What does circular economy mean to customers?
Updated: Feb 7, 2020
The Circular Economy model, established by the Ellen McArthur Foundations, has repositioned the product life cycle as we know it. I have read plenty of articles and reports that indicate the benefits of the Circular Economy for the manufacturing process, the business model and resource gathering, but we barely hear how this speaks to the customers.
The current linear economic model is based on the principles of “take, make, dispose” which is leading to high levels of waste and high demand for new natural resources to stimulate the production needed to satisfy consumption rates. The shift to the circular approach helps reduce the negative impact of the current system, by reintroducing waste as a resource and expanding the life cycle of products and regenerating natural systems.
The solution offers value to business, environment and society. It seems like a win-win situation, with reduced pollution and reduced resource costs, while consumer patterns are unchanged and may even increase, seeing as the offering is ‘guilt-free’ this time around.
The rebound effect, as discussed in Systems Thinking, is the result of improving a process to a more efficient usage of energy or sources, that directly lead to an increase of demand in consumption. In the case of Circular Economy and fashion, the reuse and recycling of materials may stimulate more consumption in customers, because of moral and product need fulfillment.
Do we buy more because it is good for the planet? The fact that the customer feels better about the purchase, may increase their shopping behavior seeing the consequences are less, but cumulatively it may be worse. I believe if we as customers have a better connection or understanding of the Circular Economy of our products, we will also benefit from this system.
If the relationship between the customer and retailer can change beyond point-of-sale, the value exchange of materials, experiences and knowledge may increase the profit for company whilst truly satisfying the customer. If a business collaborates with the customer they will be able to co-create the solution shifting from ownership to access of information or selection. As reported in the IKEA Life at Home study, the new generation of customers are living smaller in cities and are adapting sharing behavior due to lack of ownership of homes, and less space to store their stuff. When retailers accept this behavior, they can participate in the new model of reuse and share economy by making it easier for their customers to sell, donate or recycle their items.
Businesses that have successfully tapped into the service replacing approach, like Spotify, Uber and Airbnb are growing rapidly. Fashion retailers can mimic this sharing economy by looking at how the leasing or return policy of their products can benefit both the retailer and the customer through a circular model. With digital interaction opening more opportunities for companies to directly engage with its customers, the experience of the product life cycle can now be shared across all phases and stakeholders. This can lead to reducing the customer cost on repairing, returning and reusing of the product rather than replacing. Customers have access to customize their experience of the product, and reduce waste in the process.
For a truly successful system all the stakeholder must realized that they are caught in a web of interconnections. This means including the customer will close the loop of the Circular Economy and lead to a sustainable model of use and reuse.
Read more at: https://medium.com/@rinastrydom