From Linear to Circular : Navigating the Transition to Circular Business Models in the Fashion Industry

Abstract: As more companies in the resource-intensive fashion industry start their transition journeys towards circular business models (CBMs), driven by social and regulatory pressures, understanding how companies navigate this transformative process is crucial. This thesis contributes to prevailing research by analysing the challenges faced by linear companies in the fashion industry when adopting more circular models through various initiatives, dividing them by the CBM they apply, and considering their corresponding solutions to these challenges. By interviewing nine companies and four industry experts, we investigated the CBMs: product life extension, circular supplies, resource recovery, and product-as-a-service. Our findings indicate some common challenges include uncertain market demands, high costs and complex logistics, which caused profitability concerns and impeded companies’ transitions. Meanwhile, some challenges were CBM or company-specific. Companies employing circular supplies and resource recovery models faced cost considerations related to material price and availability, while product life extension models struggled with material access and limitations within the organisation or network. Significant market challenges were observed for the product-as-a-service model. To cope with these challenges, companies maintained small-scale CBMs and/or gradually scaled them based on changing circumstances or built collaborative networks within the value chain. Strengthening internal human capital was another coping strategy.