bussiness circular models

New circular business models: Decoupling production from profit in the fashion industry

In the last decades, the fashion industry has increased the levels of production to such an extend that it has become one of the world industries with the highest negative impact on the environment. Despite this growth in production though, the profit margins of main apparel retailers have decreased considerably in the last few years, due to lower prices and lost revenues from overstock, stockouts and returns.

According to the last Ellen MacArthur Foundation’s report (2021), new circular business models, such as resale, rental, repair and remaking, present an opportunity for decoupling revenue streams from the extraction of resources, that is: get more revenue from fewer new products, making the most of all that has already been invested in the production.  Lower needs for raw materials imply reducing waste and pollution while confronting other environmental challenges driven by these principles: eliminate waste and pollution, circulate products and materials, and regenerate nature

As stated in Ellen MacArthur Foundation’s paper,” Circular business models represent a significant opportunity for new and better growth in the fashion industry because they decouple revenue streams from production and resource use, like re-selling unsold stocks.” 

circular business models

These is one of the main reasons why these new circular models have the potential to grow from 3.5% of the global fashion market today to 23% by 2030 and continue growing as customers increasingly abandon old ways of consuming fashion and become more environmentally aware.


The European Commission presented in March 2020 a new Circular Economy Action Plan which includes proposals for the design of more sustainable products, the reduction of waste and the empowering of citizens.

The circular economy is a model of production and consumption which encompasses reselling, sharing, leasing, reusing, repairing, refurbishing and recycling existing products and materials as many times as possible. It contrasts sharply with the traditional lineal economic model, mainly based on the concept of ‘use and dispose’.


Fashion brands you don't want to miss

Be first to discover new arrivals of unsold and shop return fashion collections from brands. Only professional channel

Need help?