Trendy friendly

Introduction

Fashion is a perfect example of a volume - based industry, relying on a model of continual economic growth fueled by ever-increasing consumption of resources. In this industry, there has to be continuous production and selling in order to succeed and grow. Here we are talking about massive clothing production companies, such as H&M and ZARA, which provide people (especially women) from all around the world with the latest trends at affordable prices, making possible to renew a wardrobe or simply add new pieces to an existing one, according to taste and budget. As a result, there is a continuous accumulation of clothing, because with the arrival of a new collection, a person is likely to find more things appealing therefore creating a feeling of wanting more.

The unsustainability of this model is widely acknowledged, however there is an important role played by fashion products in our culture. This model is clearly unsustainable because is totally linear, in the sense that factories produce new clothes to be sold to costumers in stores or online stores, the costumers wear the clothes as long as they feel like to and then they throw it away or give them to someone else , that eventually will do the same. On the other hand, there is a need in society for fashion as a way to show identity, differentiation or simply a mean to be dressed.

The business model we are proposing is going to serve the need of fashionable clothing while generating a lower impact on the environment, because this model is not focus on produce more from zero and stock our customers with huge quantities. Our value is the design we want to offer to re-make or re-use existing clothes as much as possible. For this purpose, we will have the contribution of our community through a process of co-creation. This is why our invitation is be trendy….but also be friendly with the planet.

Limits of classical volume-based Business Model in the clothing industry

Context: A big clothing company wants to create a new integrated business unit more sustainable: Trendy-Friendly.

Why? As mentioned above this industry does not have a circular flow, but linear: goes from production, use and then disposal in the end. It is volume based and consumes a considerable amount of material resources (fabric, energy, …), making it costly and moreover requiring intensive work.

Many actors negatively impacted: negative externalities

The environment:

• 13 million tons of textile waste is generated every year just in the US.
• The recovery rate of this waste is only 15% in the US and 25% in the EU. Our objective is to increase this rate by reducing the quantity of material resources needed by integrating a service- based approach into the industry.

The society:

• This industry encourages consumerism and compulsive behavior among people. Clothes are bought for a season or for a trend and often disposed of when seasons and trends change.
• High impact per person: each person use on average 17 Kg of textile per year.
• Fashion standardization: everybody is wearing the same, leading to lose identity.

On the workforce:

• This industry implies intensive work but not necessarily quality work. We would like to improve the working conditions of the employees.

Considering the prior mentioned:
We have identified an opportunity to create a sustainable fashion brand by recycling used clothes and redesigning them according to new trends and co-creating with our community.

Formalization of the business model

Our business is based on a usage based model, considering that we will provide trendy clothes under a renting scheme, where the customers rent, use and return the clothes to get new fashion. As part of this process there is involved the design phase where our community of customers have a crucial role by co-creating with us. The community will start with our early adopters, who are people interested in both sustainability and fashion, and they will help us to spread the concept to make it more popular.

Value proposition

Old business model – Product based

“Sell trendy clothes at affordable prices”. This value proposition is as we said above, volume-based: the more clothes sold (and thus produced) the more profits the industry makes.

• Use of many material resources (cotton, fabric, machines …).
• Negative consequences on environment.
• Encourages society of consumption.

New business model - Service based

“Possibility to rent and to participate in the creation of trendy clothes made with recycled fabric”. The new value proposition we came up with is less based on the use of material resources. The key resources are now immaterial:

• Creativity, knowledge and co-creation.

The costumer will not have to accumulate clothes and at the same time will be able to renew very frequently his wardrobe according to the current trends and to his own preferences and ideas. Indeed, the co-creation, the costumer can have an influence on the final product by participating in the design.

Network of actors

Most of the actors are common to both models, the old and the new one. From our appreciation what really changes is our relation to them as well as what we offer to them and we they offer to us.

