Avoiding the mistakes of the siloed past 

Retailers have been grappling with the challenge of operating across multiple channels since the emergence of the internet but today they have another level of complexity layered on top as they seek to adopt more circular economy approaches.

Much has been made about the levels of PR bluster and greenwashing within the sector that has detracted from the efforts that some retailers and brand owners have been making towards creating a more sustainable way of working with the three R’s – resale, repair and recycle – playing an increasingly important role.

Any true move towards the circular economy will involve brands and retailers shifting some of their revenues away from the sale of new products and into the three R’s – especially resale. At the heart of this is likely to be a strategy whereby the brands generate extra revenues from existing products by selling them multiple times.

This is no small feat as it upends the traditional way of working for many organisations as their stock control will involve much greater complexity and their pricing is likely to be much more dynamic as individual, unique second-hand and repaired products become part of the mix rather than it solely being about new items that are all assigned the same price.

For this to work at any scale it is likely that the resale aspect will have to be closely integrated within the brand’s existing business of selling new products. To date this has arguably been predominantly dealt with in a similar way to how e-commerce was initially handled by retailers – as a totally separate channel to that of the physical stores.

This approach continues to cause headaches for many retailers today as they seek to rip out all the silos and instead develop more integrated, seamless operations across all their channels. They have arguably spent years painfully unpicking these old legacy infrastructures they put in place and which remain serious obstacles to progress.

Care clearly has to be taken with adopting a circular economy approach because it will likely involve working with third-party specialists and integrating their solutions with the retailer’s existing operations.

Such developments might well involve them investigating a variety of options including: setting up their own marketplaces on their websites for customers to sell through; working with recognised third-party platforms such as The Real Real and ThredUp; tying-up with the peer-to-peer marketplaces including Depop and Vinted; or using the expertise and systems of the likes of Reskinned, Trove and Reflaunt, which handle all the back-end infrastructure for trade-in and resale.

The objective for retailers and brands is to generate extra revenues from existing products by selling them multiple times. Needless to say there is a great amount of activity taking place among retailers, with the department stores particularly proactive. Selfridges has set itself the aim of having 45% of its transactions taking place through circular products and services by 2030 and to this end it has launched various in-store activities around its ‘Reselfridges’ initiative including pop-ups supporting the exchange of used products for store credits and repair services. It has partnered with a number of specialists to achieve its ambitious targets.

Meanwhile at John Lewis the company has linked up with Timpson Group to operate an in-store clothes repair service and it also recently launched a pre-loved kids’ clothing pop-up in its Oxford Street store with sustainable shopping brand TheLittleLoop, which also operates a children’s clothing rental service on the retailer’s website.

Clearly this is just the tip of the iceberg in terms of the level of activity currently taking place within the industry and it all comes with myriad challenges that need to be overcome if these circular economy strategies are to ever deliver meaningful volumes and ultimately profits. Undoubtedly a key decision, and potentially the major determinant of success for retailers, is the choice of specialist partners they select to work with and the capabilities of their underlying technology. Choosing partners carefully can help retailers avoid the mistakes of the past.

Glynn Davis, editor, Retail Insider

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