In July, Eileen Fisher finally ran out of storage space.
For a decade, the New York-based brand had been asking customers to bring back unwanted pieces in return for a gift card. Eileen Fisher collected 220,000 items of used clothing in 2018, with take-backs having risen by an average of 15 per cent year-on-year. Clothing in pristine condition — about 60 per cent of collections — is cleaned and resold under the Renew brand, while lightly damaged pieces are upcycled into new pieces.
Fashion has long operated on a linear model, and luxury houses are famous for burning excess stock. But take-back programmes are becoming increasingly popular. The labels that offer these initiatives range from Patagonia and Levi’s to Madewell and Theory. The North Face alone processed 14,342 garments between January 2018 and May 2019.
It’s an effective way to acquire customers
At a time when brands are finding it increasingly expensive to attract and retain customers, take-back programmes are a way to stand out. Knickey, an organic cotton underwear startup, offers free shipping labels and a pair of new undergarments to anyone who wants to send them unwanted underwear and socks. (Collected items are passed on to a nonprofit for recycling, and the company can take a tax deduction.)
About half of Knickey’s recycling participants become new customers, and of the shoppers that redeem their coupon — often purchasing additional pairs at the same time — 43 per cent buy from the brand again. Acquisition costs are low: Knickey merely posts about it about social media channels, and yet a quarter of new customers come from the take-back programme. “The average order value will always outweigh the acquisition cost,” says co-founder and chief executive Cayla O'Connell Davis. “Word of mouth, organic social, and journalists are pretty jazzed about it.”
Such initiatives can also help generate recurring revenue and customer loyalty, which is a perennial challenge for direct-to-consumer brands that spend heavily on marketing. California startup For Days sells access to its T-shirts through a subscription model, essentially taking responsibility for the entire life of its product. Similarly, organic bedding company Coyuchi offers a subscription programme for sheets and towels, along with traditional sales. When customers are done with a piece, they send it back for recycling and receive a new one. For Days says that it has a waitlist of 16,000 people willing to pay $38 for their first T-shirt. The brand, which also takes back unwanted clothing from other labels, has collected over 11,000 pounds of apparel so far.
The question remains: do such coupons and subscription programmes merely encourage more shopping and further wastage? Eileen Fisher’s take-back programme represents no more than 5 per cent of the four to five million garments it produces annually. “It’s very overwhelming what we’re getting back… a tiny percentage of what we make every year. It’s a huge reality check,” says Cynthia Power, director of Eileen Fisher’s Renew. The response from brands like H&M is that coupons are necessary to convince consumers to bring their old clothes in, rather than throwing them away.
Resale creates new revenue streams
Eileen Fisher Renew allows its parent company to profit twice from the same piece of clothing. The line did just under $4 million in sales last year, and the company says it is profitable.
Patagonia’s two-year-old resale brand Worn Wear is already in the black. The California company found that the line doesn’t cannibalise existing sales, but brings in customers who are, on average, ten years younger than the typical Patagonia shopper. “We learn a lot from the Worn Wear program that is not captured in the P&L… the qualitative items like marketing, who the customer is, and who the future customer might be,” says Alex Kremer, Patagonia’s manager of corporate development.
The next step is figuring out how to upcycle damaged older pieces into new material, which requires constructing a vertically integrated supply chain that includes receiving and sorting to dyeing and sewing new pieces. Due to the costs involved, upcycling tends to be financially sustainable only for higher-value items, like Patagonia’s classic fleece jackets, with consistent demand.
"If it is a lower price point brand then the model might be focused on recycling instead of renewal,” says Nicole Bassett, co-founder of recommerce supplier Renewal Workshop. Close-to pure cotton products like sheets, towels, jeans and T-shirts can be mechanically recycled, but the resulting fibre must be combined with virgin cotton for new product. For Days is about to launch a T-shirt made partially from mechanically recycled fabric, and H&M will soon launch another collection of recycled blue jeans.
About 40 to 50 per cent of collected clothing in the US is too damaged to salvage, according to the Secondary Materials and Recycled Textiles Association. Eileen Fisher managed to get such garments — typically stretchy Spandex blends and viscose — down to about 10 per cent. It stored it in a nearby warehouse, before moving the damaged items to a distribution centre in New Jersey when that got too expensive. Patagonia openly admits that it is warehousing damaged product that it doesn’t know what to do with — and it’s taking up a lot of space.
Seek out the professionals
Some brands can be put off take-back programmes because it isn’t their core competency and can seem complicated. However, a cottage industry of recycling services has emerged. Patagonia, Eileen Fisher and Arc’teryx work with Yerdle, a white-label online re-commerce and logistics platforms that collects, inspects, photographs and resells product. Yerdle keeps a percentage of each sale, with the rest sent to brand partners. (Eileen Fisher’s unsalvageable products eventually went to industrial outfits that chopped the fibre up for moving blankets and car insulation.)
I:CO, which operates in 60 countries, has become a go-to clothing collection partner for the likes of H&M, Guess and Asics. Every brand that participates will accept any clothing from any other label via mail or an in-store donation bin. Clothing donors get discounts on purchases. I:CO pays retailers for the clothing collected, although most brands choose to donate that revenue charity. (Its biggest partner, H&M, gives away 2 euro cents per pound of clothing, with €1.7million donated so far.)
Meanwhile, Eileen Fisher has talked to about half a dozen brands recently, offering its expertise and tours of its factory. “Our doors are open,” says Power. “We’re not a big company in the scheme of things. It’s really important that we do this as a bigger industry.”
Article written by Alden Wicker for Vogue Business.