T HE TRANSFORMATION
FROM LINEAR TO CIRCULAR
- A CASE COMPANY STUDY ON THE
CHALLENGES OF POST - RETURN HANDLING OF MASS CUSTOMISED PRODUCTS FOR FASHION RETAILERS
Thesis for One-Year Master, 15 ECTS
Textile Management
Mariken Halvarsson de Maar
Thesis number: 2020.18.08
Title: The transformation from linear to circular - a case company study on the challenges of post-return handling of mass customised products for fashion retailers.
Publication year: 2020
Author: Mariken Halvarsson de Maar Supervisor: Joel Peterson
Abstract
Purpose: The purpose of this research is to explore suitable end-of-life strategies for fashion retailers of custom-made products after they have been returned by the customer, by analysing and evaluating these strategies, and how to implement and conclude the viability of these.
Method: The study follows an abductive explorative case study method. The exploratory design is structured as follows; a literature review is carried out, followed by interviews for collecting empirical data, which is analysed with the help of a conceptual framework.
Thereafter, secondary data is collected to create an overview of the real-world context in the form of end-of-life strategies implemented by fashion retailers. Finally, the case was tested within a new proposed framework.
Findings: The findings demonstrate the importance of the core values of the companies and inherent to that, the product characteristics and design in the decision-making of a suitable end-of-life strategy. For that reason, a second phase of data collection based on secondary data was implemented and juxtaposed the first finding from the interviews. The main insight this paper shows is that resell “as it is”, which is a common end-of-life strategy for regular fashion retailers, is a conflicting strategy for retailers of custom-made clothing. Introducing an adapted version of the Sustainable Value Analysis Tool as a conceptual framework gave a better insight in how to approach and analyse suitable end-of-life strategies and shows the relation between these parameters.
Originality: It is difficult according to the findings of this study to conclude a generalisable, one-size-fits-all end-of-life strategy for returned custom-made products. However, the introduction of an adapted version of the Sustainable Value Analysis Tool can serve a purpose for all fashion retailers in this transformation process and which is not limited to fashion retailers of mass customised clothing.
Keywords: mass customisation, circular economy, innovative business models, post-return handling, sustainable value analysis, end-of-life strategies
Acknowledgement
Writing this Master thesis has brought an end to a very educational journey of the program Textile Management at the Swedish School of Textiles. The process of writing the master thesis has both given scholarly as well as personal insights.
I would like to thank my supervisor, Joel Peterson for his constructive feedback and his support even during the summer holidays. I would also like to thank the people of the case company Son of a Tailor who took their time to answer questions, besides the planned interviews. I would also like to thank Cirrus Rupert, my fellow student this year, for giving her supporting eye on the English writing.
Finally, I would like to give a big thanks to my family, my husband and my children for their endless support and understanding the last couple of weeks.
Mariken Halvarsson de Maar, Gothenburg, 17th of August 2020
Table of Contents
1 Introduction ... 1
1.1 Background ... 1
1.2 Research purpose ... 3
1.3 Research questions ... 3
1.4 Delimitations ... 3
2 The case company Son of a Tailor ... 4
2.1 Unit of analysis: The Zero Waste Pullover ... 4
3 Literature Review ... 6
3.1 Mass customisation ... 6
3.1.1 Knitting technologies within mass customisation ... 6
3.2 The logistics of mass customisation versus traditional fashion logistics ... 7
3.3 Reverse Logistics and closed loop systems ... 7
3.4 Value creation and caption ... 9
3.5 Core Values ... 10
3.6 End- of-life strategies discussed in relation to product characteristics ... 10
3.6.1 End-of-Life strategies explained ... 12
4 Methodology ... 14
4.1 Research design ... 14
4.2 Data collection ... 15
4.2.1 Primary data collection ... 15
4.2.2 Secondary data collection ... 16
4.3 Data analysis ... 16
5 Findings ... 18
5.1 Interview findings ... 18
5.2 Findings of fashion retailers with end-of-life strategies ... 23
6 Analysis and discussion ... 29
6.1 The Case company analysed and discussed ... 29
6.1.1 Input ... 29
6.1.2 Stakeholders ... 29
6.1.3 Value captured ... 29
6.1.4 Values missed ... 29
6.1.5 Values destroyed ... 30
6.1.6 Value surplus/absence ... 30
6.1.7 Value creation opportunities ... 31
6.2 End-of-life strategies discussed and applied on the Case company ... 31
6.2.1 Reuse ... 32
6.2.2 Remanufacturing ... 34
6.2.3 Renting or leasing ... 35
6.3 Research questions answered ... 37
6.4 Assessment of the research ... 40
6.4.1 Relevance of the research ... 41
6.4.2 Internal validity ... 41
6.4.3 External validity ... 41
6.4.4 Reliability ... 42
7 Conclusion ... 43
8 Future research and managerial implications ... 44
References ... 45
Appendix A - Outline of the interview questions ... 53
Appendix B – Brief background information on 10 chosen retail companies ... 54
List of Figures and Tables List of Figures
Figure 1: The abductive research process
Figure 2: Modified version of The Sustainable Analysis Tool Figure 3: Applied modified Sustainable Value Analysis Tool Figure 4: Implementations steps reselling
Figure 5: Implementation steps reuse with donation Figure 6: Implementation steps remanufacturing Figure 7: Implementation steps renting
List of Tables Table 1: Reuse
Table 2: Remanufacturing Table 3: Recycling
Table 4: Repair Table 5: Sharing
Table 6: Summary findings from the interviews
Table 7: Overview fashion retailers engaging in post-retail operations.
