiative success.

Shared Learnings and Consolidation of Volume Flows

Cross-functional and Capable Teams

of UK brands and retailers said customer communication is a barrier to circular initiative success.

40%

Organisation-wide Sustainability Reporting

Credit: ERDEM

Executive Summary

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Part 2

Part 3

Conclusion

Part 1

The findings of this research reveal three key themes within today’s fashion circularity landscape that reflect the position many UK organisations find themselves in. These themes are apparent across the four areas of business impact, relate to the various CBMs and can be addressed with the recommended actions at the end of this report. Three key principles: Today’s trends in UK circular fashion

Intention vs reality Despite an intention to implement and scale circular business practices, brands are struggling to translate their aspirations into tangible roadmaps; 0% of brands with a customer-facing CBM state they have the confidence or plans to scale. CBMs are of varying maturity, and organisations lack confidence in their organisation’s overall plans, and ability to scale.

One size doesn’t fit all The attractiveness and feasibility of each CBM varies by value segment. In particular, organisations are hesitant to participate in initiatives that customers might perceive as irrelevant or inauthentic to the brand. However, brands are open to measures and targets that support choice, flexibility and are relevant to organisations at different stages of their journey; 82% of respondents have already implemented at least one circular initiative. Interventions and standards can provide scope for this flexibility and support further innovation.

No silver bullets Despite varying levels of CBM success and adoption, the blockers to scaling different models are consistent and comprehensive. The biggest barriers are having a limited financial margin (c.50% of respondents) and customer communication (c.40% of respondents). The crux of the challenge will be in balancing profits with purpose, making circularity a viable business route for retailers and fostering sustainable growth in the ever-evolving industry.

Introduction

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Executive Summary

Part 2

Part 3

Conclusion

Part 1

Introduction

The UK fashion and textiles industry is at a pivotal moment of transformation, offering unparalleled opportunities to redefine how clothing is designed, manufactured, and consumed. It contributes £62bn to the UK economy and supports over 1.3 million jobs 1 . The sector holds significant potential to drive innovation in sustainable practices while fostering economic growth. With environmental initiatives gaining traction and consumer awareness of sustainability rapidly increasing, the industry is well-positioned to lead the shift towards more responsible practices. Circular fashion has emerged as a “megatrend,” as highlighted in the Circularity Gap Report 2024 2 , with discussions on the concept tripling over the past five years. This growing momentum provides businesses with an exceptional opportunity to unlock new revenue streams and competitive advantages through circular innovation. Circular business models aim to minimise waste and resource use while creating value by designing for longevity, repairability, and recyclability. Strategies such as take-back schemes and service based offerings like renting or sharing are at the forefront of this transformation, enabling companies to align economic success with environmental stewardship. The linear fashion model, however, remains a significant challenge, driving the fashion and textiles industry’s substantial environmental impact. Responsible for an estimated 3–10% of global greenhouse gas emissions 3 , the industry is one of the largest polluters. This linear approach—”take, make, use, dispose”—places immense strain on the environment by depleting natural resources, generating excessive

waste, and contributing to widespread pollution. Transitioning to circularity is essential to mitigate these harmful effects and build a more sustainable future. In contrast, circular fashion prioritises sustainability and reuse, extending a product’s lifespan and treating disposal as a last resort. By adopting environmentally friendly practices wherever possible, circular fashion seeks to minimise harm, reduce resource depletion, and create a regenerative ecosystem. Businesses that embrace these principles can address growing consumer and regulatory demands for sustainability while fostering resilience and efficiency. Understanding and measuring the UK fashion industry’s progress towards circularity is critical for driving change. CFIN has been established to embed circular fashion ecosystems across the UK. In collaboration with Newton, experts in delivering complex organisational change, CFIN is gathering valuable insights into the current state of circularity. This research seeks to identify barriers faced by organisations and the support needed to transition to more sustainable systems. Armed with these findings, CFIN aims to empower UK fashion businesses to implement circular practices successfully. By supporting this transformation, the initiative aspires to reduce the industry’s environmental impact, foster innovation, and build a sustainable and prosperous future for UK fashion.

