Circular Economy and Fashion: the business models

In the last Milanese edition of Re-Think, Shyaam Ramkumar gave us a brief overview on circular economy business models applied to fashion, and how the fashion and textile industry can switch to a more circular economy.


Shyaam shared some quite promising emerging circular business models in the fashion sector, that could help disrupt and transform the industry. To start, he demonstrated how in many industries a lot of value gets generated along the supply chain: materials are extracted, manufactured into products, assembled, and then distributed through retail to the final user. There’s a lot of value that gets added during the pre-use phase and then, after the use, there is a lot of value that gets wasted.


The question Shyaam posed was: how can we make sure that we retain that value and keep those products in use for as long as possible, to minimize the environmental impacts?


Within the circular economy, there are many ways to retain the value of products through reuse and redistribution, refurbishment, remanufacturing, recycling... The idea is to maintain a lot of the value that’s generated along the supply chain and make sure that products are kept in use for as long as possible.


There are five different models for circular economy in the fashion industry, and they’re all becoming very popular. First, are Rental models, used by various companies like My Wardrobe HQ, Designer-24, Rent the Runway and many more. These organizations promote the rental of clothes, so you don’t actually own anything: you can rent dresses or children’s clothing and then, when you’re done with a particular piece, you return it and you’re able to rent another piece of clothing.


Second, there are a lot of platforms and organizations promoting Resale models: when you’re finished with a particular piece of clothing, or you have a lot of clothing in your closet you’re not using, you can put it up on a platform or a marketplace and to sell it to somebody else who might be able to use it. There are a lot of new companies coming up like Vestiaire Collective, The RealReal, Depop, Asos marketplace and many more, to promote the resale of clothing.


In addition to those models, another one is becoming more and more popular: the Repair model. Many companies are promoting the repair of their clothing: for example, Patagonia has the Worn Wear program, Nudie Jeans has a program to provide free repairs of their jeans, Eileen Fisher has Renew program. Organizations like Clothes Doctor and initiatives like Fixing Fashion are encouraging people to repair their own clothes, and many other smaller brands are also promoting their customers to repair their clothes. This model encourages people to keep what they have, patch it up, fix small tears or holes and keep using it for longer.


Shyaam then introduced two Repurpose models, both with different objectives. The first model deals with old clothes that are going to be thrown away, and its purpose is to create new products out of them, whether it’s handbags from jeans that are going to be thrown away or jackets from other kinds of materials.


The second model is about organizations taking deadstock from the fashion industry: material that is not ever sold or scraps from the production process. There is a lot of material waste being generated there, and a lot of designers and companies are trying to repurpose that into new products.


Finally, Shyaam shared the Recycling Model. There are companies that focus on producing finished products from recycling, for example big brands like Patagonia, Adidas and their partnership with Parley, Ecoalf, Prana… These different kinds of companies make clothes made out of recycled materials whether it’s recycled pet bottles or fishing nets or other kinds of materials from the textiles industry but also potentially from other industries.


Then, there is a group of companies within the industry that are creating recycled fibers. They’re not creating finished products, but they’re creating materials for brands to then produce clothing. Companies like Econyl, Orange Fiber, and many others, are really focused on creating the resources of the intermediate materials in order for the textiles and fashion industry to be able to produce more sustainable clothing.


All of the above-mentioned cases are interesting models in terms of what is becoming very prominent within the fashion industry around the circular economy.


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Francesco Castellano

Francesco Castellano holds a Master degree in Business Administration, and he has gathered almost twenty years of experience in research, finance, consulting, and business management. During this time, he was engaged in different types of projects as a consultant at Bain & Company, launched Uber operations in Turin, and worked in the FP&A department at General Electric.Lately, he founded To... Read more

Francesco Castellano holds a Master degree in Business Administration, and he has gathered almost twenty years of experience in research, finance, consulting, and business management. During this time, he was engaged in different types of projects as a consultant at Bain & Company, launched Uber operations in Turin, and worked in the FP&A department at General Electric.

Lately, he founded Tondo, a cluster of organizations focusing on spreading Circular Economy approaches and concepts, and supporting companies in the transition to a clean and circular future. Francesco is also the ideator and coordinator of the Re-think Circular Economy Forum, a format of events organized in many different locations in Italy showcasing the most relevant Circular Economy solutions.

Francesco has been a guest speaker at different universities and events, like Federico II University, Bocconi University, LIUC - Cattaneo University, Pavia University, Padua University, Catholic University, IPE Business School, 24ORE Business School, Campus Party, Torino Stratosferica, Visionary Days.

Francesco is passionate about Circular Economy, Cleantech Innovations, Venture Building and Entrepreneurship.

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