Retailers could benefit by selling used clothing

In a report published today (February 6) entitled ‘Evaluating the financial viability and resource implications for new business models in the clothing sector’, WRAP looked at the commercial viability of a number of alternatives to “make-buy-use-dispose” business models. These included large scale hire of clothes and the repair of garments by retailers.

The publication of the report coincides with the launch of the Circular Economy 100 (CE100) programme of which WRAP is a pioneer member. The CE100 is a global alliance announced by the Ellen MacArthur foundation designed to accelerate progress towards a circular economy by bringing together 100 businesses over a three year period. Companies which have already joined the programme include M&S, Coca-Cola, Ikea, Morrisons, Renault, B&Q and the National Grid.

WRAP said its report on clothing highlights how new business models implemented by retailers could help deliver a circular economy. The research takes into account realistic estimates of the required investment, operating costs and sales value and shows how the life of clothes can be extended and help prevent them being prematurely discarded.

Models

The five models analysed by WRAP were:

• Retailers or manufacturers providing repair and upgrading services for their own garments;
• Retailers providing radical new large-scale leasing service;
• Retailers providing radical new large-scale services for one-off hire;
• Retailers offering a re-sale section for pre-owned own-brand garments within their store; and,
• Peer to peer exchange.

“As well as generating profits, the re-sale of pre-owned garments model is one of the most effective at generating waste savings over the long term. Based on this research, the simplicity of the model, means any retailer could implement it.”

Dr Liz Goodwin, WRAP

WRAP said each business model included in the study had its own merit however model four, whereby retailers offer a re-sale section for pre-owned garments, was found to provide the quickest payback period. WRAP said it is one of the most commercially viable schemes over both long and short term periods as retailers could see a return on their investment within two years. However, models one and five (repair and peer to peer exchange) were found not to provide any payback under the conservative scenario used in the study.

In model four, a fashion retailer would offer an incentive for their customers to return their used garments (bought from that retailer) to a store. The garments would then be sent to a central warehouse for sorting, cleaning and re-styling and distributed back to stores carrying the ‘pre-owned’ collection.

WRAP said the success of the model was largely down to the fact that it works in the existing retail format and therefore offers a low cost base and rapidly generates profits. It is also one of the most effective at generating waste savings over the long term in both scenarios.

It added that consumer research indicated that there is significant interest from consumers in returning clothes to retailers in exchange for a financial reward with nearly two thirds of respondents would consider using a retailer buy back scheme and 23% said they would buy more second hand clothes if their choice was improved.

Benefits

Dr Liz Goodwin, chief executive of WRAP, said: To stay ahead in todays competitive markets companies need to consider the way they do business. The traditional model of buy-use-dispose can be improved when you consider the significant commercial value that can be realised from used clothes.

Discussing the benefits of the scheme, Dr Goodwin said: As well as generating profits, the re-sale of pre-owned garments model is one of the most effective at generating waste savings over the long term. Based on this research, the simplicity of the model, means any retailer could implement it. This could be done in partnership with the charities and recyclers to increase overall levels of re-use, bringing benefits to the whole supply chain.