Credit: 16ARLINGTON

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Executive Summary

Part 2

Part 3

Conclusion

Part 1

The following circular initiatives were investigated and will be referenced throughout the report.

Respondents by market

CBMs

Luxury

o Repair: Fixing or refurbishing damaged or worn-out items to extend their lifespan and prevent them from being discarded. o Rental: Temporary use or leasing of items by consumers instead of purchasing them outright. Includes both pay per item and subscription models. o Resale: Selling pre-owned or second-hand fashion items to new consumers. Includes organisations own re-sale platforms or use of other platforms or marketplaces to enable individuals to buy and sell used apparel. o Remake: Involves altering existing garments or materials into new products to extend their lifespan and reduce waste. o Takebacks: Includes the process of taking back used or unwanted fashion items from customers for re-sale, repurposing, re-cycling or responsible disposable.

Premium

Mid-market

Value

Other

40%

10%

30%

20%

Respondents by business model

Respondents by annual revenue

Bricks and mortar

More than £1bn

Predominantly bricks and mortar

£501m-£1bn

£101m-£500m

Product Design

Predominantly online

£26m-£100m

o Circular design: The process of creating fashion products with sustainability and circularity principles in mind, considering factors such as material selection, durability, recyclability, and end-of-life options.

Online only

£6m-£25m

Other

Not sure

40%

10%

30%

20%

40%

10%

30%

20%

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Executive Summary

Part 2

Part 3

Conclusion

Part 1

About this research

The market for circular fashion

To explore and gain insights into the current state of circularity in the UK fashion industry and identify how businesses can capitalise on opportunities in circular innovation, CFIN partnered with Newton to conduct an in-depth study on the adoption, scaling, and implementation of circular business models.

UK fashion retailers are engaged in various initiatives aimed at reducing the industry’s environmental impact, Textiles 2030, managed by WRAP, and Fashion ReModel, led by the Ellen MacArthur Foundation. While these initiatives have driven positive change, the industry has historically faced challenges in sustaining progress towards circularity, hindered by consumer preferences for newness and the constant pressure to prioritise profit. However, as more government bodies issue legislation to enforce sustainability, the benefits of being a first-mover are becoming difficult to ignore. The Circular Fashion Innovation Network (CFIN), is in place to embed circular fashion ecosystems in the UK. As part of this effort, CFIN partnered with Newton – experts in helping organisations deliver complex change – to gather insights on the current state of circularity in the UK fashion industry, including barriers faced by organisations and support required for a more circular ecosystem. With the findings and recommendations from this research, we hope to empower fashion businesses across the UK to successfully implement circular operations, to build a more prosperous and sustainable future for the industry.

Below are notable examples of mature circular fashion ecosystems globally, highlighting a need for international collaboration across the industry. The EU Strategy for Sustainable and Circular Textiles by 2030 4 contains 16 pieces of environmental fashion legislation with the first coming into force in 2024. In France, the Anti-Waste for a Circular Economy Law (AGEC) 5 bans ‘eco-friendly’ and ‘biodegradable’ claims from product information and gives customers visibility of how garments are made and how easy they are to recycle. France also has a € 154m fund to provide discounts to customers repairing apparel and footwear, and is introducing a ‘Fast Fashion’ surcharge and further marketing regulations in 2025. In Sweden, the Extended Producer Responsibility (EPR) 6 target aims for a 70% reduction in textile waste sent to landfill by 2028, and the government has cut VAT rates for repaired items.

The research included:

o Survey responses from 49 fashion businesses, representing approximately one-third of the UK market by annual revenue.

o Over 20 qualitative interviews with leaders spanning boutique brands to multi-billion-pound companies.

o Extensive desk research into existing literature, international regulations, and retailer strategies.

o Analysis of circular initiatives, including repair, rental, resale, remake, take-back schemes, and circular design.