• Customers: in the old business model they are often consider as individuals, in Trendy Friendly, our customers are imagined as a community. In this scenario our targeted customers are women from 18 to 40 years old who are both socially and environmentally aware and fashion lovers. In addition we not only provide them with the clothes but we receive from them materials and ideas for co-creation.
• Suppliers: textile producers, accessories producers, and in Trendy Friendly our customers provide us with used clothes.
• Designing team: internal and external.
• Media

Actor relationship management

Old business model

The costumers benefit from personal assistance through human interactions represented by salespersons in stores.

New business model

We want to create a community with our clients. The idea is for them to share their ideas, concepts and knowledge concerning the designing and creation of clothes. Customers that bring back their rented clothes will be able to co-create items of clothing for the next season. In addition, with our fashion stylists we will provide advice for our customers so they learn more how to better enjoy the pieces of clothing we are giving them.

Accessibility and ability to grasp mentality

Our new business model offers a concept quite different and innovative that could at first perturb people (wearing recycled clothes, wearing clothes someone else has already worn…). This is why it is a key challenge to grasp the mentality of our costumers.

1) Awareness: We need to sensitize people to the limits of the actual clothing industry by explaining the negative impacts it has on the environment and on the society and introduce the concept of recycled clothes. We can talk to bloggers in the fashion and trend field and get their support concerning the co-creation aspect of the company. They will encourage the constant renewal of items of clothing. They can help us convey our concept.

2) Evaluation: the concept of renting and recycling clothes is very new. Therefor costumers do not yet have a mental representation of this service and may be reluctant to try. Maybe we can start by offering them the possibility to co-create if they donate old fabric. Then once they are exposed to the new concept, they will be more inclined to rent outfits.

3) Purchase: both stores and webstores.

4) Delivery: The costumer can rent outfits for a season and when he brings them back, participate in the co-creation of the following season.

5) After sales: through our fashion stylist/consulting service.

Key resources

Old business model

• Cheap workforce in factories in foreign countries
• Internal designers
• Marketing and advertising

New business model

• Community of customers.
• Designers: both internal and external who are involved in the co-creation process.
• Supply chain platform.

Key activities

Trendy Friendly operates according to the following steps:

1) Rent trendy clothes for a season. Every season, new clothes are made. The clothes will be provided for a season, it means 3-4 months of free use.

2) Take the clothes back. The return of the clothes is made at the end of the season. However for each collection, if the renter loves one or some (limited number) of the pieces and wants to keep it, it is possible by paying a price in money and bringing more used clothes. At the same time, the clothes for the new season are available to be rented. New clothes can be partially paid at the expense of the old one.

3) Process.

Recycle-Reuse: recycling unwanted clothing reduces landfill waste as well as the amount of resources needed to produce new clothing. It also lessens the waste produced by the manufacturing process --- clothing scraps end up in the landfill, too. In addition, there are complete pieces that we can incorporate in our new designs, in this case we will be reusing. It is also possible to receive clothes of other brands.

Buy new materials: recycling and reusing can help to diminish the amount of new material used to make new clothes; however, it cannot replace it completely. New materials are necessary to achieve the balance between sustainable and fashionable clothing. Our brand will use natural fibers and tissues as a main source.

Design: our competitive advantage relies in this phase, because Trendy Friendly is not only reducing environmental impact but is also providing fashion clothes considering the trends and foremost the input of our community of customers, who will participate in a co-creation process telling us what they want for the next season through notes, e-mails and workshops. In this way, we will count on an intangible resource by having insights from our customers and being able to offer them what they really want.

4) New collection of clothes. The clothes will be available for rent in stores and online. Our main idea is to provide a set of apparel of the current season, but it is also possible combine different pieces according to availability.

Trendy Friendly cycle from the customer's perspective

In addition to the activities mentioned above there other quite relevant that we want to highlight:

*Gather used clothes: besides of what is received from the renting service, at any moment, individuals or groups/companies can bring back old and used material to our company. In exchange the individuals will be able to benefit from promotions and discounts in our stores.

*Manufacturing: production of the designs using a combination of used and new material.

*Marketing activities: focus on web marketing through social networks and specialized media.

Positive externalities

Trendy Friendly's business model has some critical positive impact which clearly contrasts with the consequences of a volume-based apparel industry.

