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Changing Our Clothes

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Changing Our Clothes CHANGING OUR CLOTHES Why the clothing sector should adopt new business models JUNE 2020* *Please note: this report was written prior to the COVID-19 pandemic. Preface Economic development and ’fast fashion‘ trends, along with new technologies “Clothing production PR EFACE that are accelerating e-commerce, are has approximately changing the pace and scale of clothing production and consumption. Many doubled worldwide WHY WE NEED people want – and can increasingly between 2000 afford – new options after wearing TO CHANGE clothes only a few times. and 2015, outpacing Clothing production has approximately GDP growth during OUR CLOTHES doubled worldwide between 2000 and 2015, outpacing GDP growth during that period.” The clothing industry touches every person on that period. Meanwhile, the number of times a garment is worn before it is These trends are already unsustainable. the planet. It provides people in all countries thrown away declined by 36 percent Consider this, in 2015 global production with necessities and luxuries, garments for during that time2. of textiles reached 1,715 million tonnes function and self-expression. 3 The increasing pace of consumption and of CO2e . The waste from discarded clothes (pre and post-consumer) can This includes a wide variety of categories production, in turn, puts more pressure on the people in supply chains who sit in landfills for 200 years if made including uniforms and business wear, as well are making the clothes, as well as the from non-biodegradable fabrics – which as casual wear and undergarments. It is a communities impacted by the waste and most clothes are4. water and air pollution. massive industry that is expected to eclipse The industry needs to change, business US$3 trillion globally by 20301. models need to innovate, and clothing companies in 2030 will have to look very different if sustainability and equity are to become the new normal. For clothing companies to be US$3 competitive in 2030 they will have to adapt. They must prioritize business models that can meet demands TRILLION of customers without damaging communities and the environment. The clothing industry is expected to eclipse US$3 trillion by 2030 (GFA 2019) WRAP Changing our clothes: Why the clothing sector should adopt new business models 2 Preface For the industry to be circular and Our hope is that the outputs of the sustainable, companies will need a project will help innovators in business, better understanding of three things. government, and civil society find c.US$500 The World Resources Institute (WRI) and inspiration and opportunities to WRAP’s collaborative ‘Clothing Reuse advance models that meet clothing Market Makers’ project addresses each demand sustainably. BILLION of these topics: Models that dominate the clothing The estimated annual value of clothes industry tomorrow should have 1 Evidence of consumer demand discarded prematurely positive impacts on the environment (Ellen MacArthur Foundation 2017) This report, ‘Changing our clothes: (helping reduce climate change, water Why the clothing sector should adopt stress, and pollution) and society new business models,’ demonstrates (helping address gender injustices and potential mass market appeal for reuse dangerous working conditions). business models. Signed, 2 Understanding impacts of new business models on people Circular business models, however, are and planet From linear to circular only a sustainable solution if they can Two guidebooks to help companies Elizabeth Cook One recent adaptation is a move to help keep clothing consumption within ‘Square Your Circle’ and assess the Vice President of make the industry more ‘circular.’ the planet’s limits. If circular innovations social and environmental impacts of Institutional Strategy focus on incremental efficiency gains & Development, World The traditional ’linear’ model takes raw clothing reuse business models. while ignoring core system changes, Resources Institute; materials, making them into clothes, the scale of production, raw material Board Member, which are used and then discarded 3 Enabling policies extraction, and pollution will continue Sustainable as waste. The shorthand for the linear to grow. Companies will remain reliant An inventory of policies and government Apparel Coalition process is ‘take-make-waste’. on a model that assumes it can extract actions that are enabling or blocking, A circular model attempts to interrupt more raw materials, to make and sell the advancement of clothing reuse the linear process by reusing or more new clothes, to more people, around the globe. recycling clothes before they become more often, forever. Physically, infinite Marcus Gover waste. It is a much needed and growth is an impossibility and the Chief Executive, WRAP potentially valuable innovation, as apparel industry must accept and the annual value of clothes discarded adapt to that fact. prematurely worldwide is estimated to be nearly US$500 billion5. WRAP Changing our clothes: Why the clothing sector should adopt new business models 3 Summary For the most part, the type