The Circular Fashion Economy : A Case Study on the Role of Unsold Apparel in Circular Strategies

Abstract: The fashion industry is one of the most heavily polluting industries in the world. The industry has traditionally operated through the linear economy utilizing a take-make-waste supply chain. The appearance of the circular economy has provided the fashion industry with the opportunity to change its business models to more circular alternatives. However, focusing mainly on improving operations and forecasting models in ways for prevention, previous research has not considered the role of unsold goods (or deadstock) in a circular economy. This study contributes to the literature on the circular economy through insight into how deadstock can be reduced using circular strategies. Using an abductive approach, a case study was made on a fashion company that is investigating the possibilities to reduce deadstock using circular strategies. The study combines findings from previous research with a thematic analysis based on data collected from interviews with managers and experts working at the case company to answer the proposed research questions and fulfill its purpose. The findings of the study show that the drivers of and barriers to circular strategies at the case company seem to correspond with previous research. The drivers seem to mainly be softer powers that encourage change, such as organization and culture, while the barriers tend to be harder powers that hinder the change, such as heavy investments and the need for technological advancement. Moreover, the company lacks drivers being hard powers, such as technology and financial incentives. The authors, therefore, argue that the lack of drivers forcing change is one of the reasons why the industry has not changed more yet. Additionally, deadstock reducing initiatives seem to share many similarities in drivers and barriers with circular strategies, the main difference being an attitudinal difference towards them. This spurs a discussion of the duality of Doing Good and Doing Right in sustainability efforts where it is argued that to truly become sustainable, an organization must be able to do both. This study implies that deadstock reduction should be incorporated into the circular economy utilizing the circular strategies. More collaboration needs to happen between the individual circular strategies, for example through shared data systems, coordinated management for all circular strategies, and shared collecting and sorting systems. Furthermore, although soft powers encouraging change are in place, no significant transition towards circularity is to be expected in the fashion industry until hard powers, such as enabling technological innovations, are in place to force the change.