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Translated by
Mar 22, 2022
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Circular economy: The challenges for brands and retailers facing the independent resale market

Translated by
Mar 22, 2022

The rise of the circular economy along with the emergence of peer-to-peer resale marketplaces are driving brands and fashion retailers to review their model, an evolution from which they have everything to gain. The following are the findings of an in-depth survey on this topic conducted by the Cetelem Observatory throughout 17 European countries (Austria, Belgium, Bulgaria, Czech Republic, Denmark, France, Germany, Hungary, Italy, Norway, Poland, Portugal, Romania, Slovakia, Spain, United Kingdom and United States).

The circular economy is increasingly changing the way fashion products are sold - Observatoire Cetelem

A quarter of Europeans are now aware about what the circular economy is exactly and eight out of 10 have a positive perception of it. 85% of them believe that "it is beneficial to the environment and natural resources". Eight out of 10 Europeans wish to practice it in order "to earn more money", while 75% see it as an opportunity "to spend less". In fact, the two arguments in favor of this practice that came out on top in the survey were "the search for savings" and, secondly, "the conviction to behave in an environmentally responsible way".

With the development of the circular economy, the role of the buyer, who has the option to occasionally become a seller, is changing. The consumer "becomes an entrepreneur of his own consumption and, therefore, a more complex figure", leading "to profound changes in the habits of brands and retailers", as observed by the report, indicating that the profits obtained by consumer/sellers amount to an average of 77 euros per month, and that men are almost twice as likely to sell second-hand goods than women (98 euros compared to 58 euros).

Faced with the resale power of consumers and their desire to buy more sustainably, brands and retail chains are adapting by "transforming this desire into behaviour, and then into habits.” Retailers have begun to change the way they sell by offering second-hand products or the possibility of renting them. Others are launching their own resale sites or recycling clothes.

Brands are thinking of ways of giving their products a second life, such as offering customers the possibility to refurbish them or put them back into circulation. "Flow is becoming the new challenge for commerce. It is no longer just a question of selling, but of encouraging the circulation of products to prolong their life as long as possible," said the Cetelem Observatory, which points out that "today's shops are places of sale and, for some, already places of life; tomorrow, they will be places of exchange and reuse of products.” This evolution offers a real opportunity for stores, allowing them to differentiate themselves from e-commerce and offer new experiences to their customers.

In this context, retailers and brands have a card up their sleeve. According to the study, the latter still have a slight advantage over CtoC (customer-to-customer). Circular economy mainly refers to "products offered by retailers and brands to consumers" for 57% of Europeans, while for 43%, "it is about products circulating between private individuals (directly or via internet platforms)". Consumers surveyed by Cetelem said that they would buy a second-hand good from a retailer or in a shop as much as from a resale platform from individual sellers (41% and 39%). On the other hand, six out of 10 prefer selling their pre-loved products in resale platforms, and only a quarter turn to brands and their stores.

The top three second-hand players from each country - Observatoire Cetelem

As pointed out by the survey, brands and retailers are likely to continue to play an important role in the market compared to peer-to-peer resale sites since consumers remain deeply attached to ownership. Three out of four Europeans say they are very attached to owning goods and 92% of respondents would rather buy an item of clothing than rent or borrow it.

The main deterrent for 30% of the people surveyed in buying a second-hand product is "the lack of guarantees". Other obstacles: buying a product already used by someone else (26%) and the desire to buy a new product (25%). However, these challenges could be transformed into opportunities for brands to build customer loyalty and reinforce their image as an environmentally responsible player.

According to the survey, 86% of Europeans consider repair rate to be "important or very important when choosing a product", and 90% "expect the same about its durability" through information provided about its robustness and reliability. It should be noted that seven out of 10 Europeans say that they are willing to pay more for a product with a high repair or durability rating.

In conclusion, brands and retailers can benefit plenty from a circular business model. It demonstrates their sense of innovation (for 86% of Europeans), their commitment to the environment (82%), their ability to stand out in the market (78%) and gives them the opportunity to make a profit (77%). Above all, 85% of respondents believe that circular economy is an essential approach for brands and retailers in the future.

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