Table 8: Decisive criteria applied on end-of-life strategies taken from figure 3 Table 9: Summary value opportunities assessment
1 Introduction
1.1 Background
Fashion, which initially began before the industrial revolution as a craft of creating tailormade garments only affordable for the upper classes, has developed over the years into an industry of mass production. With the advent of more sophisticated machinery during the Industrial Revolution, which began around 1760, large-scale production of clothing and textiles in factories became possible (Burns, Mullet and Bryant 2016, pp. 2-6). As a result of technological innovations in the 1950s and 60s, the textile industry developed synthetic fibres that were made with low material costs, which made clothing and fashion more accessible to a wider population. Yet, from the 1970s onwards, labour had become too expensive in Western society, especially in the textile industry. Therefore, fashion companies gradually began to outsource production to less developed countries mainly located in Asia (Burns, Mullet and Bryant 2016, pp. 12-14). The benefits of access to cheap material and labour by importing garments from overseas and the introduction of “quick response” (a strategy aimed at responsiveness to consumer demand and shorter lead times) created global supply chains for the mass production of fashion. Further advancements in technology introduced customers to the concept of e-commerce, which made it possible for people to shop 24/7 and orders to be delivered approximately one day thereafter (Burns, Mullet and Bryant 2016, pp.
14-20). In the last two decades, these lightning-fast developments have continued to evolve with several drawbacks that have major consequences for people and the environment.
In the last few years, the fashion industry has been under great pressure to change how it does business due to its sizeable negative impact on people and the environment. It is an industry that is strongly characterised by its production of textiles and fibres and the inherent manufacturing processes. The majority of the industry uses linear business models that result in overproduction and overconsumption for each of the many seasons that pass by. The report titled “A call to action for a circular fashion system” published by the Global Fashion Agenda, states that EU consumers have doubled their purchases of clothing over the past decade reaching around 13 kg per capita per year, where items are often discarded after having been worn only a few times. Of this, 80% contribute to a mountain of post-consumer waste, that is disposed of in landfill or via incineration (Watson, Eder-Hansen and Tärneberg, 2017). According to a report by the Ellen McArthur Foundation (2017) the average number of times for wearing a garment has decreased with 36% worldwide in the past 15 years. A study conducted in the Netherlands shows that approximately 6,5% of production in the Netherlands is not sold and results in obsolete and unusable stocks that are considered as pre-consumer waste (Maldini et al. 2017).
Plainly, there is over-production of clothing and overconsumption of clothing which just lingers in a consumer’s wardrobe or that is thrown away after a few uses. Research on Norwegian consumers’ clothing lifetimes indicated the main reasons for the shorter time
period of clothing use after purchase. These reasons are: quality-related issues, fitting-related issues, such as cut and size and/or an emotional desire for something new (Laitala and Klepp 2011)
One of the possible solutions to counteract this over-production and over-consumption in fashion is mass customisation, which is discussed in the academic world as an alternative sustainable business concept (Bergmann 2012; Brunø, Nielsen, Taps & Jørgensen 2013;
Dissanayake 2019).
With mass customisation, first the customer pays for an item, then production starts. This flip in the sequence of the supply chain ensures that unnecessary inventories are avoided (Peterson 2012). Recently, such on-demand production systems have grown in popularity.
Deloitte (2019) revealed in their yearly “Consumer Review” which has a special edition on mass personalisation, that there is a lot of interest in personalisation of clothing and footwear, especially for consumers in the ages between 16 to 39.
Some well-known examples of mass customisation are Nike By You (Nike 2020) and Adidas Personalisable (Adidas 2020) where consumers can design their own shoes, apparel and accessories, and Levi’s has also a mass customisation option where customers can personalise their sweatshirts, hoodies, T-shirts and jeans jackets (Levi's 2020). These are examples of customised products whereby the aesthetics of the product can be altered such as colour, text and the embroidery of names. Other examples of customised products are products whereby also the size and fit can be altered meeting the specific needs of the customer.
Thus, aside from avoiding unnecessary inventories, mass customisation could prevent consumers from buying fashion products with a bad fit (Peterson 2012). In turn, this could result in a better fitter wardrobe with a longer lifetime of use. The report “Fashion at the cross roads” (2017) concluded that style, function and fit are decisive criteria for the emotional duration of a product, and that people take care of the products that are favourable in those criteria.
Mass customisation can contribute to an even further improved sustainable business concept when it also takes care of its return products, by implementing end-of-life strategies that contribute to a further going process of closing the loop. Although the percentage of returned customised products within fashion mass customisation is much lower compared to the return of non-customised products (Peterson 2012), fashion retailers of customised products do receive items back. To further close the loop as initiated by the Ellen MacArthur Foundation (2017), there could be a challenge within mass customisation for fashion products to find a suitable end-of-life activity for returned customised products.
The fashion company Son of a Tailor is a retailer that sells customised knitted T-shirts and pullovers. The company has an innovative business model but is so far still operating linear.
Their latest product that is produced without waste, motivated the company to investigate the possibilities for extending the lifecycle or closing the loop for their product.
Based on the articles “Post-retail responsibility of garments – a fashion industry
perspective” written by Hvass (2014) and “Closed loop supply chains for sustainable mass customization” written by Nielsen and Brunø (2013) a gap in the literature was identified that has not yet discussed end-of-life strategies related to mass customisation in fashion with the aim of closing the loop. Hvass (2014) concluded in the end of the article that the article has its limitations and that further research is required to create a better
understanding of implementing innovative business models that incorporates post-retail activities in the fashion industry. Since then further studies have been conducted that discusses extending the end-of-life and/or closed loop initiatives within fashion (Sandberg, Pal & Hemilä, 2017) (Perlacia, Duml & Saebi, 2017)(Pal, Larsson, Torstensson & Scott, 2018)(
Pedersen, Gwozdz & Hvass, 2018) (Sandvik & Stubbs, 2019) (Hvass & Pedersen, 2019), but not yet in relation to mass customisation.
Nielsen and Brunø (2013) on the other hand discussed the topic of closed loop supply chains for mass customised products and investigated this topic for three different industries but the fashion industry is not one of them. Son of a Tailor serves as case company to
investigate the identified literature gap as described above.
1.2 Research purpose
This research aims to explore appropriate end-of-life strategies for fashion retailers of custom-made products after they have been returned by the customer, by analysing and evaluating these strategies.
In addition, this study aims to conclude how to implement these end-of-life strategies and if they are viable strategies for fashion retailers of customised products. The case is a mass customisation fashion company based in Denmark.
1.3 Research questions
Based on the above described research purpose the following research questions constitute the basis of the thesis:
1) From a circular economy perspective, which suitable end-of-life strategies do fashion retailers have for returned custom-made products and how do they look like?
