Fashioning disruptive business models

Even five years ago few would have predicted how business models would have travelled up the news agenda. The likes of Uber, Airbnb and Etsy have stimulated debate and garnered many column inches to satisfy a growing interest in how young companies are making their money while managing to control (or not) their negative impacts on people and planet in new and interesting ways.

Beyond media attention, the efforts of incumbent businesses have also triggered action within the community of legacy companies keen to turn their organisations into more progressive and forward-thinking entities.

This is certainly happening in the apparel and textile sector which has long grappled with the numerous social and environmental challenges presented – in the field, in the factory and on the shop floor.

“Consumers increasingly view sustainability as one of the determining factors for deciding where they purchase their clothing,” says Peter van der Werf, an engagement specialist with RobecoSAM, an organisation which factors long-term environmental, social and governance considerations into traditional financial analysis enabling it to get a fuller picture of a company’s ability to create value.

He says that consumers rely on information shared by peers and NGOs to shape their opinion of a clothing brand. And messages about shifting patterns of production, reuse and recycling are beginning to penetrate with the buying public, which is more and more aware of the previously unseen non-financial costs of their love of fashion.

A number of companies have focused on creating increasingly closed loop systems, where a linear “take-make-use-waste” system is replaced with a circular model, where products are recovered and recycled – no mean feat for the fashion industry that has traditionally focused on quick turnarounds of seasonal merchandise.

“All segments of the fashion industry can benefit from rethinking their business models,” says Prasanna Colluru, a venture builder at Enviu, an organisation that supports start-up innovators. “A lot can be done to optimise individual processes, but truly groundbreaking ideas will develop only when we try to put together the different processes in novel ways.”

Marks & Spencer is one chain with well established garment take back programmes in operation. H&M has a strategy committing to going 100% circular, “which means certain obvious things like investing in innovation start ups on the material recycling side of things as most of the innovations are still missing there,” according to company’s development sustainability manager, Henrik Lampa.

Others, including Puma and OAT Shoes, have created biodegradable products. Nudie Jeans, Houdini and Elvis & Kresse, for example, have developed businesses based on the principle of clothing rental and repair, promoting longer product lifetime. Nike’s latest annual sustainability report, issued in May, shows that 71% of the products it now sells contain recycled materials.

All of these approaches are important elements in creating a more sustainable clothing system that, if widely adopted, could drastically reduce waste and relieve pressure on the agricultural system at the start of the supply chain. The cotton sector, for example, faces a huge water challenge: for every t-shirt made, around 2,700 litres of water is used in the agricultural process – the same amount of water the average human drinks in three years.

The ethical apparel brand Eileen Fisher’s efforts to create its first zero-waste clothing collection, using almost no new raw materials, is a great example of what might be possible.

But the mainstream shift to new business models is some way off yet. “A lot of initiatives have started and are trying to change behaviour and usher in change,” adds Colluru, pointing to companies such as Aluc and Evernu. “But the time is ripe for more disruptive innovations that can bring about long-term change.”