NATIONAL INSTITUTE OF FASHION TECHNOLOGY

PANCHKULA, HARYANA
Department of Fashion Management

END TERM JURY ASSIGNMENT

Submitted to: Submitted by:

MR. DEEP SAGAR ANUSHKA KHURANA (MFM/21/231)

Assistant Professor JYOTIKA BHARDWAJ (MFM/21/458)
KRITIKA BAJAJ (MFM/21/318)
MAHIMA(MFM/21/1161)
SHRISHTI GUPTA (MFM/21/268)
BIG DATA ANALYTICS

Practical solutions

for circular business

models in the

fashion industry

RESEARCH ANALYSIS
Journal name: Elsevier
Title: Practical solutions for circular business

models in the fashion industry

Author: Voicu D. Dragomir, Mădălina Dumitr
The Bucharest University of Economic Studies,

Bucharest, Romania
Published: 10 March 2022
PROBLEM STATEMENT

Leverage blockchain technology to efficiently track and

optimize the production process as circularity solutions in
the fast fashion industry value chain, as an important
instrument to reduce the environmental impact while
imposing strict rules in upstream supply chain of industry's
largest companies
 Introduction
The fashion industry uses significant amounts of
resources and generates pollution and waste.
The fact that clothes are no longer kept and cherished
by their owners adds to the fashion industry’s
environmental impact, generating large quantities of
post-consumer waste.
The impact is seen throughout the long value chain of
the industry, from the design stage to the disposal of the
product.
Circularity is one solution that reduces the impact of fast
fashion on the natural environment.
 What is circular economy?

The circular economy is a closed-loop system , in

which products are used, reused, and transformed
into other types of resources .

Through circularity, the environment is protected

while the company maintains profitability .

The circular economy considers the entire product

life cycle and all stakeholders in the value chain .
It can be defined as ‘an industrial system that is
restorative or regenerative by intent and design’ .
RESEARCH FOCUS

The purpose of this analysis of the research paper is to highlight the practical
implications of proposed circularity model for fashion companies and standard-
setters
This research paper focuses on the empirical evidence on practical circularity
solutions adopted by the largest companies, (Gap, H&M , Inditex Group , VF Corp)
in the fast fashion industry.
The research shows that big players in this sector have created a complex system for
reducing their environmental impact while imposing strict rules in their supply
chain.
At the same time, these companies educate their customers on circularity and
promote recycle-or-reuse consumer habits.
A business model with attributes of the circular economy implies ‘creating value by
exploiting value retained in used products to generate new offerings’
This model comprises eleven stages:
PRODUCT DESIGN,
VIRGIN RAW MATERIAL EXTRACTION AND
PROCESSING,
TEXTILE AND MATERIAL PRODUCTION,
PRODUCT MANUFACTURING,
PACKAGING AND RETAIL, CUSTOMER USE,
POST-CONSUMER GARMENT COLLECTION,
RECYCLING FIBERS AND MATERIALS,
PARTNERSHIPS, AND TRANSPARENCY.
CIRCULARITY

IN THE FAST

FASHION

INDUSTRY
 Methodology
This survey uses source material represented by corporate disclosures in the annual sustainability

reports of some of the largest garment retailers in the world.

Content analysis was the methodology used for extracting relevant information from corporate

sustainability reports
Corporate sustainability reports are one of the main instruments of on sustainability issues and

used as an primary data in the paper.

The data is categorized into five implementation phases: research, strategies/guidelines,

implementation at scale, quantitative, and targets.

The purpose of this paper is to provide rich empirical evidence on practical circularity solutions

adopted by the largest companies in the fast fashion industry. The sustainability reports of six

global players were analyzed using a circular value chain model.

Comparative perspective on these entities is also provided, regarding how circularity solutions are

implemented in the value chain.

THEMATIC ANALYSIS

Research Problem -

Which practical Circular economy goes

solutions do fashion beyond simply recycling.
retailers adopt in
implementing circular
business models?

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.1

The fashion industry's primary

SYNTHESIS resource is virgin fibre, but the
OF circular economy model encourages
CIRCULAR the use of recycled fibres.
BUSINESS
MODELS IN
THE FAST Traceability is an important feature
FASHION of circular models because it is both
INDUSTRY an input and an output of the
process.

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.2

The Product design stage is connected to a

company’s strategic goals but also to
PRODUCT innovation and research efforts.
DESIGN
The main strategic goals are designing
products with recycled materials, products to
be repaired or repurposed, and products to
be recycled (Gap, VFC).

For example - The focus is on incorporating new

fibers and materials of renewable origin that
have a lower environmental impact (Inditex).

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.3

Companies have imposed strict policies

regarding their sourcing of materials and
fibers.
VIRGIN RAW
MATERIAL
EXTRACTION H&M purchased 100% of committed fiber
AND TEXTILE volumes from organic cotton farming.
PRODUCTION
OVS purchased cotton through the Better
Cotton Initiative (BCI), promoting best
practices to improve worldwide cotton‐
growing standards.

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.4

Water use appears to be a prominent

concern in the manufacturing stage.

Circularity principles are applied to water

PRODUCT
MANUFACTURING consumption, reuse, and purification.

Companies have implemented different

solutions to achieve these goals:
introducing technologies to curb water
consumption, such as denim wash programs
that conserve water in the laundry stage
(Inditex, Gap, OVS, H&M), etc.

