One company that has spotted and taken advantage of this opportunity is Zalando5, a fashion and lifestyle ecommerce business. It aims to integrate sustainability and circular economy principles into its strategy, to become a net-positive fashion platform. The company should benefit if consumer preferences continue to shift towards more sustainable products and product resale.
Zalando is focused on promoting circularity and has set a target of extending the life of at least 50 million products and generating 25% of gross merchandise volume from more sustainable products by 2023, up from 16% in 2020. To achieve this, Zalando has introduced a flag and filters system for more sustainable products across its platform, enabling consumers to select items from a range of brands that relate to themes such as environmentally friendly materials, water conservation and worker welfare. To promote circularity, Zalando offers customers the ability to buy and sell second-hand items on their proprietary Zircle platform and it also directly buys second-hand items from customers through the Pre-Owned initiative. Zalando hopes to capitalise on an engendered loyalty, with increased engagement potentially creating longer and better consumer relationships.
A third strand of indirect regulatory support comes from national level emissions reduction targets aligned to the Paris agreement, as well as the related corporate efforts to reach ‘Net Zero’ goals. These should provide a tailwind for the resale trend, as lengthening the lifespan of products has the potential to reduce the fashion sector’s emissions footprint.
This consumption pull and regulatory push could lead to unstoppable, long-term structural change – and this change has only just begun. With fashion consumers planning to shift more spend to re-use items than in any other industry.13