This report serves as a foundational guide for organisations seeking to advance their circular initiatives. By analysing current practices, scaling strategies, and growth opportunities, it offers practical insights to support the UK fashion sector in achieving both economic success and environmental sustainability.

Developing markets:

o The UK’s Best Available Techniques (BAT) 7 framework guides organisations on available techniques to reduce environmental impact. o In the USA, the Americas Trade and Investment Act 8 proposed $14bn in incentives for circular innovation, reuse and recycling as part of a wider bill promoting US manufacturing over China’s.

Immature markets:

China is an example of an immature market as it has no legislation or support for circularity in the fashion industry.

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Executive Summary

Part 2

Part 3

Conclusion

Part 1

It remains as the ideal state and was informed by a deep literature review, stakeholder consultations, and consumer research. CFIN still considers the target state for the circular fashion ecosystem to allow for long-term viability, resilience and prosperity.

Achieving the target outcomes would entail significant changes to material flows, industry operations and consumer practices across the UK fashion value chain and ecosystem, and is organised along the following parts of the value chain:

The Centre for Fashion Enterprise (CFE) Target State outlines the proposed target outcomes for a future circular fashion ecosystem, as published in 2021.

Users. UK consumers buy less clothing overall. When they do purchase, they buy more pre-owned than new, and items of a higher quality and durability. Consumers wear items more often and for longer (or pass them on for reuse).

Sorting. All used clothing collected in bulk is sorted using sophisticated sorting technologies at efficient sorting facilities and other venues. This allows for optimised determination of the ‘next destination’ for individual garments, be those channels for reuse or for recovery.

Brands and designers. Use of digital prototyping to design both virtual and physical garments with circular design principles in mind.

Digital tracking. The unique characteristics and journeys of garments are tracked from the first stage of the value chain and accessible to stakeholders throughout the ecosystem.

Recycling for other industries. Material outputs in the form of fibres, yarns, textiles, and clothing that cannot be reused in the fashion industry long-term are utilised by other industries such as agriculture, homewares, and construction, as part of a wider material ecosystem.

Repair. Consumers maintain their clothing and repair items at tailors, retailers or at home.

Reuse. Consumers take clothing directly back to retail to be resold or rented to a new user or pass on clothes through recommerce platforms that engage in redesign, upcycling, garment care, tailoring and repair before the item is resold. Consumers also resell clothing to new consumers directly through online trading platforms.

Raw materials. Raw material inputs for manufacturing are either renewable, recycled or both.

Textile recycling. In the short- to medium-term, non- wearable garments suited to textile recycling are channelled to existing mechanical recycling facilities. In the long term, the destination will increasingly be facilities for chemical recycling.

Manufacturing. Zero-waste manufacturing and reuse of waste materials, water and chemicals is the norm. On-demand manufacturing and distribution mean that excessive and unsold stock is minimised.

Donation and collection. Consumers have easier and more convenient access to expanded collection and donation channels, including private, kerbside, charity, and via retailers .

Fibre manufacturing. (polymer filament extrusion) In the long-term, improved sorting and scaling of fibre-to-fibre recycling mean an increase in fibre manufacturing from recycled chemical inputs instead of raw materials, including through polymer filament extrusion.

Retail. Provision of pre-owned clothing, virtual clothing, rental clothing, and clothing subscription is mainstream and available through both online and physical retail.