• Lower consumption of material resources (environment).
• Higher relevance of immaterial resources: value of creativity, knowledge… (society)
• Learning experience: co-creation (customers)
• Possibility to often renew wardrobe and to always be trendy (customers)
• Decreasing consumption (society)

Drivers of productivity

As most volume-based industries, massive fashion relies on economies of scales and work intensification as the main drivers of productivity and hence profitability. Unlike the "old business model" of clothing industry these are our drivers:

• Complementing gains: we relate this principle to the co-creation concept, since here we are complementing our expertise with the preferences and insights of our customers.
• Integration gains (essentially immaterial) through the integration of products and services into integrated solution.

Cost structure

Fixed costs

Trendy Friendly is a value driven business model, this does not mean that we are a luxury brand but what we offer is unique in terms of design and our claim is to provide fashion while being more sustainable.

• Salaries
• Rent (stores and factories if applicable)
• Utilities

Variable costs

• Production
• Materials
• Transportation
• Advertisement

Specification of the revenue model

1. Clothes renting and eventual purchase

Renting them for a season:

• A person can rent a few outfits of a specific trend for a season (4 to 6 months).
• An outfit consists of 1 bottom, one top and a cover (sweater, jacket…).
• The price of rent for 4 to 6 months per outfit depends on the season and the materials used.

Potential purchase of clothes:

• A person can choose to keep a rented item if she is really satisfied with it. In that case the client will have an additional fee: a combination of money and used clothes/cloth.

2. Optional monthly/annual subscription

In order to build our community, the model of subscription may be useful to keep a more constant base of clients. Of course they will enjoy some perks:

Clients will be able to participate in the Co-creation of the future outfits: Participate in the creation of the outfits: giving ideas and suggestions of what they would like in their future outfits. This goes towards a more personalized design.

Clients will benefit from consulting services:

• Personal advice/consulting from stylist on clothing.
• Economic benefits such as inferior price in comparison to one shot customers.

The justification of the sustainable added value of this business model

Definition of the new perimeter of the company:

This new subsidiary decreases the negative externalities

The first negative externality is the use of resources. In our new business model the use of new resources as cotton for example is reduced at least by half. The impact of producing less fabric (as cotton) is that we have less intensive use of land, less pesticides, less energy for production and less oil for transportation.

The new business model decreases the use of chemical products for the production and the treatment. Indeed, in the classic business model the production of raw material use pesticides when it is made with vegetal fibers or plastic for synthetic fiber (non-recyclable). To create the cloth, dangerous chemical treatments are made often using toxic products as lead, nickel or chromium. The new business model wants to dramatically decrease or even abolish this practice by using new raw materials that are good for environment such as bio-cotton, linen, hemp or bamboo.

By using less new resources, just bio new resources and avoiding harmful chemical products, the new business model takes better care of the health of the workforce, decrease the danger of client poisoning and diminish the impact for the environment. The new business model uses less energy because the “traditional” production decreases considerably since there is a smaller production of fabric and the effort is focused on the creation, co-creation and redesign of clothes.

Another negative externality is the waste of clothes, which is what we are directly attacking because the main objective of Trendy Friendly is to get back clothes to redesign them so it decreases the amount of waste.

The new subsidiary increase the positive externalities

The first positive externality is related to the way you are part of the trend thanks to your input. In the new business model you do not just undergo the new trend but you are part of it by co creating. The objective is to create and be part of a community enjoys designing and giving ideas while caring about the environment. Considering the above mentioned, we will be maximizing immaterial resources (co-creation, personal consulting services, …), making that our main subject, our main differentiation.

In the new subsidiary the concept of “trend” is respected and with it come the idea of singularity, not massive quantities of the same but reduced amount of pieces making it more personal. Another positive externality is about improving the situation of the workforce. Indeed, the objective of the workforce is not only to produce more and faster but to be creative. It includes an intellectual activity and diversification of tasks which allows more participation and decreases the bad effects of repetitive work.

References

http://info.textileexchange.org/Portals/135316/docs/fastfacts_textile_product_waste_v1.pdf

http://www.foeeurope.org/sites/default/files/publications/foee_report_-_less_is_more_0.pdf