Improved solutions for shared value creation and maximization from used clothes: Streamlined structure of clothing consumption system and a framework of closed loop hybrid business model

Abstract

Underutilization, downcycling, and landfilling of clothes and their material remain challenging problems of the current clothing consumption system (CCS). Past research and the stakeholders of CCS recognize the circular economy as a solution. However, a review of CCS's existing structure, past research, and publicly available information on its industry practices and solutions reflect potential oversight and partial adoption of the circular economy and the unintended loss of value and market share for brands. Our investigation shows that around two-thirds of sample three hundred brands and brand owners do not engage in value maximization activities from used clothes. Furthermore, only four percent of the sample engages in upcycling, and it remains a niche activity as the availability of similar used clothes remains a primary barrier in scaling it up. This analytical investigation proposes an explicit CCS structure. It supports it with a customizable framework of a closed-loop hybrid business model (CLHBM) as an improved solution to scale up and accelerate reuse, upcycling, and recycling of used clothes. It uses a hypothetical example and stylized model to illustrates the potential of CLHBM-approach to generate higher margins and increase the economic pie for brands while reducing the virgin material pie and increasing the product and material life compared to business-as-usual-approach. The paper concludes with a discussion and recommendations for proposed solutions' successful implementation.

Keywords

• Fashion
• Sustainable consumption system
• Circular business model
• Reuse
• Upcycle
• Markdown