Measuring the State of Circularity in the UK Fashion Industry

Introduction

Executive Summary

Part 2

Part 3

Conclusion

Part 1

Physical garments Digital prototyping Virtual garments

Circular fashion ecosystem target state

Material flows

Tailoring & repair services Garment care Home repair

Raw materials

Reused material/ raw materials circularity Reused garment/product circularity

Retail repairs

BRANDS & DESIGNERS

REPAIR

On-demand manufacturing Yarn spinners Textile manufacturers Garment manufacturers

Maintaining garment

Producing new garment

Rental & subscription

DIGITAL TRACKING

MANUFACTURING

RETAIL

USERS

DONATION & COLLECTION

Purchasing

Sorting by quality

E-commerce

Sorting by fibre type

Private collection services Local authority collection

Direct take back of clothes

Charity donations

ADVANCED SORTING FACILITY

Textile banks

RAW MATERIALS

RE-COMMERCE PLATFORMS

Redesign Upcycling

Garment care

Tailoring & repair

REDUCE DEMAND/MAXIMISE UTILISATION END OF USEFUL LIFE

Mechanical recycling

POLYMER FILAMENT EXTRUSION

TEXTILE RECYLING

RECYCLING FOR OTHER INDUSTRIES

Chemical recycling

Credit: https://instituteofpositivefashion.com/Circular-Fashion-Ecosystem

Part 1

Sustainable fashion, unravelled

Measuring the State of Circularity in the UK Fashion Industry

Executive Summary

Part 1

Introduction

Part 2

Part 3

Conclusion

Making the business case stack up

Rallying brand support

Fashion retailers must balance a variety of interlinking pressures that continuously test efficiency, profitability, sustainability and ethics. The continued migration to online shopping exacerbates challenges for brick-and-mortar-focused retailers, while influencer culture and social media generate demand for even faster fashion. At the same time, economic instabilities threaten supply chains across industries and markets. For circularity to be successful, it must be supported across all areas of the business. Leaders must be confident that initiatives can meet the pressures of margins, marketing, operations and people, and build ongoing momentum.

Businesses need to drive customer buy-in by aligning circular initiatives with their brand proposition – but are facing four major barriers: o The newness conflict. In a crowded market, businesses must prioritise newness and are less incentivised to promote circularity at the expense of higher margin sales. o Authenticity. Brands struggle to navigate how, when and where to communicate initiatives in alignment with their image and in ways that resonate with customer priorities. o Low return on investment (ROI). The cost of additional marketing and PR makes the financial margins of circular initiatives even more limited. o Fear of greenwashing. Watertight sustainability claims are difficult to make due to variable definitions across the industry and varying legislation across geographies. Marketing is closely scrutinised for misleading claims, which can lead to reputational and financial damage. This is having a greenhushing effect on the industry as a whole. Marketing and PR teams can play a pivotal role in circularity messaging and publicity, but engagement is low; just 29% of retailers have accessed marketing or PR support for their circular initiatives, and only a third (33%) said they’d like further support in this area.

Generating a competitive and stable margin is many organisations’ biggest challenge.

Rising material and operational costs are already putting pressure on both top- and bottom-line measures, and many businesses cannot afford the additional costs or risks associated with implementing new models. And, although a fifth (20%) of respondents say they had accessed operational support, inefficiencies are still viewed as a “leaky bucket” for financial sponsorship and increased lead times to profitability. This perpetuates a loop, where siloed initiatives and pilot phases aren’t benefiting from economies of scale and are consequently struggling to make an impact. Revenue opportunity and customer participation are the most tracked KPIs, but customer demand is inconsistent. There is a disconnect between sentiment and behaviour, and shoppers are not yet willing to pay a premium for circular products, forcing retailers to price competitively. To break this cycle, the fashion sector needs to create more pull factors using marketing, education, alignment with customer needs and market- wide interventions to facilitate behavioural change. And there’s an appetite for regulatory support; retailers perceive government intervention as the biggest enabler to circularity, and feel like existing measures aren’t enough. Seven in 10 (71%) want more financial incentives, but just 10% report receiving any to-date. Only 2% of organisations have so far been impacted by government regulatory requirements, whereas 52% of organisations stated that government regulatory requirements would further support scaling.

