We need to scale alternative ways of doing business to make sure our products are used more and we recover the materials they are made from when they are no longer usable. This way, we can move away from relying on virgin natural resources to grow our business.
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 by decoupling our growth from resource use, while continuing to deliver fashion and style for our customers.
Customer
Our customers’ needs and expectations 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.
Planet
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.
Business
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. CBMs break this chain to keep garments in use for longer through care and repair services and by increasing the number of users through resell and rental. Once they have come to the end of their useful lifespan, collection schemes make sure they are not wasted and help maximise the value of the resources that went into making them.
Our company 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 trialing 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 four broad categories – access, use and care, repair and collect.
Access
Offering customers different ways to enjoy and experience fashion, while keeping products in use for as long as possible.
We are expanding ways for our customers to purchase pre-loved products. Our ambition is to normalise second-hand fashion and make it more desirable.
- H&M customers in Sweden and Germany can now shop a curated assortment of second-hand garments from Sellpy on the H&M website.
- In the US, customers can now access a H&M resell shop hosted by ThredUp
- 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 Curated 2nd Hand gives customers the chance to buy and sell pre-owned clothes in-store. It is available in three cities in Sweden, Amsterdam in The Netherlands, Antwerp and Gent in Belgium plus London and Sheffield in the UK.
- Monki’s resale service, Preloved, offers customers in Stockholm, Sweden the chance to buy and sell secondhand clothing in store.
We are expanding options to rent our products:
- Selected H&M stores in Amsterdam, Berlin, London 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.
- H&M’s Take Care initiative offers customers in 46 markets ways to look after and customise their clothing. The Take Care product range helps customers extend the life of their clothing and is available in 17 markets.
Repair
Helping customers prolong the life of their clothes through repair tips, products and services.
- H&M customers can access repair studios in Ecuador, France, Austria, The Netherlands and six cities in Sweden. H&M’s Take Care initiative also offers customers tips and products to repair their clothing.
Collect
Encouraging our customers to recirculate products ensures that valuable resources don’t go to waste
- COS launched Full Circle, a garment collecting initiative in Austria, Poland, Spain, Italy, France, Sweden, Denmark and The Netherlands that prioritises fixing and repurposing clothes before recycling.
- We offer our customers garment collecting services in almost all our stores. Items collected are reused as products or material before going to recycling depending on their condition. In Europe, this service is run by Looper, our joint venture with Remondis.
Trial and scale
We need to trial different services to find the ones that work best for 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 into being part of our core business.
We’ve already learnt a lot about 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 as convenient and attractive as the traditional linear model. This is why we offer an integrated second-hand offer at hm.com in Germany and Sweden.
It needs to make economic sense to scale initiatives. We address this challenge and discuss how to incentivise a scalable transition in our position paper on circular business models as a means to prevent waste.
We publish our Sustainability Disclosure annually. In this document, we set out our goals and the progress we’ve made in the previous year. Find the latest version here. More up to date information can be included on this page.