2) How can these suitable return handling possibilities be implemented?
3) Do the proposed options contribute to some compensation of the financial losses as a result of the customer returning the product?
1.4 Delimitations
The scope of the study concerns strategies with regard to the end-of-life of the product lifecycle, the beginning- and middle-of-life phases are not in focus.
In this research there is no relation made between the examined end-of-life strategy and the use of sustainable materials.
2 The case company Son of a Tailor
Son of a Tailor is a Danish fashion e-retailer selling custom-made knitted T-shirts, polo shirts and pullovers. The garments are either made from 100% extra-long staple cotton fibres or 100% merino wool. It is a small company that started their business in Copenhagen in 2014, but that employs today ca. 23 employees and has a current turnover of about 4,2 million DKR.
In 2018 Son of a Tailor reached the sales of 100.000 T-shirts. The founders of Son of a Tailor, Jess Fleischer and Andreas Langhorn started the company with a mission: “to make fashion better”. Through applying technology and innovative thinking the company’s focus lies on creating timeless T-shirts and casual wear of a very high quality and durability aiming at increasing the lifespan of its products and the aim to challenge the traditional way of producing fashion.
Customers create their custom-made T-shirt with the help of an algorithm program called Ideal Size™. All products are delivered with a 100% Perfect Fit Guarantee, meaning that in case the ordered garment will not fit the customer, they receive a new one with the required adjustments.
Son of a Tailor have all its products manufactured in either Portugal or Italy and in close collaboration with its suppliers. Son of a tailor and its stakeholders are continually learning from each other with the goal to improve all the time. Son of a Tailor makes the workers behind the customer’s order visible as every custom-made order includes a hangtag signed with the name of the person who worked on the piece with the intention to create a personal relation between the supplier and the customer.
The overall aim for Son of a Tailor is to offer its customers fashion in combination with technology to create less waste and reduce CO2 emissions. Through producing garments of a high quality, a tailor-made fit and creating a personal relationship with their customers, Son of a Tailor intends to contribute to a consciousness consumption by its customers and intends to reduce waste by supplying them with T-shirts and casual wear that last longer than average mass-produced items. As a result, the number of customer returns is much less, and therefore less manufacturing time and material is wasted and there is a reduction in CO2 emissions.
Through producing made-to-order no inventories are built up with the risk of unsold stock being avoided. The core values that Son of a Tailor strives after is reducing wasting in everything they do and being transparent in their business (Son of a Tailor 2020a; b & c;
Founders stories, 2020).
2.1 Unit of analysis: The Zero Waste Pullover
The embedded unit of analysis within the case study (Yin 2018, p. 51) is the Zero Waste Pullover for the reason that these garments are collected and taken back. In 2019 Son of a
Tailor made the next step in their contribution towards a more sustainable fashion industry by introducing the Zero Waste pullover, a 3D knitted pullover made of pure merino wool.
Because the pullover is manufactured as a complete garment, Son of a Tailor is able to reduce production waste from 20% to less than 1% (Son of a Tailor 2020d).
As with any production process, there are instances where things can go wrong which means that there is a small fraction of orders that do not result in a 100% fit 100% of the time.
However, due to the high production costs, in such a case Son of a Tailor asks their customers to return the pullovers to them at the expense of the company.
If it is possible to get so close to producing almost 0% waste in production, then the next logical step is to take care of the return products and to further close the loop in the supply chain, while taking the responsibility as a company to also look after the “waste” at the end- of-life phase of the product. Even though the number of returns is relatively small, from an environmental perspective the end-of-life phase is an important aspect.
The challenge for a company selling customised garments with unique sizes is to implement a suitable end-of-life strategy or strategies that reinforce(s) the business model.
3 Literature Review 3.1 Mass customisation
Discussion on about the concept mass customisation as a sustainable alternative to mass production in the academic world started about 30 years ago. Originally mass customisation was presented as a concept serving the individual needs of the customer on a large scale, without compromising on costs. Stan Davis was one of the first people that explicitly discussed the concept of mass customisation in his book “Future Perfect”. It was a concept that was introduced as “a system in which the same large numbers of customers can be reached, as in mass markets of the industrial economy, but simultaneously can be treated individually, as in the era of customised markets in pre-industrial economies” (Davis 1987). About six years later Joseph Pine filled out the concept more thoroughly by defining mass customisation as a strategy in which as many varieties and individual adaptations of products are provided to meet as many individual customer’s needs as possible against prices that are comparable to those of mass production (Pine 1993).
Before the industrialisation clothes were tailor-made. The upper classes ordered their clothes from the tailor to show their status and that they belonged to a certain class. Making customised clothes at that time was time consuming and the costs were considerably high.
With industrialisation, however, clothes could suddenly be produced on a large scale with more affordable prices and at a much faster pace when using standard designs and sizes (Dissanayake 2019). The further development of the industrialisation made clothes accessible to the masses, but with the negative consequence of rising mountains of clothing that are quickly written off as waste.
3.1.1 Knitting technologies within mass customisation
The use of knitting technology lends itself very well to mass customisation and can be applied in three degrees: cut and sew; fully fashioned/integral knitting; and complete garment knitting (Larsson, Peterson & Mattila 2012). In particular, the latter production technique in particular has a major advantage over traditional knitting production: the technique does not require cutting, and consequently, there is no material waste. The garment is knitted readymade in the knitting machine in the right size and fit (Peterson 2012). The downside of this technique is that if something goes wrong with the size or fit on either the body part or the sleeves and results in a returned garment then it can be argued whether or not this is the optimal design for the end-of-life phase. The option of updating of only a module or panel of the garment in order to get the right size or fit for complete garment knitting is most likely not possible and could limit possible solutions in light of the research question. Modular design as a possible solution to prolonging the lifecycle of a product is well discussed in the literature (Fletcher 2014; Möller 2017).
3.2 The logistics of mass customisation versus traditional fashion logistics
In recent years, however, the opportunities related to the implementation of mass customisation to minimise “waste” throughout the supply chain is emphasised and discussed by various authors. Several arguments advocate the implementation of mass customisation to reduce “waste”, both in terms of the physical use of material as well in terms of processes.
