The circular economy, in which companies move from a system of waste to one of reuse, has been gaining in popularity for years. A new report claims that this model of doing business has finally moved in to the mainstream, as trends like urbanization, rising energy costs, resource shortages, and a related trend, “the sharing economy,” take hold.
JWT’s report, The Circular Economy, defines the circular economy as a system where manufacturers squeeze out as much value as possible from their resources, with the end goal of having a closed-loop supply chain where waste disappears altogether.
There are a number of ways that brands can participate in the economy. One of the most popular methods is selling the temporary ownership of goods–the Zipcar model. But this isn’t just about carsharing. As the report points out, mobile operators like Vodafone have started leasing phones, Dutch company Mud Jeans has begun leasing jeans for €5.95 per month (customers can trade them in after a year), and Patagonia lets customers sell old items on the “Used Gear” section of its website for store credit.
“Not every brand is Patagonia, where there are so many elements in line with the circular economy,” admits Marian Berelowitz of JWT, a marketing communications firm. “Brands are aware of elements, but not the whole idea.”
Other elements of the circular economy cited in the report include facilitation of secondhand sales, facilitating product repair (like Timbuk2’s complimentary repair service), finding new uses for waste (such as Procter & Gamble’s Worth From Waste program, which finds new ways to upcycle product waste), collecting and recycling used goods (H&M’s recycled denim collection), recycling goods via partnerships (Ford’s partnership with Heinz endeavors to find new ways to use tomato fibers in car components), remanufacturing goods, and designing for circular use from the beginning.
Google’s Project Ara is one of the most well-known recent efforts at designing for circular use. The company recently showed off a working prototype of the modular phone, which allows users to swap out parts as they need to be replaced or upgraded. “When you hear about it, it sounds like an obvious idea. Why throw away a phone when you can just replace a part of it?” says Berelowitz.
For most brands, adjusting to the circular economy takes some serious work. They have to extend the customer relationship far beyond a single purchase, for example, if they decide to start leasing products. And they need to start thinking about the environmental impact of their designs and encourage collaboration between departments that may have not had much contact before.
It’s a gamble with some potentially big payoffs. “Ultimately companies will save money, become more competitive, and drive loyalty with customers. As much as it’s a nice thing to be doing, it’s also smart and practical,” says Jessica Vaughn of JWT. “It’s a chance for businesses to build deeper connections with customers.”