of brands that citizens shop at does SUMMARY not greatly affect their interest in 90% either recommerce or rental models. New business models are appealing A GLOBAL FORCE 90% of citizens we surveyed in India are to shoppers at all ends of the market. interested in trying at least one There is however more interest in rental WITH A new business model among those who currently shop at higher end brands in the USA and India. GLOBAL IMPACT The larger markets of India 68% of social media comments and the US surveyed showed Consumption of clothing is outpacing utilisation; surveyed for this study conveyed an particularly high interest in new models. Italian citizens, a smaller we are buying more clothes and wearing them less. obvious positive sentiment toward reuse of clothing, indicating demand market, showed similar interests to for reuse fashion. Propositions tested Americans suggesting there is more in our research showed 61% to 90% of demand for rental in Italy than other citizens across India, the UK and the European countries. USA are interested in trying at least one new business model. For four other European countries the range was 51% to 76%. Business models that focus on The new research presented here from increasing utilisation of clothing can WRAP and WRI clearly demonstrates “Citizens ahead of the curve are demanding reduce the overall need for more the potential mass market demand production while driving revenue for these new business models. We new models, and opportunities exist for growth – part of a circular economy. will put forward evidence in this disruptor companies in this space to report that citizens ahead of the Companies in the traditional linear curve are demanding new models, substantially grow their customer base.” economy of ‘take, make, waste’ are and opportunities exist for disruptor locked into this model, and unpicking companies in this space to substantially this in transition to a circular economy grow their customer base. is slow. One of the reasons for a lack of urgency in the establishment is perceived lack of consumer demand for new business models in clothing retail. WRAP Changing our clothes: Why the clothing sector should adopt new business models 4 Contents This is an interactive document. The top toolbar and contents buttons allows you to navigate through the different sections of the guide. WRAP Changing our clothes: Why the clothing sector should adopt new business models 5 Background “Brands and retailers need evidence that BACKGROUND citizens are interested in new ways of CHANGING OUR consuming fashion.” Clothing sales have grown rapidly this The economic ‘size of the prize’ is CLOTHES century. Estimates for the increase in clear, and disruptor companies are consumption globally vary between looking to capitalise. Examples from Consumption of clothing has seen rapid growth 60 percent over 14 years6 to 100 other industries and sectors of such 7 this century. Billions more people are percent over 15 years . companies are familiar. Uber went from a niche way for Silicon Valley entering the middle class globally and During this time, utilisation – essentially employees to join a modern chauffeur the number of times an item of clothing are spending more on clothes. service to a common transportation is worn – has decreased8. Clothes are option for millions of riders around used for a shorter period, or being used the world. Netflix, Spotify and Audible less frequently, or both. have revolutionised the way television, music and books are consumed. Opportunities for innovation Rather than offer products as services, corresponding companies such as Many stakeholders, including clothing WeBuyAnyCar and Ziffit instead resell brands and retailers, recognise an underutilised assets. opportunity here. They see potential economic, environmental, social benefits in increasing the utilisation of clothes. Evidence to inform action There are common approaches to So why is fashion so slow to change? estimate financial benefits, such as Some new companies like Rent the well-established financial accounting Runway and Depop are inspiring existing models, that help companies evaluate brands such as Urban Outfitters or the economics of clothing reuse models. American Eagle to pilot new models, They can assess options for capturing but these are the exceptions rather a portion of an estimated US$500 billion than the rule. Brands and retailers need wasted when clothes are disposed of evidence that citizens are interested before the end of their useful life9. in new ways of consuming fashion. This report provides it. WRAP Changing our clothes: Why the clothing sector should adopt new business models 6 Background BACKGROUND DEFINITIONS Disruptor – a company changing the Linear (business model) – a business Rental – a customer paying the owner Subscription – a commitment by a ‘business-as-usual’, similar to how model designed to generate profit of something, in this case garment(s), consumer to pay a regular fixed amount the car disrupted personal travel by via a straight process from resource to borrow it (or them). The owner of money in return for a set amount of coach and horse.
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