One of the arguments for implementing mass customisation that results in reducing waste is the fact that production meets actual demand, since production first starts when an order is placed and paid by the customer whereas the management of a traditional fashion supply chain is characterised by long lead times between the moment of design until the point of sales which results in forecasting errors. Sometimes the garments produced are already obsolete stock before it even hitting the retail shelves (Peterson 2012). The risk in the supply chain is reduced through for customised fashion garments through the implementation of a postponement strategy in the production (Harrison, van Hoek & Skipworth 2014) resulting in no overproduction or unsold stock due to forecast errors (Larsson, Peterson & Mattila 2012;
Bergmann 2012; Dissanayake 2019). Consequently, the sell-through ratio in mass customisation is higher than in traditional fashion (Larsson, Mouwitz & Peterson 2009;
Peterson & Mattila 2010) in which sell-through is explained as the percentage of garments that are sold at full price on a SKU level. The sell-through ratio for traditional fashion is estimated at 65% (Mattila 2009). The remaining 35% mostly go on sale which means a lower profit or even no profit at all. The remnants that are not sold during a sale ends up as waste in landfill or are incinerated. In contrast the sell-through ratio for fashion customised products is rather higher and is estimated around 90%.
Another argument that advocates for the use of mass customisation resulting in reduced waste is that the fit of customised products better matches the needs of the customer (Larsson, Mouwitz & Peterson 2009; Peterson 2012) and ensures that the products are actually used (Brunø, Nielsen, Taps & Jørgensen 2013). Furthermore, mass customisation can also lead to an extended user phase that results in waste reduction (Dissanayake 2019) The extended user phase is the result of the customer’s involvement during the co-design process that increases the emotional attachment to the product (Cobbing & Vicaire 2017), but also because of the created uniqueness of the product using mass customisation.
Other than the above-mentioned arguments advocating for mass customisation are the opportunities of reducing “waste” during the production and information process.
3.3 Reverse Logistics and closed loop systems
Sustainable action as a company stretches further than reducing waste during the production phase and in the use phase. The way the end-of-life of a product is treated, is strongly connected to sustainability. A sustainably produced product that is disposed at its end of life through either landfilling or incinerating cannot be considered as truly sustainable. Some products that are disposed of contain harmful material that threatens the environment.
Furthermore, continuously producing new material will eventually lead to natural resource
depletion of some raw materials (Nielsen & Brunø 2013). From an environmental perspective, the goal with reverse logistics is to hinder post-consumer waste from happening (Jayaraman
& Luo 2007).
Reverse logistics is concerned with taking back products with the aim to create or capture value through different end-of-life strategies. Rogers and Tibben-Lembke (1999) define reverse logistics as
“…the process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing or creating value or for proper disposal.”
One of the drivers for reverse logistics can be to through legislation, such as the Extended Producer Responsibility (ERP), in which the producer is held responsible for the product they produce till after the post-consumer stage instead of only at the moment of sale (OECD 2001).
So far only France applies ERP in relation to textiles, but implementation of ERP frameworks is under discussion by an increasing number of countries. For now, all post-consumer waste initiatives taken in relation to the extended responsibility of the producer are voluntarily driven by the fashion industry so far (Hvass & Pedersen 2019). Earlier, Hvass (2014) already contributed with a research about the possibilities to capture value creation from postconsumer textile waste from a fashion company perspective. It was concluded that that the main drivers for fashion companies to get involved in reverse logistics and engaging in post-retail activities are economic and corporate citizenship related, in which corporate citizenship is translated into sustainable development through environmental and social aspects. These findings support the research in examining what the possible post-handling possibilities for customised fashion retailers could be that is not covered in the literature according to the author of this thesis.
The authors Nielsen & Brunø (2013) concluded in their article “Closed Loop Supply Chains for Sustainable mass customisation” that there is a potential for a higher level of product sustainability through the application of mass customisation in closed-loop supply chains. The introduction of closed-loop supply chains will result in reduced amounts of produced waste, lower the demand for raw material production and thereby, lower energy consumption.
However, the introduction of reverse logistics taking into existing business models to promote circular economy has its challenges (Hvass & Pedersen 2019). Hvass & Pedersen (2019) came to the conclusion, that fashion companies should attempt to reduce the transaction cost through partnership for reverse logistics in their product returns management.
Another essential conclusion Hvass & Pedersen (2019) made, is that for fashion companies that implement reverse logistics it is sometimes difficult to measure the value of it. Therefore, companies should shift towards a long-term value proposition in favour of short term focuses on profit. This could indicate that possible compensation in searching for alternative
handlings options of post-return customised garments could be translated in other type of value than just economic value and requires that other values be taken into consideration in this research.
3.4 Value creation and caption
Through the implementation of reverse logistics additional values can be created from existing resources and consequently the value chain can be seen as closed-loop system (Jayaraman & Luo 2007). By including a reverse supply chain in the business model and engaging in end-of-life strategies, fashion retailers can create more than only economic related values, such as environmental and social values (Sandberg, Pal & Hemilä 2018).
Sandberg, Pal and Hemilä (2018) subsequently state that environmental value can be considered as use value for the retailers themselves. By taking back unwanted products directly or indirectly as being part of an image-building strategy for the company, nonfinancial values such as improved customer relationships and increased customer satisfaction may emerge by having an additional point of contact with the customer (Jayaraman & Luo 2007;
Sandberg, Pal & Hemilä 2018).
Implementing a holistic view on value creation in closed loop supply chains allows for a more sustainable value creation that covers economic, social, and environmental values (Möller 2017; Yang, Vladimirova & Evans 2017). Möller (2017) states that factors that enable sustainable value creation in sustainable supply chains requires the need for companies to focus on people-related issues, such as core values, philosophies, and social relationships.
Stubbs and Cocklin (2008) agree that for sustainable companies, the economic value of creating profit should only be seen as a mean to exist and to facilitate value creation in sustainable activities and to move away from mainly achieving short-term financial results.
