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The circular economy as a solution to the crisis in the world of fashion


The fashion industry has been hit hard by the crisis caused by COVID-19. In 2020, more than two million workers have lost their jobs due to the cessation of production processes, low demand caused by economic uncertainty, and the closure of many physical stores around the world (The Ellen MacArthur Foundation, 2020).





Although it is not the first time that the world must recover from the consequences of a pandemic - as it happened with the Black Death [1347 - 1351], the Spanish flu [1918-1920], and the Ebola [1976], among others (El Correo, 2021) - the Ellen Macarthur Foundation pointed out that "the solutions of the past are not enough for the problems we face today".


The circular economy, used as an economic development instrument that seeks to reduce environmental impact, is a solution. This production model allows reinforcing innovation, reducing dependency and damage to the environment, and creating new jobs.


From 2020 most sales have been through the internet. E-commerce, especially in the fashion sector, has grown faster than expected, creating new challenges and opportunities for consumption. A study of German and UK customers in 2020 found that 43% of people had started shopping online for the first time, and 28% expected to reduce their purchases in physical stores in the future.


In this new situation, there are two new opportunities for circular investment, both with potential growth and the possibility of reducing the risk of future shocks: the business models for renting and reselling clothes and the collection, classification, and recycling of clothes, according to The Ellen MacArthur Foundation (2020).


Clothing rental and resale business models


In a survey conducted in 2020, more than 60% of consumers have indicated that they have reduced their spending on clothing during the crisis, indicating that they want to maintain this behaviour even in a post-pandemic time. In the same way, a large part of them has had to adjust their budget to purchases due to their new economic situations, opting on many occasions for the purchase of second-hand clothes. By having the same element used by more than one customer throughout its useful life, the profit is increased compared to the traditional linear model. At the moment, studies show that people are more likely to rent accessories than clothing.


Collection, classification, and recycling of clothes.


During the last year, there have been numerous cancellations of orders that had already been produced, thus creating a great risk of reaching "product destruction" measures to avoid over-stock in stores. In the city of New York (USA) alone, more than 20 million dollars a year are used in the incineration of textiles, where the vast majority are clothing. Investing in the collection, sorting, and recycling of clothing can deliver favorable results both economically and environmentally.


Investing in the circular economy in the fashion sector has great advantages, such as avoiding the creation of waste, the preservation of water and the environment, the creation of new jobs, and even, in some cities, you can enjoy the reduction of taxes for collection and recycling.



References:

The Ellen Macarthur Foundation. (27/10/2020). 10 circular investment opportunities for a low-carbon and prosperous recovery. Available at: https://www.ellenmacarthurfoundation.org/news/circular-economy-and-the-covid-19-recovery [Accessed 06/13/2021].

S.N. (07/04/2020). Las 10 mayores pandemias de la Humanidad (y cómo se resolvieron). El Correo. Available at: https://www.elcorreo.com/tecnologia/investigacion/mayores-pandemias-humanidad-20200403132555-nt.html [Accessed 06/17/2021].

Grupo industria. (22/03/2019). La ropa que no se compra, se quema. Available at: https://www.grupoecoindustria.com/la-ropa-que-no-se-compra-se-quema/ [Accessed 06/19/2021].



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