Overcoming these challenges is necessary for building external support, and collaboration is the key to devising clear messaging frameworks.

Credit: Ancuta Sarca

Measuring the State of Circularity in the UK Fashion Industry

Executive Summary

Part 1

Introduction

Part 2

Part 3

Conclusion

Embracing complexity

Circular models experience different operational complexities than linear models, opening businesses up to a combination of new challenges.

Organisations may need to re-purpose their existing networks – for example, takebacks often utilise retailers’ reverse logistics operations. This provides the benefit of reduced set-up costs, but can negatively impact business functions if not managed effectively. Retailers may also need to develop new networks to facilitate repair or tailoring, which have higher set-up costs and typically require independent management. And complexity is difficult to balance – circularity models aren’t viable if garment volumes are too small, but networks can quickly become overwhelmed by volumes that are too high. The right partnerships can provide the logistics management that’s needed for successful operations – and most business recognise this. Two-thirds (67%) of initiatives have partnerships with third-party organisations, and over a quarter (26%) of initiatives are fully run by third-party organisations – around a fifth (21%) of organisations state that further third-party operational support would aid further scaling. Industry-wide improvements in infrastructure, transparency and organisation agility will unblock both retailers and third parties alike to enable scaling.

Taking stock: An opportunity for cross-functional success

On average, 13% of stock is left unsold after full-price and discounted sales, the majority of which goes into storage, to outlets, or to charity partners. Collaboration between sustainability teams and buying & merchandising teams to improve forecasts could result in a win-win: reducing unsold half (from 13% to 6.5%) in the UK would result in an annual reduction of up to 80,000 tonnes of CO 2 emissions 9 and up to £2bn in cost savings for retailers. 10

Credit: E.STOTT

Measuring the State of Circularity in the UK Fashion Industry

Executive Summary

Part 1

Introduction

Part 2

Part 3

Conclusion

Sustainability teams are not typically integrated into BAU functions, creating performance siloes and knowledge gaps within a business. Weaving circularity into everyday practices Although circularity initiatives benefit from organisation-wide synchronisation, efforts are often disjointed. Sustainability leads aren’t given decision-making power within commercial or logistics functions with a sustainability impact, limiting their ability to embed initiatives end-to-end. A lack of experience in mature circular models means that many organisations are unclear on the next steps or capability requirements. Where businesses do understand these gaps, third-party organisations are frequently recruited rather than upskilling current employees, a solution that’s less sustainable and less accessible to smaller brands. Across a business, prioritisation of larger revenue streams frequently leads to employees in non-sustainability-focused teams with little time or capacity for circular initiatives. Combined with poorly defined circularity key performance indicators (KPIs) and incentives, and a lack of accountability mechanisms for circularity success (with the exception of circular design initiatives), these initiatives rarely become a priority.

Implementation of circular initiatives is often carried out by isolated teams

Board

Functional teams

Ecommerce

Design

Retail

Purchasing

Other

Sustainability

Merchandising

Logistics

Organisation-wide communication channels

Part 2

The circular initiative

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

The circular initiative

with an existing customer-facing circular business model claim to have a clear route to scale, with the plans and resources to get there successfully. But this doesn’t deter retailers altogether, and despite challenging market conditions and a lack of strategy, participation in all types of CBM is expected to increase. Another reality is that one size does not fit all, as the attractiveness and perceived feasibility of circularity models varies by value segment. Premium and luxury customers expect longevity from high-cost items, so circular design and repair models are considered more central to brand propositions and are therefore more mature. However, rental, remake and resale are met with hesitation as they pose a threat to brand

equity, value perception and exclusivity.

On the other hand, mid-market and value retailers are working with higher margin pressures and customers with different perceptions of value. Retailers that offer new products are afforded a much lower average selling price, particularly for rental, resale and repair. These businesses are able to leverage their reach to drive takebacks and recycling schemes, but financial incentives are critical for non-revenue generating initiatives and organisations contend with added operational complexity within stores and supply chains.