Others have called this corporate citizenship, which also aims at development in social and environmental aspects. Fashion companies acknowledge that the driving motivations for engaging in post-retail activities are not only economic but as well corporate citizenship related as well (Jayaraman & Luo 2007; Hvass 2014). Corporate citizenship means the contribution of value to people/society and the environment that in its turn contribute to a company's corporate image and which eventually results in an increased market share.
Sustainable value creation as discussed by Yang, Vladimirova and Evans (2017), looks at possibilities for value creation across the entire product lifecycle. However, as discussed under the section about logistics of mass customisation, the beginning- and middle-of-life for mass-customisation has a strong focus on minimising waste and optimalisation of the supply chain. Therefore, the assumption can be made that for mass customisation further value creation needs to be sought by expanding beyond the end-of-life phase through post-retail activities.
Although not exactly the same values are discussed in other articles related to the fashion industry, it confirms that there are values to be captured in the end-of-life phase of clothing.
(Hvass 2014, Pal 2016, Sandberg, Pal & Hemilä 2018, Pal, Sandberg & Paras 2019, Hvass &
Pedersen 2019),
3.5 Core Values
The relation between the core values of a company and sustainability has not been widely discussed in the literature yet. Jollands, Akroyd and Sawabe (2015) aim in their research to examine in light of sustainable development which effects core values have on actions taken by organisations. They concluded that core values indeed guide individual actors in the mobilisation for sustainable development at specific moments, but that more research is required for understanding which influence core values has when sustainability develops over time. Pedersen, Gwozdz and Hvass (2018) are talking about organisational values instead of core values but are also claiming that these values are playing a decisive role for successful implementing of business model innovations and corporate sustainability, whereby management decision-making should be aligned with the organisational culture in order to achieve sustainable development. Although core values and organisational values are not exactly the same, organisational values form the foundation for the core values and are closely related (Urde 2003). Todeschini, Cortimiglia, Callegaro-de-Menezes and Ghezzi (2017) concluded that it is a challenge for young fashion companies with a sustainable business model to stay true to their core sustainability values when scaling up.
3.6 End- of-life strategies discussed in relation to product characteristics
The term “end-of-life” in the context of a product’s lifecycle refers to the phase in which the product no longer meets the expectations or fulfils the needs for the first user of the product (Rose 2001).
Defining strategies is the process of formulating and implementing of activities to reach a goal in which decision-makers are weighing strategies against each other depending on their business model, their product and possible regulations (Gehin, Zwolinski &Brissaud 2008). For companies that incorporate Sustainable Business Models, the end-of life phase of a product should be integrated as strategic part of the company (Stubbs & Cocklin 2008). Although the end-of-life phase has been widely discussed the last decade in terms of value creation and recovery initiatives there are few articles that explicitly discuss the options for the end-of-life in terms of strategies. Rose (2001) was one of the first that talked about end-of-life strategies and discussed these strategies as processes that describes the activities that involves the end- of-life phase of a product with the strategic aim of recovering value from the depreciated product. The last decade a few other academics have put strategies in relation to the end-of- life phase and often refer to Rose (Gehin, Zwolinski &Brissaud 2008, Fukushige, Yamamoto
&Umeda 2012, Remery, Mascle & Agard 2012, Alamerew & Brissaud 2018).
Different end-of-life strategies have different environmental impacts. Strategies towards closing the loop can be divided in material and product-related activities. An end-of-life strategy that is product related has a shorter loop and therefore has a lower environmental impact. In contrast an end-of-life strategy that is material-related has a bigger loop, and therefore, it has a higher impact on the environment. This is because it either requires quite some additional value or has little value left inside (Rose 2001).
Nielsen and Brunø (2013) state that many mass customised products can be reused in an asis configuration. Yet, this could actually be difficult for customised fashion products with a focus on fit, size and design, which create product characteristics that are highly personal and unique. To be able to match the need of another person could be challenging.
Sandvik and Stubbs (2019) argue that end-of-life activities such as reuse/resale and remanufacturing in fashion are dependable on a product’s durability and production quality.
Durability and quality are among others, the results of the characteristics of a product. Earlier, Rose, Ishii and Masui (1998) and Remery, Mascle and Agard (2012) already discussed that product characteristics are determining in the choice of a suitable end-of-life strategy. Rose, Ishii & Masui (1998) generated four main factors, divided into sub-elements that define the characteristic of a product. Although this article is based on findings from electrical consumer products, some of these elements defines also the product characteristics of fashion products. The main factors are divided into external, material, disassembly and inverse supply chain factors (Rose, Ishii & Masui 1998). Usable elements for fashion products to take into consideration could may be wear-out life; functional complexity (external factors); number of materials, recycling value drivers (material factors); number of modules; disassembly time (disassembly factors); and responsibility for recycling, responsibility for transportation and recycling drop-off possibilities (inverse supply chain factors).
3.6.1 End-of-Life strategies explained
Below a short description of the different end-of-life strategies in fashion is given, along with a general product characteristic description of the benefits and disadvantages of the strategies and the challenges faced:
Table 1: Reuse
The process of using clothes in their second life “as is”, either through selling via second-hand shops or internet-facilitated websites or through donating (Fletcher 2014)
Product Characteristics: Have a low aesthetic obsolescence Benefits: Little or no cleaning required,
Minimal productions costs and reduced environmental impacts,
Disadvantages: Only appropriate for products with low aesthetic obsolescence,
Concerns over quality and fitness for purpose
Challenges: Aesthetic obsolescence, Limited markets
Sources: Centre for Remanufacturing and Reuse, (no date)
Table 2: Remanufacturing
The process of making something new out of used clothes through different redesign options and from which the quality is equal to the quality of a newly produced garment (Pal,Larsson, Torstensson,
& Scott 2018)
Product Characteristics: High inherent material value and production cost, high quality components can be reused many times, Potential for disassembly
Benefits: Ability to charge as new-price whilst benefiting from reduced production costs and reduced environmental impacts.
