Clients, consumers, and investors increasingly expect businesses to operate ethically and transparently, prompting leaders to rethink how they make decisions, grow, and hire.
Amid growing pressure for sustainability and transparency from regulators, stakeholders, and society at large, organisations must shift from a linear to a circular economy.
A circular economy is designed to reduce waste through strategies like recycling, designing products to be durable, and regenerating ecosystems instead of depleting them.
The goal is to decouple economic growth from resource consumption.
In the report, The Circularity Radar: A Framework for the Circular Economy in Retailing and Manufacturing, a research team led by Professor Regina Frei from the University of Surrey provides analyses and a practical framework for businesses in the retailing and associated manufacturing space who are eager to embrace circularity and sustainability.
Product returns are a barrier to sustainability
Traditional business models in retail and manufacturing often follow a linear path: extract, produce, consume, discard. This linear approach has led to serious environmental and social costs, from depleting natural resources to increasing waste.
The Circularity Radar: A Framework for the Circular Economy in Retailing and Manufacturing report highlights that the increase in product returns — especially brought on by online shopping — is a significant source of more waste being produced, furthering the negative environmental impact.
With high rates of returned products, companies face financial losses, increased emissions, and more resource consumption. Many products cannot be resold, or they need additional handling.
Circular business models offer a response and solution. New technological innovations are currently changing product returns. Concepts like “try whilst the courier waits,” peer-to-peer shipping, and digital size-finders can all help reduce waste, improve the resale of returned items, and improve customer satisfaction.
The road to circularity is complex and requires changes across design, operations, supply chains, and engagement from consumers. Innovations are needed to tackle inefficiencies and support the change towards keeping products in circulation and reducing environmental impact.
Embedding circularity using a framework and a self-assessment
The circularity framework is a framework that entails seven key aspects:
Eco-design
Sustainable operations
Sustainable materials
R-strategies (e.g., repair and recycling)
Product stewardship
Social aspects
Strategic organisational positioning
The purpose of the framework is to establish a strategic lens for your organisation so you can assess where you stand and where your business can improve.
Building on the framework, the Circularity Radar is a digital self-assessment tool created specifically for retail and manufacturing industries that guides you through a structured evaluation of your current practices so that you can identify opportunities and measure progress.
The tool is designed to be user-friendly and highly customisable, allowing you to tailor it to your organisation’s needs and run “what-if” scenarios to explore different sustainability strategies.
Consumer feedback: Retailers lack transparency
The Circularity Radar: A Framework for the Circular Economy in Retailing and Manufacturing report reveals that, despite growing environmental awareness, most of the world’s largest clothing retailers score low on environmental transparency and circularity, with 12% scoring zero out of 100 points on a weighted environmental and sustainability index.
Only a small number of brands show a strong commitment to sustainability. Viewing the low scores from a consumer perspective, there are both risks and opportunities.
Businesses that fail to enhance their environmental approach risk facing backlash from increasingly eco-conscious consumers and tightening regulatory requirements; those adopting circularity will gain a competitive advantage.
Interviews and workshops with practitioners, academics, and consumers exemplify some of the barriers and motivators to adopting circular business models.
Important motivators for adoption include value creation from an environmental, social, and financial standpoint; increased regulatory compliance; and technological innovation. Barriers to adoption vary, from financial and operational challenges to consumer attitudes and knowledge gaps.
A circular, sustainable future requires collaboration and policies
The path to a truly circular economy requires collaboration from people across the organisation, as well as external partners.
The research in the report urges regulators to support more innovation through incentives and to create platforms where knowledge can be shared.
Policymakers, entrepreneurs, researchers, and consumers all have a role to play in the adoption of circular practices. As the circularity radar exemplifies, shifting to circularity is a strategic and practical challenge.
With the proper framework, tools, and collaboration, businesses in retail and associated manufacturing can reduce their environmental footprint and discover new sources of value.
Read the full report and explore the digital, interactive tool.