This research finds that, despite core business challenges, brands are actively looking to adopt circular initiatives, but are struggling with implementation and scaling. Although four in five (81%) organisations claim that circularity is a part of their five year strategy (and 82% of these have already implemented at least one circular initiative), just under two thirds (63%) of their customer-facing CBMs are in a low maturity pilot phase.

Ultimately, each CBM comes with its own set of benefits and challenges.

A lack of tangible roadmaps is a key issue – retail leaders have mixed confidence in the future of circular practices. In fact, no organisations

Current CBM participation vs future plans

Circular Initiative Landscape % of respondents with an initiative by market segment

Circular Design

Premium & Luxury

Mid-market & Value

42%

increase in participation

Repair

71% increase in participation

71%

31%

Circular Design

50% increase in participation

Resale

57%

15%

Repair

Takebacks

38% increase in participation

29%

31%

Resale

42% increase in participation

Remake

21%

38%

Takebacks

56% increase in participation

Rental

36%

23%

Remake

10%

20%

30%

40%

50%

60%

70%

80%

21%

31%

Rental

Current

Future

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Circular design The process of creating fashion products with sustainability and circularity principles in mind, considering factors such as material selection, durability, recyclability, and end-of-life options.

Circular design is the most prevalent, most highly scaled and most supported circular initiative in the industry. Unlocking further value will require industry-wide collaboration and alignment on definitions in this space, certifications or accreditations to display progress and regulation enforcing improvements in textile supplier transparency. The most prevalent circular initiative, just over half of survey respondents stated they embed circular design principles within their product ranges. However, there is misalignment in the definition of this initiative, with each retailer sharing a different definition of a ‘circular product’. While strong in execution and future expansion, there is great opportunity for retailers to embed circular principles into products. Design tools Well-utilised: Only 7% of respondents stated they hadn’t accessed any circular design tools or toolkits. The most frequently used tools are approved material lists, circular design guides and training programmes. Room for improvement: Retailers stated that centralisation or standardisation of tools and recommendations across the industry would make design tools easier to use and better suited to their business cases.

The numbers at a glance

Presence within retailer market 51%

70%

Proportion of product range with some circular design attributes applied

46%

Proportion of initiatives accessing third party support

Approved material lists

Most common circular design business model

Environmental impact reduction

Most tracked KPIs

Industry initiatives and support from SMEs, academic bodies and consultants

Most frequently accessed support

Credit: Stefan Cooke

Measuring the State of Circularity in the UK Fashion Industry

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Executive Summary

Introduction

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Conclusion

Part 1

Barriers to growth

Complexities in the supply chain

Difficulty communicating initiative to customers

Transparency issues with suppliers make it challenging for brands and customers to have confidence in a ‘circular product’.

The lack of alignment on a circular product definition leads to fears of greenwashing and reputational damage creating hesitancy around marketing and PR on this topic.

Increased cost of materials and difficulty sourcing materials

Support More retailers have accessed support for circular design than for any other circular initiative. However, there is a discrepancy between the support available and the support required for further expansion in this space. 5

Smaller companies stated the impact to margin on increased cost of materials and high minimum order quantities (MOQs) required to source materials is a blocker to entry for this market.

Lack of alignment on a circular product definition

The industry is flooded with different definitions of a ‘circular product’. Different circular design principles are practical for different product types and retailers. An aligned industry-wide definition of these terms is required for progress.

Credit: Stefan Cooke

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Mass/mid-market apparel retailer Case study spotlight

“We launched our collection to show everyone what we’re doing isn’t impossible, it’s really tangible. The minute the launch went live, attitudes completely flipped. There’s more appetite than we have capacity for now.”