Disadvantages: Product must be disassembled down to component level, Significant time and financial investment to set up the system
Challenges: Customer’s perception of quality, Levels of product return
Unknown product quality Sources: Centre for Remanufacturing and Reuse (no date)
Table 3: Recycling
The recovering of fibres, yarns or fabrics through the collection of pre- or post-consumer waste by turning these into new materials, such as new fibre, yarns or fillings or for energy recovery through burning (Kadi 2019)
Product Characteristics: Constructed out of mono-material, Have the potential for disassembly to component level, Contain high value material
Benefits: Positive branding opportunities due to widespread knowledge of recycling,
Divers material from landfill and reduces production of virgin materials Disadvantages: Mass recycling of products consisting of mixed materials can lead to contamination and quality variation
Challenges: Separation of products consisting of mixed materials, Low market value for recyclates
Sources: Centre for Remanufacturing and Reuse (no date)
The three above mentioned end-of-life strategies are strategies that are associated with the closing the loop. Strategies that focus on extending the product lifecycle are called product service systems, such as repair and sharing.
Table 4: Repair
Repair services through either offering the service in-store or offering products and instructions for DIY (Pal 2016)
Product Characteristics: Have a high inherent value, Have high initial costs
Benefits: Increased local skilled jobs,
Reduced environmental impacts of production
Disadvantages: Product likely to have a low resale value
Challenges: Relatively small market for repaired products, High costs of one-off repair
Sources: Centre for Remanufacturing and Reuse (no date)
Table 5: Sharing
All activities that include renting, leasing, lending, swapping or sharing of clothing as transaction between a retailer and a customer or between customers (Perlacia,Duml & Saebi 2017)
Product Characteristics: Have a high product quality
Benefits: Reduced environmental impacts of production Disadvantages: Product likely to have a low resale value, High logistics costs when through E-commerce platform Challenges: Availability of high-quality products Relatively small market for sharing products,
,
4 Methodology
In this chapter the research process and methods are outlined and motivated. The first part of the methodology chapter introduces the purpose of the research. The second part presents the process of data collection. The third part discusses the analysis of the data and the research relevance in terms of internal validity and reliability.
4.1 Research design
Qualitative research strategy is often characterised by an inductive approach towards the relationship between theory and research, which entail that the theory is produced out of conducting research (Bryman 2016). However, according to Kovács and Spens (Kovács &
Spens 2005), applying an abductive research approach results in new understandings of existing phenomena by illuminating these from new angles as is shown in Figure 1. From this, it is understood that this is done “through interpreting or re-contextualizing individual phenomena within a contextual framework, and aims to understand something in a new way, from the perspective of a new conceptual framework.” (Kovács & Spens 2005, p. 138).
Timmermans and Tavory (2012, p. 174) also provide that “abductive analysis specifically aims at generating novel theoretical insights that reframe empirical findings in contrast to existing theories.”
Figure 1:The abductive research process (Kovács & Spens, 2005:139)
For this research, the author chose to apply the research strategy with an abductive approach.
Kovács and Spens (2005) further argue that abductive reasoning is frequently used in case studies as research design. As Yin (2018, p. 15) states, “a case study is an empirical method that investigates a contemporary phenomenon (the “case”) in depth and within its real-world context, especially when the boundaries between phenomenon and context may not be clearly evident.” The case within this research is to explore suitable end-of-life strategies for returned mass customised fashion products and complete knitted garments in specific, by exploring the possibilities for an existing company. Case studies can comprise both single and
multiple-case studies, but for this research an embedded single-case design is applied (Yin, 2018). The embedded unit of analysis is the customised complete knitted garment, the Zero Waste Pullover within the main case of mass customised garments.
According to Yin (2018, pp. 27-34) a case study research design includes 5 components, which are the research questions, propositions, case(s), the logic that links the data to the proposition and at last the criteria for interpreting the findings. The first three components are discussed in the introduction and the case company description. A literature review that was carried out on topics that could support the case followed by interviews for collecting empirical data, and that was analysed with the help of a conceptual framework. Thereafter, secondary data was collected to create an overview of the real-world context in the form of end-of-life strategies implemented by fashion retailers. The next two paragraphs describe in detail the data collection and analysis which explains how the approach is linked to the proposition. Finally, the case was tested within a new proposed framework which helped to interpret the findings.
4.2 Data collection
4.2.1 Primary data collection
Within exploratory research conducting interviews are a common method to collect data, as interviews can give a rich source of information. The advantages of using semi-structured interviews is that that it serves as a guide about the content of the interview but still allows for variation in the questions and to deepen the answers given by the interviewee (Bryman 2016).
4.2.1.1 Interviews
Four semi-structured interviews were held. The first interview was a 30 minutes interview with a scholar from the University of Borås, that has conducted research in adjacent subjects and that provided an orientation in the field of mass customisation and circularity. Findings of this interview are not included in this article but constituted a better holistic understanding to conduct the study. The interviews with the employees of the case company took between 45 and 50 minutes. The first interviewee at the case company is working as Product and Sustainability Engineer and is responsible for the product referred to as the Zero Waste Pullover. The other interviewee is working as Head of Product and is responsible for developing the product. At a later stage even a third person, working as Head of Growth at the case company answered some of the interview questions in writing.
4.2.1.2 Interview guide
The outline of the semi-structured interviews conducted with employees of the case company were guided by the article “Creating and Capturing Value Through Sustainability” (Yang, Vladimirova & Evans, 2017). The article formed input for topics to focus on during the interview so that the tool to perform the analysis with, that is described in the same article,
could be employed. The goal is to identify uncaptured values that are broken down in value absence, value surplus, value destroyed, and value missed (Yang, Vladimirova & Evans, 2017).
The benefit of conducting semi-structured interviews is the interchange between the interviewer and interviewee (Kallio, et al., 2016) and the possibility to deepen the discussion through follow-up questions providing a thick description of information as much as possible.
The interview questions were adapted to the persons’ roles within the company, but the main content and subjects to address remained the same. See Appendix A for an overview of the outline of the interview questions and explanation for the terms value absence, value surplus, value destroyed, and value missed.
4.2.2 Secondary data collection
In the second phase of the research data, there was a collection made of 10 small to medium- sized fashion retail companies that have extended their original linear business model with circular innovative business models by engaging in post-retail operations through various end -of-life strategies, either through closing the loop or through extending the product lifecycle.
