Episode 4: Are take-back programs the answer?




Resale, Thred-up, W.R.A.P, Sustainability, Circular Economy.



Thred-up resale report





Welcome to the Fashion Unearthed podcast. If you need help navigating the fashion industry sustainably, you have come to the right place. I'm your host Belinda Humphrey and my hope is to simplify the fashion industry so that businesses can make the best decisions for people, planet and product.


Hello, and welcome to Episode Four of the Fashion Unearthed podcast. I'm recording this episode in Melbourne, Australia and we are in lockdown number six. Hopefully, by the time you're listening to this, we are out. But for now, I've been focusing on the good stuff and taking more regular breaks and I hope that wherever you are listening to this, you're doing okay and reaching out to someone if you're not.


So moving onto today's topic. As many of you might know, I am passionate about embracing circular fashion design and the circular economy as a whole. So in this episode, I wanted to talk about a key lever that businesses are trialling and using to get them closer to a more circular model. And I was interested actually just to see what was happening in this space, particularly through the pandemic. You might have picked up on the title of this episode, but what I'm talking about are take back programmes and today I'm going to run through what they are some of the challenges, look at where the customer is at, the sustainability component and the potential business opportunity.


So textile take back schemes are where customers donate unwanted clothing to retailers to be reused or recycled and they say these can increase brand loyalty, demonstrate corporate responsibility, and start to close the loop on products and materials. Another bonus of this is that it can highlight weak areas within materials, construction, dyes, etc. and can inform better decision at the start of the product's journey.


By providing this option to customers, it also makes it easy for them to extend the life of unwanted garments. It's a way to offer items at a more accessible price point respond to consumer habits, and to keep moving towards more circular products. Especially for those brands who are already designing items to last, it provides a pathway for those items to live on if a customer size or style changes.


So that's a bit of an overview of what it is I want to dive into some of the questions that might come up at that point. The first one being does having your take back programme make you more sustainable? Well, according to thred-up's resale report in 2021, buying used instead of new displaces 17.4 pounds, that's nearly eight kilos of co2 emissions and reduces an item's carbon footprint by 82%. They then go on to scale this example and say that if every retailer sold 1 million items used instead of new, it would displace 414.8 billion pounds of co2. I haven't worked that into kilos, sorry guys.


So that's an impressive statistic showing the benefit of keeping products in use, we could also consider the impact of getting the product back in house. From what I've seen, most businesses have an in-store drop off model of some kind. So we might assume that people aren't making a special trip and combining it with other errands. The last bit that we can look at is what happens to the item after it gets taken back. How is it processed? Where is it stored? And is the energy being used renewable?


So moving on to the second question you might think of is does the customer even want this? For this, let's look at some of the general data I've found. Keep in mind, you'll want to assess your own customers, but these figures suggest a broader and longer consumer trend. So within that same thred-up resale report in 2021 that I mentioned earlier, a study was done in 2020, stay with me, that 86% of men and women surveyed say they have or are open to shopping secondhand purchases. That's a significant percentage. If we apply that percentage to Australia's working age population, which are years 15 to 64 of 16.5 million. That's just over 14 million people that are open to shopping secondhand purchases.


Let's look at some of the reasons driving this shift. More consumers care about sustainability and they're concerned about the environmental impact. Waste and resources action programme W.R.A.P reports that over half of consumers are very or fairly concerned about the environmental impact of clothing. And since the pandemic people want to feel more financially confident and are thinking of creative ways to save or make money. They are also looking at the quality in a garment so that they can resell it and may consider this is a key factor to consider before making an initial purchase. And finally they are adverse to waste. They don't want to waste resources and they don't want to waste their money, particularly if they've been severely impacted and have less of it. I want to also point out that a lot of the research will focus on the Gen Z or Millennials, traditional age bracket cohorts. But according to Thred-up the biggest shift in secondhand is coming from mums with young kids, one in two planned to spend more on secondhand in the next five years.


Next up, I want to look at the potential business opportunities. Thred-up projects that the second hand market is set to double in the next five years reaching 77 billion. Resale is expected to grow 11 times faster than the broader retail clothing sector by 2025. And within the same survey 42% of retail execs say resale will be an important part of their business within five years. Now, I know I've mentioned that report a bit so I will link to it in the show notes, but you just have to look at the increase of buy swap and sell groups on Facebook and sites like Poshmark and Depop, being flooded with people decluttering to see that this is a growing consumer behaviour. Also, as a side note, Etsy has recently bought Depop for $1.6 billion dollars, which I think says a lot about the confidence in the resale market.


