Online shopping offers many perks. No. 1: Not leaving the comfort of your own home. An unexpected side effect, however, is the rise of return rates.
More than a fifth of online purchases of non-food items are returned in the UK, and serial returners — individuals with a habit of frequently returning unwanted or unused items — sent back £6.6 billion in products in 2024, according to an article in The Guardian.
But unlike brick-and-mortar locations that can efficiently handle returns, it’s easier and often more profitable for many online retailers to instead route brand-new, unused items straight to landfills.
In linear economies, materials and goods are taken, used, and disposed without much attention to the negative environmental and social affects. But some clothing retail companies are trying to break the cycle of returns through the lens of circular business models (CBMs), where the focus is to achieve a balance between the economy and the environment.
Clothing retailers need a rubric to assess their current practices, measure the environmental impact of sustainable business practices, and identify further opportunities to increase sustainability.
Assessment tool to achieve sustainable practices
Reimagining online returns is just one area of retail sustainability, but it helped motivate a team from the University of Surrey to conduct research funded by the Chartered Institute of Management Accountants General Charitable Trust, which explored and evaluated CBM’s within the clothing retail industry. The findings are published in the report ‘The Circularity Radar: A Framework for the Circular Economy in Retailing and Manufacturing’.
The goal of the research was to analyse the current state of circular business models and practices in the clothing retail industry and provide a framework for organisations to gain a strategic overview of their practices and chart path forward.
Organisations with circular business models prioritise recycling, reusing, sustainable materials, overall product design, and renewable energy. Researchers identified seven interconnected mechanisms that can create circularity in the retail clothing industry and form the Circularity Framework: strategic organisational positioning, product stewardship, R-strategies (like recycle, repair, refurbish, rethink), social aspects, sustainable materials, sustainable operations, and eco-design.
From these seven mechanisms, researchers created an assessment tool, the Circularity Radar, allowing business leaders to analyse their current practices and identify growth opportunities for sustainability. This quantitative tool can measure, monitor, and communicate an organisation’s sustainability practices and provide instruction when composing their business case for sustainability.
Environmental transparency can be low among fashion retailers, and many are failing to deliver on their sustainability promises, according to the research. The Circularity Framework and Radar provide the foundation to create a circular business model and achieve sustainable business operations.
Whilst there is some overlap with some sustainability reporting standards, the Circularity Framework and Radar are specifically created for the retail and related manufacturing industries and provide more active guidance in conducting strategic self-assessments.
Focus points for a path forward
Adopting a new business model isn’t as simple as flicking a switch — there are external factors that affect the seven mechanisms of circularity. These can include governmental policies, laws and regulations, taxes, customer perspectives, shareholder influence, and more. And the complexities and logistics of transitioning to a circular business model can also be a barrier to implementation.
A multidimensional approach, as the one laid out in the Circularity Framework, accounts for these factors and emphasises collaboration, transparency, and innovation.
Achieving circularity in the retails and manufacturing industries and sustaining it requires a fundamental shift in how things are done but can lead to more efficient solutions that consume less resources. As more consumers favour sustainable businesses and organisations, striving towards a circular business model can lead to competitive advantages.
There are many paths towards circularity, and ‘The Circularity Radar: A Framework for the Circular Economy in Retailing and Manufacturing’ can help your organisation assess current initiatives and identify focus points.