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Embracing Innovative Business Models for Sustainable Fashion

Social Innovation
Published on:

As the world grapples with sustainability issues, industries renowned for their environmental impact, such as fashion, face increasing scrutiny. A recent research thesis has shed light on alternatives to environmentally detrimental linear models prevalent in the fashion industry. This article, authored by SASI Master's student Andrea Murguia under the guidance of Professor Sam Aflaki, summarizes the thesis, “Sustainable Business Models in the Fashion Industry”, and delves into these findings, revealing innovative ways to navigate towards sustainability. 

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Copyright: altitudevisual

Sustainable Business Models: Unearthing the Potential

The research highlighted three distinct categories of sustainable business models with the potential to reengineer the fashion industry: Efficient Material-Technical Loops, Effective Product-Service Loops, and Social Collaborative Loops. Each model proposes transformative solutions by questioning conventional norms and addressing salient environmental and social concerns.

Efficient Material-Technical Loops: The Rise of Sustainable Manufacturing

Under this category, the research analyzed sustainable manufacturing practices. Companies manufacturing garments with eco-friendly materials and techniques illustrate the potential for responsible production and social development to go hand in hand. According to the State of Fashion 2023 Report by McKinsey & Company, "The materials upon which the fashion industry is dependent are part and parcel of the industry’s move to improve its environmental impact and meet the sustainability expectations of customers and regulators alike."


Addressing challenges in various domains (…) requires concerted efforts from industry stakeholders, policymakers, and consumers.

 

Effective Product-Service Loops: Prioritizing Functionality over Ownership

The research further delved into innovative product-service loop models that value functionality and access over ownership. Jennifer Hyman, CEO of Rent the Runway, articulates the consumer's mindset stating, "The average consumer cares about making smart choices, [about] not being ripped off. She is thinking about how often she's going to use something for." These models decrease the need for excessive consumption while ensuring an improved customer experience.

Social Collaborative Loops: Cultivating Sustainable Connections

The third category highlighted social collaborative loops, encouraging connections among various stakeholders in the fashion industry to cultivate sustainable practices. Max Bittner, CEO of Vestaiire Collective, emphasizes the future importance of secondhand goods stating, "Secondhand goods will definitely play a huge role in the future fashion landscape. That trend is not reversible." These platforms extend the lifespan of fashion items, promoting a more sustainable form of consumption.

Driving Sustainability: Challenges and Success Factors

The research also brought to the fore challenges and success factors inherent to these sustainable business models. It highlighted the importance of consumer behavior change in driving the success of all sustainable models, necessitating educational and awareness campaigns.

Critical success factors identified by the research include strategic partnerships, operational expertise, technological infrastructure, high-quality materials and products, and strong supplier relationships. For resale or rental companies, elements such as streamlined processes, curated offerings, and rigorous quality control measures were deemed imperative. As Business of Fashion, 2021, puts it, "Every item for sale on a secondhand marketplace must be sorted, priced, photographed, and described in a listing."

Paving the Way Forward

The research underscores the need for holistic change within the fashion industry. Addressing challenges in various domains, including business culture, knowledge gaps, technical limitations, and environmental considerations, requires concerted efforts from industry stakeholders, policymakers, and consumers.


As the industry evolves, concepts such as zero-waste design, resale and repair models, and the role of luxury fashion in rental and resale services gain traction. Digitalization emerges as a significant enabler of circularity, with Vestiaire Collective's CEO, Max Bittner, cautioning, "Consumers and technologies are evolving at a crazy speed, and if you’re not willing to disrupt yourself, someone else will."

Method

We used business case studies to make the comparison between the different categories of sustainable business models. We also used both primary and secondary information to fill up the information required for such comparative analysis. To achieve this, we conducted interviews with business experts, and complemented the information gathered with secondary sources from articles, webinars, and podcasts.

Conclusion

In sum, the research offers compelling insight into the transformative potential of sustainable business models in the fashion industry. The identified models—Efficient Material-Technical Loops, Effective Product-Service Loops, and Social Collaborative Loops—present diverse avenues for businesses seeking to balance profitability with ecological responsibility. Additionally, the study of business examples and the statements of industry experts further illustrate the key challenges and drivers to adopt these new models.

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