We need to develop new ways of doing business to make sure our products are used more, used for longer and, eventually, the materials are recovered. This way, we can move away from relying on using virgin natural resources to grow our business.
Circular business models
Why are we introducing circular business models?
We need to take responsibility for the impact fashion has on climate and the environment. Circular business models (CBMs) can help us reduce and limit this negative impact, while continuing to deliver fashion and style for our customers.
Our customers’ needs are changing. Research shows that circular business models are growing up to ten times faster than the traditional fashion market, with generation Z driving the shift. They are motivated by getting more for their money, finding fashion one-offs and a desire to shop more sustainably.
Moving to a circular economy will decrease the amount of virgin resources we use to make products, reduce carbon emissions and pollution, and reduce our impact on biodiversity and natural ecosystems.
CBMs can help us build a resilient and relevant business that is equipped for future legislation, such as EU laws around waste, sorting and collecting. Research by the Ellen MacArthur Foundation shows that business models such as resale and repair could generate USD 700 billion by 2030 and make up to 23% of the global fashion market.
What are circular business models?
Traditionally, fashion has followed a linear business model – take, make, waste. Circular business models break this chain to keep garments in use longer and to make sure that they are not wasted once they have come to the end of their useful lifespan.
Repair, resale, remake and recycling are all examples of how we can keep products in circulation for longer and maximise the value of the resources that went into making them.
Our new goal
In early 2022, we introduced a new goal to double our sales while at the same time halving our carbon footprint. By doubling sales, we don’t mean doubling volume or selling twice as many products – we mean doubling revenue – and CBMs are key to us reaching this target. In a circular system, products generate revenue more than once. A single garment can be rented several times or sold, resold, repaired and remade, offering multiple opportunities to help us reach our goal.
Our circular business models
Across the H&M Group, we are trailing and launching many different types of circular business models to give our customers new ways to experience and engage in circular fashion and choose more sustainable options. These models help us learn what works and what doesn’t so we can scale up services that meet our customers’ needs. They fall into three broad categories – access, use and care, and collect.
Offering customers different ways to enjoy and experience fashion, while keeping products in circulation for as long as possible.
We are expanding ways for our customers to purchase pre-loved products:
- H&M customers can now shop second-hand garments from multiple brands alongside new H&M garments in Sweden by incorporating a curated assortment from Sellpy into its website.
- Customers in three markets can now buy and sell pre-owned clothes through our collaboration with business technology provider Reflaunt. H&M launched H&M Rewear in Canada, while COS offers COS Resell in Germany and the United Kingdom.
- Customers in 24 markets can now shop second-hand garments through Sellpy, and customers in four markets can sell at Sellpy. H&M Group is a majority shareholder in Sellpy and H&M’s website directs customers to Sellpy in seven markets.
- Weekday offers Weekday Curated 2nd Hand in three cities in Sweden giving customers the chance to buy and sell pre-owned clothes in store.
We are expanding options to rent our products:
- Selected H&M stores in Amsterdam, Berlin and Stockholm offer clothing rental services for specific collections.
- H&M HOME started offering rental for occasions and celebrations. Rent a Christmas offered customers the chance to loan festive decorations in five markets.
- Fashion lovers in the UK can rent selected &Other Stories garments and accessories through Hurr Collective online and in Selfridges, London.
Use & care
Encouraging customers to love their clothes for longer and extend the life of their fashion favourites through care and repair.
- H&M’s Take Care initiative offers customers in 46 markets ways to care, repair and customise their clothing. The Take Care product range, which helps customers extend the life of their clothing, is available in 17 markets. Plus, the brand offers repair services through repair studios in six stores.
- COS launched a garment collecting initiative in Austria and Poland that prioritises fixing and repurposing clothes before recycling.
Supporting customers to recirculate products so they can be reused, remade, or recycled.
- We showcased new recycling technologies. For example, H&M ran events for customers in Sweden featuring its in-store Looop recycling machine.
- We offer our customers in-store collection for post-consumer garments across all our brands. We work with partners, who sort these garments for rewear, reuse and recycling.
Putting people at the centre of circular fashion
We know a lot about the environmental impact of a circular fashion industry, but we have lots to learn about the impact on people, including understanding what it means for jobs across the fashion value chain.
In 2021, we worked with several partners on Keeping Workers in the Loop. This report looked at the impact on employment of moving to a circular fashion system and recommended how to create a just, fair and inclusive fashion industry. Since it was launched, we have worked with the report’s key learnings to build our knowledge and to define how we can secure fair and equal circular jobs across our value chain.
Trail and scale
We need to trial lots of different CBMs to find the ones that work best for our us and our customers. Then we need to scale them. If these new models are going to help us reach our climate and biodiversity goals, they need to grow from an idea into part of our core business.
We’ve already learnt a lot about scaling up resale. To make it a sustainable business, we need to build solutions that can help close the gap between customer intentions to shop more sustainably and their actions. We need to make second-hand more convenient and more attractive than the traditional linear model.
Circularity begins at the drawing board
To make sure our products are fit for a circular future, we introduced a new design approach in 2021. The Circulator reskills our product teams to think in new ways and make design decisions that will increase the durability and recyclability of products.