Anonymous survey respondent

To become a circular fashion brand, you have to start with the basics: a strategy. A popular high street brand did this by creating a framework for circular products, and unifying buyers under a common definition. They began by creating a Circular Product Standard, which was then the blueprint for a single range and company-wide training across product teams. The brand has gained support from employees, suppliers, and sponsors due to this strategy, which continues to grow.

Key takeaways:

Clear from the beginning The involvement of cross-functional teams through regular working groups and other forums ensured everyone was aligned behind a common goal. By establishing feedback loops and fostering a collaborative and iterative environment from the offset, everyone was working towards the same goal from day one. 1

Robust, sequential, considered planning

Initiatives were carefully road mapped, and business cased, and sequentially released to build momentum. The launch of the circular range was accelerated as a proof of concept and was immediately followed by training whilst employee interest was high.

Senior sponsorship and advocacy

A team that ‘speaks buyers’ language

Buy-in from sponsors was crucial to getting the business case sign off, despite the increased margin pressure. Through senior management advocacy and the promotion of circular concepts, colleagues and suppliers were granted the time to drive progress due to belief in the mission.

The delivery team assembled with a range of previous buying and commercial experience. This granted the team vast knowledge of the pressures encountered by purchasing teams. Using this as an advantage, the team facilitated close collaboration with buyers, and an empathetic approach to ensure solutions are effective for both buyers and delivery teams.

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Repair, replenish, revive Fixing or refurbishing damaged or worn-out items to extend their lifespan and prevent them from being discarded.

The numbers at a glance

Presence within retailer market 36%

53%

Proportion of initiatives in pilot phase

25%

Proportion of retailer customer base accessing initiatives

62%

Proportion of initiatives accessing third party support

Revenue and number of customers

Most tracked KPIs

Marketing and PR Support

Most frequently accessed support

Credit: Huishan Zhang

Existing initiatives demonstrate a stronger presence of repair in the premium and luxury market. Retailers are keen to further set up and scale up repair initiatives, but to do this, they must overcome the barriers of limited revenue streams and low customer demand.

In luxury and premium markets, repair is additive to business models and drives sales conversions by enabling high-cost items to ‘last a lifetime’. In these markets, repair is often a mature proposition pre-dating sustainability. But in mid-value markets, repair is less common and less effective – due to lower item average selling prices (ASPs), repair is often seen as ‘not worth it’ by customers and retailers alike. With many repair initiatives in early pilot stages of development, there are few plans or resources in place to scale operations. Despite this, repair has the highest proportion (25%) of customers accessing initiatives out of all customer-facing circular business models.

Credit: ERDEM

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Repair, replenish, revive Fixing or refurbishing damaged or worn-out items to extend their lifespan and prevent them from being discarded.

Barriers to growth

Not a major revenue stream Revenue is the most-tracked KPI of circular business models. Most repair initiatives today create very little revenue, and at best where successful are often lossleading loyalty-drivers. This makes it hard to get the business case to stack up. 1

Logistics and operational complexity

Additional business channels (in-store or online) and garment touchpoints to operate a repair service add operational complexity to an organisation, particularly when items are sent elsewhere for repair. Minimising repair turnaround time by optimising the efficiency of these processes is an extra business challenge.

Current customer attitudes There is low customer demand for repair services, particularly in the mid-value market as competitive pricing means it is easier for a customer to replace items than repair them. 2

Availability of skillset The availability of a skilled workforce for repair is diminishing as the demographic shifts. Repair work needs to be carried out to a high quality to retain product value. 4

Credit: ERDEM

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Resale: preloved profits Selling pre-owned fashion items to new consumers. Includes organisation’s own re-sale platforms or use of other platforms or marketplaces to enable individuals to buy and sell used apparel.