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.5

Packaging is a stage in the value chain that creates a major

environmental impact because of the quantity of waste it
generates, either in stores or in the customer’s home
PACKAGING,
DISTRIBUTION, (H&M, PVH) committed to Canopy’s Pack4Good12 initiative to
AND RETAIL responsibly source wood‐based packaging.

On the other hand, H&M committed to replacing single‐use

plastics with FSC‐certified paper or removing them altogether.

Inditex disclosed that it covered the cost of collecting

packaging from consumers and sending it to an authorized
waste management organization.

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.6
In order to "go green," consumers are given a practical
incentive, such as the choice of recyclable or recycled fibres,
investigating the origin of the materials, and recycling
unwanted clothing.

OVS created a simple guide called ‘Eco Valore,’ which

CUSTOMER USE explains to users the specific environmental impact of each
item of clothing (the amount of water used to produce the
item, the CO2 emissions generated by manufacturing, and
item recyclability).

Companies insist on maximizing a garment’s useful life by

collecting used clothes, cleaning, repairing, and reselling or
renting them

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.7

The primary objectives of circularity are to reduce resource

consumption and prevent transfers to landfills.
POST-CONSUMER
GARMENT
Gap and H&M encourage the customers to turn in used clothes
COLLECTION AND
for shopping credit.
RECYCLING

H&M launched a collection using Circulose

Inditex launched products made with 14 thousand tons of

recycled materials

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.8

Collaborations give access to consumers who are eager to

take part in recycling programmes as well as new concepts or
technologies.

COLLABORATIONS
To create new fibres, technologies, and digitalization
WITH OTHER
processes, businesses worked with different organisations,
ORGANIZATIONS
universities, and start-ups.

VFC’s Timberland brand partnered with several NGOs to

collect, donate, reuse, and recycle clothes f recycled materials
in the UK and the US

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
 4.9

Transparency in the supply chain is essential for the

circular economy. The adoption of the Higg Product
Tools is the key strategic factor in this sector.

TRANSPARENCY
Customers can view details on each item's materials,
AND TRACEABILITY
factories, environmental impact, and recycling
alternatives via these tools further down the supply
chain.

P R ACT I CAL S OL UT I ONS F OR CI R CUL AR B US I NE S S MODE L S I N T HE F AS HI ON

I NDUS T R Y
IDENTIFICATION
OF GAP
There isn't complete transparency regarding
what happens to old clothing when it is collected
from customers.

Circular Fashion primary Lack of knowledge and awareness about the

objectives is to reduce waste quality of the materials that prevents
transfers to landfills and consumers from making optimal decisions.
decrease the use of resources.
However, without participation of
consumers, it cannot be fulfilled.
RECOMMENDATION OF GAP IDENTIFIED

Selling the product in the

right setting. The Demonstrate

acceptance of circular through the process
fashion products derives once the clothes are
from the product itself, the collected from the
sales process and consumer.
communication (before, Transparency
during, and after allows shoppers to
purchase) - INCREASE THE make better
AWARENESS THROUGH decisions
DIFFERENT STRATEGIES
AT A GLANCE

Circularity is one solution that reduces the impact of fast fashion on the natural
01
environment.

In the circular economy, the focus is on producing goods that can be reused in the same
02 form or an upcycled/downcycled form, whereas in the linear economy, the goods are
sold, used, and become waste.

Circular economy implies creating value by exploiting value retained in used products
03
to generate new offerings.
 Model of Circular
economy in Textiles

Transparency can be increased throughout the supply chain using

instruments such as blockchain technology- Blockchain connects
the apparel supply chain with a real-time flow of data, replacing
fragmented data with a single, immutable ledger that is visible to
all permitted parties. This allows retailers to build more customer-
centric supply chains that prioritize authentication and trust.

In circular models, stages like Recycling fibers and materials,

Textile and material production, and Product manufacturing are
considered upstream. However, post-consumer garment
collection, customer use, and ensuring transparency and
traceability are still underdeveloped. These stages are considered
downstream.
GAPS IDENTIFIED

01 There are more facts but lack suggestive methods.

02 No mention of AI (for demand forecast)

 1) Companies to disclose all the sustainability numbers
and not hide them

2) Set benchmarks for each step of the circular cycle

Recommendations
and Future scope 3) Fashion industry as a whole to set up a standard cyclical
process template that is to be used by every company
within the domain

4) Leverage blockchain technology to efficiently track and

optimize the production process
 Conclusion
The circular economy, which is characterized as "an economic model wherein planning, resourcing, procurement,
manufacturing, and reprocessing are planned and controlled, as both processes and outputs to optimize ecological
functioning and human well-being," has been shown by sample businesses. The comparison findings show that there
isn't just one circularity model for the textile sector. Additionally, there are other ways that huge fashion stores
implement the circular economy. Global industrial networks must be coordinated for the circular economy to
function effectively. These findings might serve as a foundation for future theoretical advancements. A useful study
project would be to categorize circular business models in the fashion sector. Through a qualitative analysis of the
perspectives of stakeholders, the future study may offer alternatives to the fast fashion industry's existing business
model.
 Refer to the research paper here:

https://www.sciencedirect.com/science/article/pii/S2772390922000130#f0005