All companies were mentioned in the report “Evaluation of business models for increased reuse, collective reuse and prolonged lifetime of textiles” issued by Mistra Future Fashion (2017). The authors of the report have identified 59 companies that were engaged with such business models. Five of these 10 companies were also mentioned in Greenpeace´s report
“Fashion at the crossroads” from 2017 (Cobbing & Vicaire, 2017). In this report, Greenpeace has compiled fashion companies that have introduced design concepts and strategies for closed-loop systems and which subsequently have been assessed by Greenpeace using a fourlevel classification system ranging from red “wrong direction” to green “being on the right track”. For further explanation of the assessment, the author refers to the report published by Greenpeace.
The 10 companies studied were chosen on the author’s personal assessment of companies with an interesting circular business profile. Subsequently, data was collected from the chosen companies’ websites, companies’ sustainability reports, and research articles that have studied some of these companies in the same field. For some brief background information on the 10 chosen companies, see Appendix B.
4.3 Data analysis
The data retrieved from the interview transcriptions were coded in emergent themes and uncaptured values by processing the data on spreadsheets, dividing the material in categories and sub-categories and colour codes, representing value absence, value surplus, value destroyed, and value missed. This resulted in the identification of uncaptured value and issues coming forth in relation to the Zero Waste Pullover and against the current business model.
Value propositions tools form a framework in supporting the development of a business modelling process (Bocken, Short, Rana & Evans 2013). The Sustainable Value Analysis Tool, created by Yang, Vladimirova & Evans (2017) supports innovative business models to identify uncaptured value with the aim to create new value and to capture it. It is a holistic framework that aims for the creation of sustainable value comprising the elements of environmental, social, and economic value according to the triple bottom line viewpoint.
The Sustainable Value Analysis Tool as designed by Yang, Vladimirova and Evans (2017), looks for possibilities for value creation across the entire product lifecycle, but in this study the tool has been modified with focus on opportunities for value creation only at the end-of-life phase.
The literature showed that companies with mass customized products already have a sustainability focus in terms of minimizing waste and optimisation during the product development and manufacturing process, as well in the use phase and that the creation of additional sustainable value must be sought by expanding in the end-of-life phase through post-retail activities.
From the literature review it was found that that the organisation’s core values influence the success of innovative business models, and that product characteristics play a decisive role in the choice of end-of-life strategy. As the product lifecycles beginning-of-life and middle-of- life have been left out of the research for the reason that sustainability has been the starting point in these two phases all along.
The purpose of collecting the secondary data of fashion retailers that have extended their original linear business model with circular innovative business models, was to generate an overview of post-retail initiatives that already experienced this transformation. By applying outcomes of the literature review, the exerted post-retail activities of the studied fashion retailers were analysed on core values and product characteristics, supported by research about the relation between core values (Pedersen, Gwozdz, & Hvass, 2018), product characteristics (Rose, Ishii. & Masui, 1998) and business model innovation. Further, an analysis was made as to what extent the end-of-life activities were in line with the core values and product characteristics, to the extent this was possible.
Based on the above findings the Sustainable Value Analysis tool has been modified, see figure 2.
The intertwining of the analyses from the interviews and the 10 studied post-retail business models formed the foundation for evaluating and discussing the implementation of the different end-of-life strategies for the customised Zero Waste Pullover based on a modified version of the Sustainable Value Analysis Tool and provide the answers for the research questions as shown in the segment 6.3 Research questions answered. The tool facilitated the identification of uncaptured values and mapped whether destroyed and absent values could
be eliminated and whether value missed and value surplus could be captured. Subsequently, the tool helped to assess the value opportunities.
Figure 2: Modified version of The Sustainable Value Analysis Tool (Yang, Vladimirova & Evans, 2017 p. 34).
5 Findings
This section compiles data from the interviews with persons working at the case company and the studying of 10 fashion retailers that have implemented an end-of-life strategy. The section is divided into two separate findings. Based on the findings, the analysis and discussion are performed.
5.1 Interview findings
This paragraph compiles collected data from the interviews with the Product and Sustainability Engineer and the Product Development Manager of the case company. A third interview was held with the Head of Growth in writing at a later stage. The last respondent only answered the more general question in relation to the company and not the specific questions regarding the end-of-life. The interview questions were guided by the article
“Creating and Capturing Value Through Sustainability” (Yang, Vladimirova & Evans, 2017) that
introduces the Sustainable Value Analysis Tool that is used in the analysis of the findings.
Findings from the interviews gave insight about the core values of the company and the values created, delivered and captured. The findings encompass specific findings in relation to the product the Zero Waste Pullover and general findings about the case company.
Quality
A theme within the case company is the focus on a constant delivery of quality throughout the supply chain. This constant delivery of quality relates to the customers, the suppliers, and also internally among the employees where quality is defined in several ways. Quality is not only translated by the case company in the material used, the fit of the garment, the quality of their customer support, and the transparency towards the customer. It is also translated through the company’s collaboration with their suppliers that is aimed at continuously improving the production process and the working environment as well as their internal attitude to be honest with each other and to continuously improve. According to the respondents the delivery of quality is confirmed by their customers when asking how the customers’ reactions are on their products. Their customers talk about the quality of the material, the fit, the colourfastness of the garments, the easiness of navigating on their webshop and engagement of their customer service.
Core values
A key finding from the interviews is the search for an end-of-life strategy that does not impinge on the core values of the company, but rather a search for strategies that extent those core values. Both respondents were questioning and mentioning examples of possible end-of-life strategies and what the impact of implementing such a specific strategy possibly could have on the core values of their business. Furthermore, it was noticed the importance of staying true to its business model and the company’s identity to avoid building up too high expectations and to stay upfront.
Design and product characteristics
To optimise recovery at the end-of-life of a product’s life, design at the beginning of life is important. Sometimes changes must be made at the design stage to optimise recovery.
