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Arc’teryx, Zalando and H&M ask how to ‘make money without making more clothes’

Eight fashion brands have banded together to form The Fashion ReModel, a project that hopes to create a $700 billion market for reuse and recycled clothes. Read More

(Updated on July 25, 2024)
Shredded denim
The project seeks to help the fashion industry build a business case for circularity. Credit: Shutterstock/nnattalli

Arc’teryx, Zalando and H&M have joined a new organization to create a market for reused, rented, repaired and remade clothes that could be worth $700 billion by 2030, according to the Ellen MacArthur Foundation (EMF).

The nonprofit is leading them and five other companies in The Fashion ReModel project, a three-year undertaking.

Fellow early members Primark, Arket, Cos, Weekday and Reformation held their first working session in London two weeks ago.

“The Fashion ReModel is really designed to bring front runners from high end to High Street to prove it’s possible to scale circular business models,” Jules Lennon, fashion lead at EMF, told GreenBiz. 

“And the project asks the question, how can we make money without making more clothes?” she said May 28 at the launch of the Fashion ReModel at the Global Fashion Summit in Copenhagen. 

EMF hopes scores of additional organizations will join Fashion ReModel.

“Even in that moment, in the audience at the end, we were just swarmed with people coming to talk to us about it,” Lennon said later. “And then, I mean, over the following days, literally hundreds of people reached out. It was really unexpected.”

High emissions, lots of waste

The effort seeks to break the industry’s high-emission waste habits. According to the EMF:

  • Fashion contributes 2.1 billion tonnes of greenhouse gases annually, 4 percent of the planet’s total. Circular economy models can slash one-third of that and put the industry in line with the Paris Agreement.
  • Companies have doubled the amount of apparel produced between 2000 to 2015. The number of times consumers rewear their clothing has dropped by 36 percent in the same period.
  • About 3.5 percent of the global fashion market, worth $73 billion, had a circular business model in 2021. That could grow to 23 percent and $700 billion in the next six years, according to EMF.

“We’re under no illusion that circular business models currently offer many economic and environmental benefits,” Lennon said. “However, those are not always realized.”

How The Fashion ReModel will work

EMF, based on the Isle of Wight in the U.K., consulted with 150 NGOs, academics and apparel businesses before setting up the project. It will work on a single topic for about nine months, sharing “bite-size learnings” along the way, Lennon said. They will meet in person three times each year for design sprints.

Participants at the London meeting focused on financial issues that sometimes impede circularity. “Is it understanding financial accounting? Is it changing financial KPIs? Is it something else? It’s codefining what’s the entry point to making the most progress and then working together with that,” Lennon said.

Companies are required to report annually, in absolute terms, their progress toward growing a certain percentage of revenue by 2027 from circular business models.

EMFFashionRemodelfigures
Consumers are buying more clothes more often, yet rewearing them less. Credit: Ellen MacArthur Foundation

Arc’teryx is keen to ‘question the status quo’

“Partnering with leading voices from across the apparel industry, we’re excited to question the status quo and share our experiences in building out circular business practices.” Dominique Showers, VP of the ReBIRD circularity program at Arc’teryx, told GreenBiz via email.

The outdoor company’s ReBIRD programs include “care and repair, resale and upcycling” options for customers.

Arc’teryx is aiming to reach net zero by 2050, Showers said. That includes reducing Scope 1 and 2 emissions by 90 percent and Scope 3 by 42 percent by 2030.

Arc’teryx is among the many companies that have launched sites for reselling clothes in recent years. Others include Carhartt, Lululemon and Doc Martens.

Zalando kept 6 million items out of the landfill

Berlin-based online retailer Zalando kept 6.3 million products in use between 2020 and 2023, falling short of its target of 50 million items. Zalando’s circular revenue target was based on its existing pre-owned sales business, which offers roughly 270,000 items, Pascal Brun, Zalando’s VP of sustainability told GreenBiz. The company booked total revenues of $11 billion last year. 

“We want to embrace the role of an enabler for a more sustainable industry, serving as a catalyst and connector to drive progress by connecting diverse stakeholder groups,” he wrote.

H&M seeks ‘multiple transactions of the same product’

“It’s not about selling more; it’s about broadening our revenue streams with sustainability at the core of how we do that,” an H&M Group spokesperson told GreenBiz via email. The company’s multiple circularity-related projects include backing startup Syre with a promise to buy $600 million of its future product, recycled polyester.

“This will allow us to provide our customers with more sustainable choices while at the same time enabling multiple transactions of the same product.”

Genesis in jeans

The Fashion ReModel emerged in part from the EMF’s Jeans Redesign project. That effort engaged 100 organizations from 25 nations, including fabric mills, garment makers and brands such as Gap, H&M, Primark and Wrangler. 

From 2019 to 2023, they explored whether it was possible to make long-lasting, recyclable jeans with cellulosic fibers including cotton, grown with regenerative practices. For instance, jeans that last 30 washing cycles and include specific care instructions met the durability requirements. Their buttons, zippers and other hardware also had to be easy to take apart.

“In 2019 that was a valid question to ask, because it wasn’t known,” Lennon said. “In 2024 that wouldn’t be the right question to ask, actually, because that’s not a pioneering question anymore.”

Seventy-two percent of participants made 1.5 million pairs of jeans meeting the project’s guidelines to make durable, recyclable jeans with traceable, nontoxic materials. The impact of the project extended beyond its participants, according to Lennon.

Diesel and Gucci said later that although they did not formally engage in the Jeans Redesign, they used its guidelines to make new, circular products, Lennon said.

“With the Fashion ReModel the question to ask is, is it possible to scale circular business models?” Lennon said. “Is it possible to actually increase your revenue from circular business models? Hopefully in four years time, I would sit here and say, ‘That’s not the right question to ask anymore.’”

The revenue problem

Revenues for circular fashion remain tiny, according to Richard Wielechowski, senior investment analyst at Planet Tracker. “Moving from the linear model to circular is not easy,” he said. “The industry has developed an efficient linear model based on selling ever more items.”

Investors in brands will question the profit and loss issues around circular products, the impact on sales growth, margins and return-on-capital during a business model transition. “What are the risks of being a leader in a transition? Could you lose sales to linear hold-outs?”

“In my view, the path towards circularity is difficult and the exact path to take uncertain,” Wielechowski said. “I therefore fear that it will remain something that brands tinker with rather than commit to wholeheartedly and thus any change will be slow.”

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