Anchoring bias — the tendency to rely heavily on the first information received about a topic, even as new data becomes available — is decidedly real. So when it comes to sustainability in retail, some believe it’s all about, for example, packaging.
“But it’s not just about packaging,” says Scot Case, NRF’s vice president, CSR and sustainability. “It’s also about the products. And how the products are made. And where the raw materials come from.” The ever-evolving “circular economy” is still being defined — and the conversation is becoming a lot more sophisticated.
The circular economy’s benefits
Case says consumers, retail executives, suppliers and manufacturers are realizing the deeper connections. And business models are being refigured in ways that produce more value for customers at a lower price, with higher profits, and improved environmental and social benefits.
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“We’re still in the early phases of the circular economy,” he says. “So it’s not working perfectly yet. It’s easy to criticize parts of it. But some retailers have five-, 10- or 15-year strategies in this space. They’re planning for the future and making money today to fund their ambitions.”
Circular practices are most prevalent in segments like fashion, electronics, construction materials and furniture; used automobiles have been bought and sold for some time, too.
“Some retail executives assume that it’s a low-quality consumer that’s interested in buying resold merchandise,” Case says.
“But when you dig into the demographics, it’s the younger consumers who are most interested. It allows them to trade up to what would otherwise just be aspirational brands. And it’s a way of engaging with consumers and helping build lifetime connections to brands or retailers.”
Circular business models
Some retailers sell gently used and pre-owned products. Others facilitate transactions between consumers. And still others acquire products from their consumers and resell them through their own online sites or apps, authenticating those products along the way.
ThredUp, in its 2023 Resale Market and Consumer Trend Report, noted that the global secondhand market is expected to nearly double by 2027, reaching $350 billion.
In a broader sense, the Ellen MacArthur Foundation notes that the circular economy is based on three principles, driven by design: eliminating waste and pollution, circulating products and materials at their highest value, and regenerating nature.
“A circular economy decouples economic activity from the consumption of finite resources.”Ellen MacArthur Foundation
“A circular economy decouples economic activity from the consumption of finite resources,” according to the foundation. It is “a systems framework that tackles global challenges like climate change, biodiversity loss, waste and pollution.”
In March, Trove — a leader in branded resale and trade-in for world-class brands and retailers — released its inaugural Brand Resale Index: Defining the Resale Experience. Conducted in partnership with OSF Digital, the index evaluated 40 brands in fashion/apparel, outdoor, footwear and luxury, assessing criteria such as brand positioning, commerce and trade-in experiences, “with a general consideration of how the resale business model potentially contributes to environmental sustainability benefits,” the report states.
There are now more than 120 brands with dedicated resale channels, according to the report. REI was ranked as the “overall leader,” thanks to practices like in-store “garage sales,” the ability to buy used gear online through Re/Supply, and the chance to exchange gently used items for REI gift cards. Used gear options are tied into REI co-op membership; more than 1 million items were resold in 2021.
Then there’s Patagonia, which took top honors for brand positioning of resale: The company’s Worn Wear program, for example, is positioned with tag lines like “Better Than New” and “Scars Tell the Story,” and pre-owned items are promoted on mainline product pages. There are also options for repair and recycling.
A new use for QR codes
Jennifer Patrick, global head of packaging and branding at Patagonia, says the conversation has changed in her field, largely thanks to evolving technology. QR codes, which have been around for decades but found a resurgence during the pandemic, are one example.
Patagonia recognizes the codes as a “huge gateway into being able to track your product,” which is important when putting products back into the system to resell, Patrick says.
That is especially the case if the QR codes eventually become part of the product, rather than just printed on a hangtag that will be discarded. Data on that QR code might trace the product’s journey from factory to store to customer to distribution center once returned for repair or resale. It’s possible now, Patrick says, but will take a significant amount of integration before it’s the norm.
On the customer side, QR codes add to Patagonia’s sustainability efforts by cutting back on the need for printed materials.
Research has shown customers primarily look to the hangtag for price. But those willing to read additional info about product features, manufacturing, use and regulations are just as willing to scan a QR code and read the info on a website — and putting that QR code on the product allows the information to be available through repair and reuse.
“We can continue that conversation with customers beyond the point of purchase,” Patrick says. “So, five years down the road, when you’re ready to trade in your jacket, we can talk to you about how to do that. But also, are you interested in some of the events going on at a Patagonia store? Environmental efforts? Or a different jacket?”
Luxury brands embrace circularity
According to the Trove index, category leaders include Arc’teryx (outdoor); Amour Vert (fashion/apparel); On (footwear); and Phillip Lim (luxury). Overall, outdoor brands are pulling ahead — but the largest opportunity in the $100 billion global industry, according to the report, is in luxury.
Ralph Lauren Corporation is one such luxury company working on circular solutions. It’s also a partner in the Ellen MacArthur Foundation Network.
Devon Leahy, head of sustainability at Ralph Lauren, says timelessness has been at the center of the company for more than 50 years.
“From inspiration through to our products’ every use and reuse, our hope is to design for circularity and help people love their products longer,” she says. “This means strengthening our commitment and efforts for systems-level change that considers the entire lifecycle of our products.”
The company introduced a circularity strategy in 2021, including design for circularity, creation of circular customer experiences and advancing a circular product economy. Last year, Leahy says, Ralph Lauren built on that strategy by committing to new time-bound goals, including the “Live On” promise. The promise is a “commitment to enable our past and future products to live on responsibly by 2030.”
“We’re also focused on applying circular principles to our broader design and development process,” Leahy says.
“These will be developed with our design and product development teams in collaboration with sustainability and circularity experts. By 2030, our new products will be designed, developed, manufactured and packaged in alignment with these principles.”
One example is the Cradle to Cradle Certified Gold Luxury Cashmere Sweater, “a reimagined iconic product made to be worn, loved and live on responsibly for generations to come.” It’s the first of five iconic Ralph Lauren products that the company has committed to have C2C Certified by 2025. The work includes a multi-step, complex certification process with the nonprofit Cradle to Cradle Products Innovation Institute.
The company is also connecting customers to a channel that allows them to recycle their end-of-life 100% cashmere products, no matter the brand. Already, Ralph Lauren has seen “strong interest and engagement” from consumers taking part in the program, Leahy says.
Questions to ask
Retail executives, then, have three questions to consider moving forward, Case says. “What are consumers asking for? What are my competitors doing? And what are the opportunities for me?”
Consumer research has shown that in recent years, U.S. consumers have learned how interconnected they are with the rest of the world. They’ve also learned about supply chains, and how “things that happen in the far corners of the economy can have a direct impact on them,” Case says. Likewise, they — and retailers — can influence other parts of the world with their choices, too.