Just to mention a couple of retailers recently moving into this space towards the end of 2020 Levi Strauss launched Levi secondhand a pilot buyback and resale platform. According to Jen Sey, Senior Vice President and Chief Marketing Officer of the brand, they are working with Trove, a re-commerce, tech and logistics startup to handle the back end. Customers will get between $15 and $25 store credit for worn Levi's that can be resold and if it's vintage, they get between $30 and $35. They also add that if someone comes in with jeans too worn out to sell again, they still give them $5 and pass the jeans on to Blue Jeans Go Green, a partner they've been working with that converts used denim into insulation for buildings. Lululemon Athletica is another one, they are piloting a programme called "Like New" and is also partnering with Trove.


So at this point, I guess you would think this all looks great so me up but in the interest of objectiveness let's look at some of the challenges with a take back programme, the main one being building a reverse supply chain. The logistics involved are complicated and costly from every item being sorted, cleaned, inspected, priced, photographed and described, there's a lot to consider not to mention the space needed to store the items. Another one is cannibalization, offering up a strong line of cheap and used clothes risks cannibalising sales of a retailer's full price apparel range. We saw this when retailers grew outlet stores, but they realised that it was undercutting sales and brand value at their full price locations and creating profitability problems. There could also be a lack of inventory, the more retailers that enter the market, particularly ones that take all brands, there will be more competition for a limited amount of quality inventory. Next up, there's the problem of disposable fashion. A large quantity of clothes, particularly fast fashion, have not been made durable enough to last for a second owner and may have fallen out of style or fashion. And finally, the pandemic has left some people more wary of wearing other people's used clothing.


So finally, let's look at how you might implement a take back programme. The most common ways to implement this strategy is either partnering with an existing resale business or charity to handle the reverse supply chain logistics or implementing the process yourself in-house. From my research partnering with an existing resale business seems to be the most popular. Perhaps this is because many businesses are in the early stages of implementing this and want to trial it first before setting up their own internal structure.


I've already mentioned Trove, I:Collect is another company partnering with the brands in the H&M group. They sort out the textiles and resell the ones in usable conditions, reusing them as other products for instance cleaning costs or turn them into fibres that can be used for insulation and stuffing, as well as textile fibres for future collections. Weekday one of H&Ms brands asks their customers to bring in a bag of used clothes and home textiles, anything, any brand, and they receive a 10% off discount voucher to use on their next purchase.


Another great retailer Eileen Fisher has been using a takeback programme for 13 years, starting by incorporating used items into their new offer in store. This has even evolved into include a new category "Not quite perfect". According to their website, they've taken back over 1.5 million pieces since 2009 to be resold donated or remade into new designs. But also while doing this experiment, they discovered that some were damaged beyond repair, which created an interesting problem. Even when you start with high quality materials, the garment is still at the mercy of the consumers use. So they came up with the "Resewn" collection where they cut up and deconstruct the clothes to make one of a kind pieces, items include bags, jackets, scarves, dresses, jumpsuits and tops. And they say that this way the garments can have a first, second and third life.


I love this example because it shows a brand that just got started and has adapted and evolved along the way. In Europe, Philippa K customers receive a 15% discount voucher, and instead of using collection "bins", they ask customers to hand in the item over the counter to a member of staff. They believe that this not only makes the experience more personal, but also keeps the customer thinking their return item has value and it's not being thrown in a "bin" (in commas). I feel like this method might also enable a better process to give feedback to the Design and Merchandising team about materials and how things have worn.


And finally, again, I have quoted that thred-up report a bit, but if you aren't familiar, they also partner with retailers such as Gap, Macy's and Nordstrom for take back programmes, and they facilitate that back end process. So obviously, they are investing in this level of research because it informs their business as well.


In summary, I want to say that implementing a take back programme is not a panacea in answer to this podcast title, but it could be part of the answer to a complicated and ever evolving problem. So when you're deciding on and setting up a take back scheme, you need to consider a few things, such as your long term circular fashion strategy, how it fits into your overall business strategy, and what resources do you have to set it up or can afford to set it up? And how will you engage your customers and internal teams? Understanding the attitudes and motivations around your customers clothing disposal should also be a key consideration.

So hopefully, I've given you a bit to think about and maybe some inspiration to consider implementing your own take back programme. What do you think? I'd love to know if this is something you've been thinking about? DM me on Instagram or send me an email at info@belindahumphrey.com. There were a few references in this episode, so you'll find the links for those and the show notes over at belindahumphrey.com/podcast/four. And if you're liking the podcast, I'd love it if you could take 60 seconds to either hit stars, or leave a quick review. It really helps the podcast get seen and get out there. Thanks very much for listening. See you next time.


Thanks for listening to the Fashion Unearthed podcast. If you want to get in touch head over to belindahumphrey.com or you can find me on Instagram @belindahumphrey_

Disclaimer: Whilst every effort is made to ensure that information is accurate at the time of recording, much like the fashion industry itself, this information may change.

Correction: It was announced on the 19th August after this recording that H&M will partner with Reflaunt for its resale and Canada will be the first country to launch the new initiative.


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