This is part of Retail Outlook, a series of articles running over the next four weeks that explore timely topics and trends for the retail industry in 2020. Click here to see more stories in the series. Did you know that the average Australian buys 27 kilograms of clothing every year yet throws away (cough…recycles) 24 kilograms of apparel a year? Approximately 65 per cent of the clothing we ‘recycle’ usually gets sent offshore to a developing country where it is sent to landfill. And
ll. And somewhere between California and Hawaii there is an island of plastic and floating rubbish known as the Great Pacific Garbage Patch – comprised of 1.8 trillion items of rubbish that is twice the size of Texas and three times the size of France. Well you may not know it – but your customers sure do. Particularly millennials. And it is very important to them. Unsurprisingly, caring for the environment has never been a hotter issue both for society and businesses. And right in the middle of the battleground is retail, which is a huge contributor to the environmental problems we face around the world. In response to a global environmental disaster, the circular economy movement is gaining momentum as brands recognise that a sustainable environmental footprint is the new ticket to play in retail. The circular economy gives new life to products and materials that would otherwise make their way to landfill, letting products have an infinite lifecycle through different uses. Globally, governments and industries are developing initiatives to promote the circular economy, which they claim can potentially deliver economic benefits of $1 trillion globally by 2025. In Australia, state and federal government initiatives have been announced, with $167 million being invested federally to contribute to the circular economy and recycling. This is in part for funding a Circular Economy Hub developed through Planet Ark, planned to launch in 2020 where a marketplace will connect buyers with sellers in the circular economy. The current state in the textile industry While the majority of Australians believe they already contribute to a sustainable circular economy in textiles – via charitable donations, which is primarily recycled clothing – the reality is much different. While charities have given a second or third life to over 285 million items of clothing and hard goods, there is still an estimated 62 million kilograms of textile waste exported by charities yearly. And these charities are spending around $13 million in landfill costs per year. Globally, 85 per cent of textiles are sent to landfill, equating to around one garbage truck load of textiles being sent to landfill or burned every second. When we then recognise that 60 per cent of textiles are made from polyester, what we wear as consumers can be compared to the plastic bottle waste the community is currently up in arms about. Moving towards a more sustainable industry Retailers are starting to take sustainability more seriously, seeing it both as a sales opportunity and risk management strategy to future-proof their business. Customers have shown that they care and sustainability is here to stay. Yet the complexity for retailers to transition into a circular economy can be like navigating a labyrinth, making it difficult to action without sacrificing profitable business models. Retailers should see the circular economy as an opportunity to be innovative, collaborative and explore new business models that connect with their customers. Partnerships are key in a circular economy, ranging from recyclers, resellers, repairers, manufacturers, distributors and customers themselves. An example of a company that has taken the textile circular economy to heart is Nudie Jeans, which uses sustainable and recycled materials. The company has global repair locations for customers to maintain their jeans, as well as re-sell and recycle their jeans. In 2018, the company reported they had repaired over 55,173 jeans, collected 10,557 jeans to resell or recycle, resulting in 44,000 kilograms of clothes being diverted from landfill and saving 386,000,000 litres of water. Global circular resources If retailers are interested in undertaking the journey to becoming part of the circular economy, there are a plethora of resources available to assist them. One of the largest organisations associated with the circular economy is the Ellen MacArthur Foundation, a valuable resource to get education and understanding of the innovative solutions and ideas that have started to form globally in the textile circular economy. An initiative from the foundation called Make Fashion Circular has brought global leaders together from across the retail industry, including innovators, philanthropists, governments and retail brands to stimulate collaboration and innovation for the textile circular economy. The primary ambitions of the initiative are to phase out substances of concern and microfiber release; increase clothing utilisation; radically improve recycling; make effective use of resources and move to renewable inputs. A call to action Retailers should seriously consider the impact of sustainability on the future of their organisations – that is if they aren’t already thinking about the circular economy. Simple ways to engage with the circular economy could be to reduce packaging, identify additional ways to reuse transport material, incorporate sustainable clothing materials, explore with rental and reselling products or identify local partnerships related with the circular economy. The most important step in any journey is the first one, you should consider yours if you haven’t already. Download your free copy of the Australian Retail Outlook 2020 here. Myriam Bentley is senior account manager of clients and markets at KPMG.