What Goes Around Comes Around – Or Does It? A Case Study of Circular Business Models in Finnish Fashion Industry

Abstract

Fashion is an integral part of people's lives today. It is a way to keep us warm but also a way to express and distinguish ourselves from others. However, the fashion industry is not without challenges and the increasing awareness of the industry's environmental and social concerns have made the industry explore new ways to do business. The circular economy is seen as one solution for the industry to overcome these challenges and become more sustainable. Among academics, the circular economy has started to raise interest and in particular, circular business models are increasingly being researched from various perspectives. However, holistic research addressing circular business models in the fashion industry is lacking. Further, there is no previous research focusing on the factors influencing the adoption of circular business models in the fashion context. This study fills this gap by researching six Finnish clothing and accessories companies.

This research is a qualitative, multiple case study of different types of fashion companies. The sample consists of different-sized companies with varying approaches to the circular economy in order to find what type of circular business models can be found in the Finnish fashion industry. Each of the case companies was interviewed once with a semi-structured approach. Additionally, secondary data from online sources were utilised for further information. To identify the drivers and barriers for adopting circular business models a thematic analysis was used.

The study found that circular business models at the beginning of the loop are easier to adopt. These business models include design for longevity, choosing high-quality materials and efficiency in production. Business models that require increased engagement from the consumers’ side, such as second-hand stores, repair and rental services, are currently less present. Interestingly, there were no major differences between the adopted circular business models among the companies.

Further, this research found nine factors influencing the adoption of the business models: 1) environment, 2) economic, 3) customer, 4) society, 5) regulations, 6) supply chain and technology, 7) product, 8) organisation and, 9) fashion industry itself. Based on the findings, not all of these factors influence at equal weight. With economic, product quality, regulatory, and supply chain and technological factors, the companies need to further consider if adopting the model is applicable for the company.