Circular economy models reduce costs and boost sales for major fashion brands

Pictured: A customer using the Farfetch Donate scheme

The two brands first announced the trials, carried out in partnership with ReLondon and QSA Partners, back in early 2019. FW added a ‘gold standard’ repair service to Its new brand as standard, while Farfetch launched two re-commerce offerings.

A new report published today (15 March) outlines the benefits of these trials. FW has seen the costs associated with its returns under warranty decrease by 60% under the programme, the report reveals, with customers increasingly opting for verified repairs over refunds or replacements. This, in turn, keeps materials in use, reducing environmental impacts as well as costs.

Farfetch, meanwhile, developed Farfetch Second Life, which enables shoppers to sell designer handbags in exchange for store credit, and Farfetch donate, a partnership with Thrift+ that enables users to raise money for charity and store credit for themselves simultaneously. The business’s research with consumers after launching these offerings revealed that purchases of pre-owned products replaced a consumer’s purchase of a new item in around 60% of cases. 

Elsewhere, Farfetch has tested a first repair service for products like shoes and bags in partnership with UK-based start-up The Restory and has launched a digital tool helping shoppers to compare the environmental impact of products before purchasing. The offerings are all designed to drive progress towards the business’ overarching ‘Positively Farfetch’ sustainability vision.

The new report does not go into detail about other trials taking part under the scheme, with brands including Adidas and Ted Baker, as they are still ongoing. However, it stipulates that similarly positive results are likely, given the growth of markets for fashion resale, repair and rental in the UK and beyond.

Both Farfetch and FW have committed to making the trial offerings more permanent and to exploring further circular economy models.

“We know there’s more we can do, and we’re really encouraged by our initial work on repairs,” FW’s head of quality and ESG Sara Asmoarp said. “QSA and ReLondon helped us develop a circular business model that fits our brand perfectly ad we will definitely be testing out more circular options with our customers in the future.”

Farfetch’s global director of sustainable business Tom Berry added that the collaboration “helped to build a credible business case and brought credibility to [the firm’s] environmental assessment of the benefits of recommerce.”

Broader benefits

Aside from the financial returns associated with circular economy models and the reduced environmental footprint, both FW and Farfetch said they experienced higher levels of customer engagement due to the circular models.

A recent study from global consultancy Kearney found that similar benefits were being felt by dozens of businesses with circular economy models across the world.

The study was based on a survey of 150 companies globally in sectors including consumer-facing and B2B retail. 51 of these companies were classed as circular economy “leaders”, meaning that either their core business model is non-linear, or that they have recently significantly expanded offerings in this space.

In this group of leaders, 2% of respondents reported revenue increases since either launching or scaling up circular economy offerings. This was partly due to an uptick in customer loyalty and brand recognition. Moreover, 38% reported cost-savings benefits.

Join the conversation at edie’s Circular Economy Inspiration Sessions

On Thursday 25 March, as part of its special Circular Economy Week of online content and events, edie is hosting three live, interactive webinar presentations and discussions – all dedicated to accelerating the transition to a zero-waste economy. 

Called the Circular Economy Inspiration Sessions, the three events, range from Q&A style debates with circular economy experts, business-led panel discussions and a masterclass. Experts from organisations including the Ellen MacArthur Foundation, Zero Waste Scotland and The Body Shop are taking part. 

For full details and to register, click here. Tickets, which give holders access to all three events live and on-demand, cost £49 plus VAT. 

Sarah George