Fashion in Change, Part 3: How can new business models save the world?

‍It is often said that new business models are needed to bring about a radical change that creates climate benefits. How does this relate?

“New business models are essential for the fashion and textile industries to implement the requirements of the EU taxonomy, which will be incorporated into new legislation from the EU and other countries during this decade. If CO2 emissions are to fall by 55% by 2030, fewer garments will have to be produced and each garment will have to live much longer than today. The industry cannot simply implement such a change without rethinking and introducing strategies for new market and operational solutions. New business models related to cost and CO2 reductions need to be introduced. The process of designing, producing and bringing products to market needs to be shortened, and companies need to find solutions on how to change production from large to more and small productions during the product's market period, and it needs to be done closer to the local market to reduce transportation costs.

“This requires new ways of looking at market volume planning, production and logistics, as well as the introduction of new data analysis infrastructure for logistics solutions and factory infrastructure. The beauty of it all is that many other consumer industries have implemented these changes decades ago, so the fashion and textile industries don't have to reinvent gunpowder.

Can you give concrete examples of how changing business models are affecting the textile and fashion industries?

“New business models for revenue over the life of the garment must be introduced. Today, revenue is primarily linked to the sale of garments, but the big meta-changes show that as consumers and users, we are more interested in access than ownership. In other industries, there are subscriptions in which the user has access to an item without owning it, through leasing, monthly mailings and one-time rentals. This is ongoing in the fashion and textile industries and we believe these business solutions will increase in economic importance, but it is worth noting that most rental companies need large volumes before it makes economic sense, and that frequent rentals also increase CO2 emissions with increased transport and packaging.

“Furthermore, services such as the upcoming statutory “Right to Repair” will be a solution that can be offered for some form of insurance premium. So that if you have bought an expensive garment, you can pay a monthly sum to have it repaired without extra large expenses.

“Something that is reasonably new are solutions where the user can access other content, such as entertainment or lifestyle experiences that are only accessible through the combination of subscription and garment.

— Within Fashion Innovation Center Among other things, we work with esports and gaming companies to build unique content that targets the customer group and demographic that a specific brand caters to. We believe the future for brands lies here if they are to be able to sell fewer garments that live longer. We believe that unique content and storytelling can be part of an identity enhancer, and fashion is often fundamentally about identity, or the identity users want others to perceive -- and we're pretty sure that business models that include relevant content and lifestyle experiences would be in demand in the marketplace when done properly.

“While GDPR and digital privacy are important, we believe there is great value in the behavioral data that exists throughout the value chain, and the brands that understand and use this data correctly have an additional revenue stream to manage.

More articles: In our mini-series about changes in the textile and fashion industry, there will be a total of three articles in which Kurt Svegård from the Fashion Innovation Center gives his views. In the first part he told about important changes for a sustainable industry and in the second about the impact of Green's taxonomy on the industry.

‍Fashion in Change, Part 1: A paradigm shift with many possibilities

Fashion in Change, Part 2: Green taxonomy creates change around finance and climate

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