The Push for Circularity: Making Circularity in Retail Possible

Over the last few years, the concept of a circular economy has grown in significance as individuals and businesses aim to reduce waste, conserve resources and promote sustainability. 
For the retail industry specifically, the circular economy presents unique opportunities to rethink traditional business models and transform the way products are designed, produced and consumed.

However, the transition from theory to practice is not without its caveats. There are various obstacles to overcome and to be considered when implementing circular principles. The aim of this blog post is to not only address areas of concern, but also to provide real-world examples of how circularity can be applied.  With that in mind, we will discuss:

• Conflicting trends in relation to circularity
• Practical examples of companies who have adopted circular principles
• Why retail has the potential to be a pioneering industry for the circular economy

Together, these points demonstrate not only the current state of circularity, but also its potential and ability to be adopted into a retail company’s business model. 

Diverging Directions

• The Corporate Sustainability Reporting Directive (CSRD): This is a law that requires companies to "disclose information on their risks and opportunities arising from social and environmental issues", which enables a wide variety of stakeholders - from investors to consumers - to "assess the sustainability performance of companies".
• The Energy-Related Products Directive (ErP): This incentivises both manufacturers and distributors to produce more energy-efficient products.
• The Extended Producer Responsibility (EPR): This requires manufacturers and distributors to be responsible for the environmental impacts of their products throughout their life cycle and ensures that retailers take back electronic equipment, even if the consumer did not purchase it from them.
• The Green Claims Directive, the Consumer Rights Directive and the Unfair Commercial Practices Directive (UCPD): As a means of combating greenwashing and enhancing product durability and repairability, these directives are designed as a means of not only setting clear criteria for environmental claims and practices, but also aiding in the foundation of a circular economy within Europe.  

More information about the CSRD and what it entails can be found in this blog post: The CSRD 2022: Step by Step Towards Greater Sustainability.

However, despite the upswing of legislation and the creation of laws to combat unsustainable practices, the circularity rate has been getting worse throughout the years. According to the Circularity Gap Report 2023, the global percentage of all materials extracted and used which made it back into the economy was 7.2. In 2022, it was 8.6% which was already lower than 2018’s 9.1%. This means that less and less materials are finding their way back into the economy and are ending up in a landfill or being incinerated. But, as Connor Hill, founder of  inspire circular, puts it:

"Legislation can be a huge step for a circular economy, but we do not need to wait for legislation to act."

Changing the Narrative: The Practical Example of Revivo (Vivobarefoot) & John Lewis

There are a variety of examples of companies applying circular principles without waiting on legislation to tell them to do so, including that of Revivo, the re-commerce section of Vivobarefoot and John Lewis & Partners.  

During the webinar The Circular Economy & Retail: From Theory to Practice, Connor Hill highlighted Revivo by providing the following statement:

A customer may wear a shoe for thousands of miles, but it must be considered that the product may wear down. Vivobarefoot came up with a refurbishing solution to make sure that, when the point comes where a consumer is faced with the question of buying new or repairing, they had a system in place to send their shoes back to get them fixed.

Together, the company is finding solutions to make sure that the shoe is designed to last as long as possible while also having a sustainable repair solution (for example, reapplying soles when necessary). However, they even go a step further: a customer can also send the shoes back and the company will clean and repair them and sell them secondhand. Not only does this make sense for the environment, but it also makes sense commercially. As said by Connor, “Normally, you get one revenue shot by selling one shoe. With this system, you get the option of selling the same shoe twice or more.”

And Revivo is not alone. Other companies, such as John Lewis & Partners, have also taken proactive steps to apply circularity. “At John Lewis, we have been looking at every possible R – reduce, reuse, refill, refurbish, etc. And, while we explore these R’s, we are learning from the challenges – like refilling for example,” says George Barrett, Sustainability & Circular Economy Manager at John Lewis & Partners. “In general, we have been noticing some common threads including aspects like how the smallest thing to start with can have greater customer impact. For example, we are teaching customers to interact with a product in a way they haven’t done so before and haven’t been taught to do.” 

And this is just the beginning. Starting in October of 2020, John Lewis & Partners announced their commitment to circularity. In the launch, the following points were made as detailed in their circularity and waste strategy:  

• All categories of John Lewis products will have a 'buy back' or 'take back' solution by 2025.
• John Lewis will further enhance sustainable rental and resale options for consumers.
• Halving food waste in the Waitrose's supply chain by 2030, on top of our existing operational target for 2030.
• Helping customers halve household food waste by 2030

As George stated in the webinar, John Lewis & partners believe that

"waste is a resource that has fallen into the wrong hands".

Pioneering Potential: Retail

In general, retail can find untapped potential when it comes to a circular economy. As Gary Lewis, CEO and cofounder of Resourcify says, “Retail is the most advanced when it comes to a circular economy – the reason being the highest quality and the highest quantity of material. If anything is going to happen with circularity, I believe that retailers are positioned to do it first and could play a pioneering role for other industries.” 

But why aren’t more retailers moving towards circularity when there are solutions already available such as digitisation? According to Gary, it is the factor of complexity. “Europe is a complex place with various languages and regulations. And, when you are a small team at headquarters trying to implement a strategy for locations throughout Europe, it can be very hard. However, through means of digitisation, it can be easier to take the next step in becoming circular.”  

The Future of Circularity for Retail

Despite the complexity, it is evident there is a way to adopt circularity since companies like John Lewis & Partners and Vivobarefoot have already taken the initiative to incorporate it into their business models without waiting for legislation telling them to do so. Furthermore, as discussed in the webinar, the endeavour itself may seem large and daunting, but it is worth it, and it is the future. No matter where you start, like George said,

“Start small because doing nothing isn’t an option.”