The fashion industry’s traditional business model has been linear. Designers make clothes. Brands produce them. Consumers buy them. Soon after, many garments are discarded, often after minimal use. This system has created environmental harm and economic fragility. Between 2000 and 2015, clothing production doubled while garment utilisation which is how long people keep and wear clothes fell significantly. That mismatch has driven waste, greenhouse gas emissions, and shrinking profit margins for brands.
Industry leaders are now starting to rethink this model. Instead of tying revenue strictly to selling more new clothes, many are exploring ways to decouple profit from production and resource use. This new approach is not just about ethics. It is about building a resilient and future-proof fashion business strategy.
What Circular Business Models Are
Circular business models keep products and materials in use longer and reduce waste from production and consumption. These models go beyond recycling. They include:
- Resale — Peer-to-peer and platform-based second-hand markets
- Rental — Subscription or one-off clothing leasing
- Repair — Fixing garments to extend their life
- Remaking — Creating new products from used items or components
Together, these models formed a market worth over USD 73 billion before 2020 and have the potential to grow to nearly USD 700 billion by 2030, representing close to a quarter of the global fashion market.
This shift is not niche. Major platforms from Depop and Vestiaire Collective in resale to Rent the Runway in rentals have reached significant valuations and are reshaping how consumers think about ownership and consumption.
Why Circular Models Matter for Industry Leaders?
Circular business models help fashion companies address three big challenges at once:
1. Demand Volatility and Profit Pressure
Traditional models link growth to constantly selling more new stock. This creates pressure to produce rapidly, often leading to overproduction and markdowns. Circular models offer new revenue streams through services like repair, rental, and re-commerce.
2. Resource Risk and Environmental Impact
Clothing production accounts for significant greenhouse gas emissions and environmental degradation. Keeping products in use longer reduces demand for raw materials and strengthens sustainable fashion supply chains.
3. Consumer Behaviour Change
Younger consumers increasingly prefer access over ownership and care about environmental impact. Circular models align with this shift and can improve customer loyalty while reducing waste.
Real World Examples of Circular Innovation
Several companies are pushing circular strategies beyond theory.
- Patagonia’s Worn Wear programme offers trade-ins and repairs while encouraging multiple owners for each garment.
- ThredUP has become one of the largest online second-hand clothing marketplaces and sells items across thousands of brands daily.
- Teemill designs products that can be returned and remade repeatedly, reducing material loss and capturing value at end-of-life.
Even traditional players are reacting. Major luxury and mass-market brands are piloting rental offerings and resale partnerships, indicating that circular models are crossing segment boundaries.
What the Industry Must Do Next
To make circular business models genuinely effective rather than surface-level, three areas require coordinated action:
- Design for Longevity and Reuse
Garments must be made to last physically and emotionally. Design teams should prioritise durability and recyclability at the outset. - Build Infrastructure for Services
Scaling repair, cleaning, logistics for rentals, and efficient resale requires building or partnering with specialised systems. - Measure Real Impact
Circular models must decouple revenue from raw material use. If resale incentives drive purchases of new products — for example through vouchers — the environmental benefits can be undermined. - A Future Built on Circular Principles
The shift toward circular business models represents more than incremental change. It signals a deeper transformation in how fashion creates and captures value. For industry stakeholders from brands to suppliers and retailers, business success will depend on how quickly they adapt to these new structures. By keeping products in use longer and rethinking the notion of value beyond new sales, the industry gains resilience, reduces environmental harm, and aligns business outcomes with changing consumer expectations.