The resale market has consistent popularity across the spectrum of retailers. Initiatives vary significantly in maturity and are heavily dominated by third parties. Again, customer communication and margin pressures are the biggest blockers to further expansion of resale. A consistent and moderately popular circular business model, this study finds ’product authenticity’ as a top issue in luxury and premium resale markets, compared to ‘value retention’ and ‘customer demand’ in the mid-value market. Retailers struggle with a heavy dependency on third parties for set-up and running, along with competition with non-retail organisations (e.g. Vinted, Depop).

The numbers at a glance

Presence within retailer market 30%

78%

Proportion of initiatives in pilot phase

13%

Proportion of retailer customer base accessing initiatives

88%

Proportion of initiatives accessing third party support

B2C resale service through partnership online platform

Most common business model

Revenue and number of customers

Most tracked KPIs

Marketing and PR support, consulting support and support from SMEs

Most frequently accessed support

Credit: Huishan Zhang

Credit: ERDEM

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Barriers to growth

Difficulty communicating initiatives to customers

Cannibalisation of existing sales Resale of second-hand clothes at lower ASPs is in direct competition to full priced sales. Some organisations are disincentivised to set- up or scale-up resale platforms due to this. 3

From B2C ‘vintage’ platforms to C2C resale platforms, different communication styles are required, but all involve a constant marketing push to gain traction, with the pay-off of customer usage still being a challenge.

Operational or logistical complexity

Limited margin Second-hand clothing typically offers a lower profit margin than new products due to lower Average Sale Price (ASPs) and additional operational and logistics costs – this limits feasibility for B2C initiatives for certain categories and value segments. 2

Different resale platforms have different operational and logistical implications. However, at a minimum, customer communication and customer touchpoints are required.

Credit: Huishan Zhang

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Takebacks Includes the process of taking back used or unwanted fashion items from customers for re-sale, re-purposing, re-cycling or responsible disposable.

An opportunity to scale within mid-market and value retailers is enabled by higher garment volumes, shopper frequency and less risk to brand execution. Scaling further requires investment into infrastructure, front- end mechanisms and awareness to drive customer participation alongside incentives for businesses to implement non-returning schemes. Takebacks are not attractive for luxury and premium retailers or customers, with products having greater longevity and value retention. In the mid-value space however, takebacks offer good alignment to customer needs, higher garment volumes and accessibility. This model’s greatest challenge is the demand of higher garment volumes on operations and supply chain logistics. Most takeback schemes surveyed involved takeback of wearable items to be re-sold. However, schemes in which garments are responsibly disposed of, recycled or re-made into alternative products also exist.

The numbers at a glance

Presence within retailer market 30%

50%

Proportion of initiatives in pilot phase

10%

Proportion of retailer customer base accessing initiatives

88%

Proportion of initiatives accessing third party support

Online takeback service

Most common takebacks business model

Revenue

Most tracked KPIs

Third party infrastructure support

Most frequently accessed support

Credit: TOVE

Measuring the State of Circularity in the UK Fashion Industry

Part 2

Executive Summary

Introduction

Part 3

Conclusion

Part 1

Takebacks

Includes the process of taking back used or unwanted fashion items from customers for re-sale, re-purposing, re-cycling or responsible disposable.

Barriers to growth

Difficulty communicating initiative to customers

Insufficient customer demand There is low customer demand for takebacks in the premium and luxury markets as consumers less frequently ‘donate’ more expensive garments. In the mid-value markets, consumer interest can be high, but conversion rates of customers sending garments can be low. 3

There is a proportional relationship between marketing spend and consumer uptake. When initiatives are promoted consumer uptake increases, but it falls away without ongoing communications.

Not a revenue stream Many takeback initiatives are not a source of revenue, particularly for non-wearable takebacks, meaning businesses are not financially incentivised to progress. 2

Infrastructure and mechanism of takeback

Current reverse logistics infrastructure (particularly for non- wearables) doesn’t avoid damage (e.g. development of mould). This results in high dependencies on third parties for infrastructure. Longer-term innovation will require greater expertise in this field with resources a limiting factor.

Credit: TOVE

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