The interviewees of the case company believe that they have the optimal design for their products as it is today, taking into account their business model to reduce waste in the supply chain and the complexity of all the different sizes when producing tailor-made. In the case of the Zero Waste Pullover, the question was asked whether the pullover as a 3D-knitted complete garment an optimal design is for being able to do something else with it at the end- of-life phase. The respondent explained that the focus for this product was very much on to create it without any waste, a specific product characteristic to the product. The respondent concluded that to alter only a part would require another construction or manufacturing technique which would most likely lead to more waste in the production stage, not only in terms of material, but also in terms of additional manpower required in production.
However, the case company is a company that is open to improvements. With regard to design of their other products, they are studying alternatives in their patternmaking for their T-shirts and other pullovers in order to further reduce material waste, even if the alternative would mean higher costs in production.
Sustainable value creation and caption
As it is today, the case company create and capture value through offering custom-made garments adapted to individual needs and through the use of high material quality and by utilizing technology
Customers that are returning a Zero Waste Pullover as result of not having met the 100% fit guarantee are returning an almost completely new garment that still has high utility and economic value. The respondent gave the insight that due to the high quality of the garment;
the use value is missed of those returned items.
Reflections upon any absent values were noted as the recognition of not having a return system in place for the products that have passed the customers’ use phase. This means that the Zero Waste Pullover most likely ends up as waste any way after having been worn by the customer. Having no return system for products that have passed use phase is also valid for their other products. The respondent answered that the thoughts for such initiatives are there but that the company is not there yet.
When asking the respondent to identify any possible opportunity for value creation at the end-of-life phase of the Zero Waste Pullover, an uncertain attitude was shown about what would be best for the company. There were questions as to if one value creation could jeopardise another value creation, and how it would best match their business model.
One of the respondents was wondering when implementing an end-of-life strategy what will create the most value for the company and at the same time for the world. Would the transformation of the returned product into a new product that creates increased environmental value and maybe social value, but at the same be too expensive and being far from economical rewarding in the end?
In general, the responses from the interviews showed a high social and environmental interest. The respondents were aware of what impact the end-of-life of the product has and the ability the end-of-life of the product can create. Having the returned Zero Waste Pullovers in storage is similar to the company as creating waste, which should be avoided. The company has started a social project there the local employees of their manufacturer in Portugal create carpets of the cutting waste of their T-shirts.
Table 6 provides a summarise of the findings including the supporting quotes from the interviews
Table 6:
Summary findings from the interviews: uncaptured value identifications and emergent themes (VD=Value Destroyed, VA=Value Absent, VM= Value missed, VS=Value Surplus)
Zero Waste Pullover
Emergent themes/uncaptured values
Supporting quotes from the interviews
Risk for impingent with core values (VD)
“[…] Now I'm talking about if you kind of resell it in some way. Then that then you miss out on actually some of our core values; the On-Demand perspective we have, for instance, and the no stock […]”,
“[…]And is that the experience that you want when you are a customer of Son of a tailor?...
but I think most of them also go to Son of a Tailor because I know what they can get it exactly as they want. I'm not sure if people are willing to compromise with a centimetre here, to get a cheaper. I'm not sure that we are willing to broaden our eh.. concept. […]”, Altering design for optimising
recovering end-of-life results in more waste
“…it's just a bit more tricky in the Zero Waste Pullover also because our focus is very much been to create it without any waste. But if we were…. to separate the parts it will require that we construct it and produce it in another way, meaning that then we will automatically get more waste in the beginning…..
But then again, the manpower and the effort you need to put in that, it doesn't economically make sense at all…..
Missing on a high use and economic value of the returned items (VM & VS )
“the use of the value…..you miss out on a really, really good quality.”
“... The quality is so high that it will maintain its economic value.”
“But on the other hand, the quality is really, really good and the material maintain it's quality. So it’s…. I guess it's a surplus.”
Opportunity for value creation that matches business model and is not conflicting.
“But we're not quite sure how it should look in the end and what will create the most value for us, but also like the world.”
“So also, it would be much better for us to give it to charity than it's just lying there. But, of course, …. it's such a good quality and it's so expensive. We are very much interested in finding use of it in another way.”
Case Company Emergent themes Supporting quotes from the interviews Optimal design other products in
relation to business model
“[…] But as our products are tailor-made,… It's just it's it's a different complexity, which with all the sizes. I actually do not believe that we would get there. And we are doing ….for example, a
study currently in our pattern making team, which is to actually create extra seams, even though that would mean that the products would become more expensive for us to make, but it's something that we would be willing to do if that would mean reducing material waste in cutting. But so far, … we don't believe that that is possible… But I think for us, we do have the optimal way of doing it now.”
Search for end-of-life strategy that aligns with core values and business model
“[…]to test what would be the impact either, right. Would it be even worse for us that we are recycling?”
“[…] be very upfront so you don't build up, for example, to high expectations either […]”.
Focus on delivering quality throughout the supply chain and the recognition of this by the customer
“[…]we are constantly looking into our supply chain and production to see where can we optimize things. Meaning that we constantly track and gather data on, for instance, the fit or how to respond to the quality. And then we adjust all of these things. So, for instance, with the t shirts as well. We have updated our sized algorithm constantly to make sure that the fit become better and better. And we do that for the pullover as well. So we start very early in that sense.”
“[…] the customers, if, it's mainly they they they are very impressed with the fit[…],they're impressed with the quality. They're impressed with how their colour stays, how the the the shapes stays after washing as well. And then our customer support as well, because we do…That's another thing that we have been trying as well along these these years is,… to sort of make the customer feel that there is less distance.”
Recognition of an absent
environmental value in not having a take-back system for their products that passed use phase (VA)
“An environmental absent value for the pullover will be that we do not have a return system and we do not have a return system for when the customer is done by using it... This means that the pullover in the end will end up as waste as well...
I guess that you could argue it is an economic thing as well - there could be BC in thinking of a return system in more aspects than just the return system for when the size is wrong...” ”That we are not there yet. I think the only thing that we don't do and that we would like to and that would be the thing that would make sense is recycling.”
“I think the only thing that we don't do and that we would like to and that would be the thing that would make sense is recycling. […] Recycling or upcycling, I don't know what you would call it then. But I believe that some part of it would have to…, would have to be part of how we do things in a in some way, either finding a way of reusing it without having to create something
