Store Innovation Watch: June 2019 – Trends in Circular Retail

Editor's Note: This month we're celebrating the one-year anniversary of Store Innovation Watch. Click here for a look back at the biggest trends in store innovation that were highlighted over the last 12 months.

While there has been a lot of activity across many different types of store innovation, I'm going to take a deeper dive into a concept that has been lurking behind the scenes for a while now, but seems to be making its way to the forefront in the last couple of months: circular retail. Among all of the store innovations that have made it to my desktop since the end of April, circular retail has had the most activity.

What is circular retail? It's the idea of having products that approach zero-impact from an environmental perspective. That's a pretty broad definition and it covers a lot of territory, everything from basic resale that keeps products in the retail economy instead of in the landfill, to refill or "package-less" stores that reduce or eliminate packaging that heads to landfills, to recycling product components into new products (think materials like yarn or plastic).

Retailers are taking several approaches to circular retail, from retail partnerships to pop-ups to charity relationships. Here are five examples just in the last few months…

ThredUp x Peebles

Resale eCommerce site ThredUp opened a resale pop-up shop inside Peebles, a regional department store in Virginia. In addition to selling gently used clothes, ThredUp accepted donation bags of used clothes, and subsequently made donations to Girls Inc. for every bag received.

For ThredUp, the benefit is clear, especially in the context of an experiment. Will people be interested in more "premium" resale clothing in a physical location? Will a ThredUp physical presence either encourage people to donate clothes or encourage people to engage more on ThredUp's website (a benefit that is frequently cited by dot-com companies that open physical stores)?

For Peebles, the collaboration is definitely an experiment, but talk about undermining everything a retailer stands for. For a company that sells new clothing at new clothing prices, having a department in the store that has clothes that may be used, but are of a quality and price that makes them highly competitive with new clothes, how do you not end up with some cannibalization of your own sales?

The Peebles store manager is quoted in the article citing the increased traffic that ThredUp drove to the store, but it's not clear if that traffic translated into sales that benefited the department store. However, there is no more authentic gesture you can make in supporting sustainability than giving up sales in the name of that effort. Whether other, larger retailers take on the experiment remains to be seen.

Carousel by Bloomingdales

Bloomingdales Manhattan opened a pop-up that focuses only on recycled or organic goods. Categories tended towards body products, kitchen and fashion. To be considered for the pop-up, brands had to have some kind of sustainability angle, whether through sustainable techniques that went into the materials, or sustainability evidenced in the products themselves – recycled or upcycled materials.

This is a bit more of a traditional approach than the ThredUp relationship with Peebles, because it's still new clothes at new clothes prices. It does, however, depend a lot on how well the retailer can translate the brands' sustainability value propositions. But curating a selection of goods and putting the Bloomindales brand promise on ensuring that those goods deliver on a sustainability promise does make for a good "short cut" for consumers who want to feel good about the environmental impact of what they buy – so long as Bloomingdales is doing its due diligence on whether brands ultimately are "sustainable."

Trade My Bag

Trade My Bag is an eCommerce site that has joined the rank of dot-com natives moving into physical spaces. Like The Real Real, Trade My Bag is focused not just on selling quality resale items – in this case, specifically handbags – but also in sourcing new inventory. Their pop-up shop in New York sells bags, appraises bags, and buys bags from consumers. Their business model allows you to trade in a bag you bought from them against 80% of the purchase price of another handbag purchased from them, thus ensuring something approaching a rental rather than pure resale.

Here, the pop-up is clearly targeting consumer awareness, as well as finding more high-quality inventory to sell. That is probably the largest challenge for resale sites, especially ones focusing on vintage luxury goods – including handbags: finding enough inventory to meet demand. But Trade My Bag's approach tries to keep consumers coming back for more, creating a virtuous cycle of bag recycling, while clearly taking their slice of the transaction in the process.

ZERO

ZERO is a "zero waste pop-up" shop that opened in Leith. It was a genuine retail pop-up store, with shelves and things to sell, but was run by a local recycling-focused social enterprise. The objective was to raise awareness about zero-waste options for consumers.

When I first read about it, I thought immediately about some of my stickier challenges when it comes to eliminating plastic from my life, for example, the single-use bags in the grocery store for bundling fruit and vegetables. I've started to see others who have found fine mesh bags to use, and reuse, in their place, but haven't seen them for sale – and will undoubtedly have to source them from Amazon, who will ship them to me in a giant box via a plane, which is about the worst kind of carbon pollution you can have.

ZERO took a bit of a different approach: they stocked their store with things that "otherwise would've been headed to a landfill." It's great to raise awareness of how many things can be reused, and one item reused is one less new one purchased. But it's not necessarily one less new one made, and doesn't in and of itself lessen the environmental impact of the original item in the first place.

ZERO is a great first step in raising awareness, and an interesting take of a charity using retail to raise that awareness, but it does also underscore some of the challenges in educating consumers about what sustainability really means.

Harrods x NSPCC

NSPCC stands for the National Society for the Prevention of Cruelty to Children, an organization based in the UK. Together with Harrods, they opened a pop-up shop in London called Fashion Re-Told. The store sells used clothing as well as one-off samples from Harrods, with the proceeds going to the NSPCC. The collaboration capitalizes on three trends: Millennials (and younger generations) rejecting fast fashion in favor of investment pieces that last, shopping "vintage" to avoid buying new, and buying from social enterprises.

Innovation Lessons

It would be easy to say, "go out and find a charity to partner with, and sell some used merchandise," but that is decidedly not the lesson to learn from these examples. The charities and social enterprises involved in the examples above are organizations that have long been focused on the values they represent. It's far more important to ask yourself whether sustainability and/or circular fashion fits with the things your company already stands for.

Outdoor companies have a clear stake in the game – REI, Patagonia, and many others have taken stands on sustainability and reducing their own ecological impact and footprint, in the name of the very environment that drives their sales. Bloomingdales? Harrods? They don't have quite as much credibility in the space as their retail peers focused on the outdoors. The worst thing a company can do is adopt a stance on an issue simply because it has become important to the customers they serve.

However, if you're going to go all in on an issue, then by all means – explore every avenue available to you. Featuring a few designers that specialize in recycled materials is one step, but it's not enough on its own. That's where you can get very creative internally about how to support an issue and make your response uniquely your own.

Finally, if sustainability just isn't a good fit from a values perspective – in terms of making it front and center as part of your brand value proposition – then you don't need to go all in here. Though, as Harrods somewhat cynically pointed out in the drivers behind Fashion Re-Told, Millennials and generations beyond increasingly value sustainability as part of every brand. So you may find that you have to at least meet a minimum expectation here of minimizing your ecological impact, even if it is not central to your brand.