Circular Business Models in Fashion: Resale, Repair, Rental, Take-Back

December 2, 2025

circular fashion

Circular fashion applies circular economy thinking to apparel by designing out waste, keeping garments in use for longer, and cycling materials back into new products. It rethinks how clothes are designed, made, used, and recovered, aiming for closed loops rather than one-way flows.

The fashion industry is currently valued at $1.7 trillion and produces over 100 billion garments each year. This massive scale highlights the urgent need for sustainable practices.

The traditional linear economy in the fashion industry based on a take-make-dispose model contributes significantly to textile waste and carbon emissions. For example, the industry generates 12.6 million tonnes of textile waste annually within EU member states, with clothing and footwear accounting for 5.2 million tonnes. Globally, less than 1% of all textiles are recycled into new products, underscoring the sector’s waste and environmental impact.

Transitioning from the traditional linear economy to a circular model is essential to address these challenges. A circular model focuses on designing products for reuse, recycling, and longevity, minimizing waste and environmental impact throughout the product lifecycle.

What Circular Fashion Means

Circular fashion is an approach within the broader circular fashion economy and circular system that reduces waste and extends the lifespan of clothing and textiles. Circular products are designed with their entire product’s lifecycle in mind, considering every stage from raw materials and production to use and end-of-life. According to the European Parliament, circular fashion involves sharing, leasing, reusing, repairing, refurbishing, and recycling materials and products. It aligns with circular economy principles by closing material loops and maximizing value at each stage of a garment’s life cycle, from design and production to use and end-of-use pathways such as resale, repair, rental, and recycling.

Why Fashion Needs Circularity

Most fashion today follows a linear model: make, sell, discard. This take-make-dispose approach contributes significantly to textile waste and climate change. Circular fashion challenges that pattern by keeping products and materials circulating through maintenance, reuse, refurbishment, and recycling. The aim is to cut waste and pollution while reducing dependence on virgin inputs and, where possible, supporting regeneration of natural systems.

The shift towards a circular approach is motivated by the need to reduce environmental impact and address climate change. Moving towards a circular fashion system is driven by growing awareness of the environmental and social impacts of the current fashion system. Reducing environmental impact is a key goal of circular fashion, as it seeks to minimize textile waste and help mitigate climate change.

Core Principles In Practice

Circular fashion is guided by the key principles of the circular economy, which are translated into apparel decisions to promote sustainability and minimize waste.

  1. Eliminate waste and pollution
    Design garments with fewer mixed materials, avoid hard to separate trims, and plan for safer chemistry to reduce downstream barriers. Emphasize resource efficiency and sustainable practices to minimize waste throughout the product lifecycle.
  2. Circulate products and materials
    Keep items in use through care, repair, resale, and rental. When products can no longer be worn, route textiles into high value recycling where feasible. Adopting sustainable practices and focusing on resource efficiency helps extend the lifecycle of garments and further minimize waste.
  3. Regenerate nature
    Where relevant, prefer inputs and practices that help restore ecological systems rather than deplete them. Use sustainable materials, such as organic cotton and recycled polyester, to support regeneration and eco-friendly innovation.

Circular fashion is increasingly recognized as a strategic industry standard, with major brands embedding circularity into their business models by 2026. For example, ASOS participates in the ‘The Jeans Redesign’ project to demonstrate how jeans can be designed for a circular economy. ASOS’ Circular Design techniques are informed by the Textiles 2030 Circular Design Toolkit, which establishes a consistent set of circular design principles for the industry.

Design Rules That Enable Circular Fashion

Circular design and product design are foundational to enabling circular fashion. Good intentions fail without design choices that make circulation possible. Practical rules include:

  • Prioritize durability and care
    Build for longer use with strong seams, abrasion resistant fabrics, and clear care guidance so garments survive more wear cycles. Designing products for longer lifespans helps reduce waste and the need for frequent replacements.
  • Use eco-friendly materials and new materials
    Incorporate eco-friendly materials such as recycled materials, organic cotton, and innovative new materials that are responsibly sourced and support circularity. These choices help minimize environmental impact and support sustainable product design.
  • Design for repair and disassembly
    Choose construction and components that can be accessed, removed, or replaced. Fewer incompatible blends and simpler trim stacks improve both repair and recycling routes. Enable the use of repair items and offer repair services to extend product life and promote consumer involvement in sustainable practices.
  • Plan end of use pathways
    Anticipate where the product should go after first use: resale, rental re circulation, take back, or textile to textile recycling. Make identification and sorting easier with clear labeling and product data.

ASOS has a Circular Design Collection that applies circular design techniques to product design. Products in this collection must contain a minimum of 98% recycled, renewable, and/or regenerative materials by weight, including options like organic cotton. The collection focuses on designing products for durability and longer lifespans, helping to reduce the need for frequent replacements and supporting a more sustainable, circular fashion system.

Reality check on trade offs
Durability and recyclability can conflict. Some of the toughest, longest lasting constructions are the hardest to pull apart for recycling. Brands should clarify the primary goal for each product and design accordingly.

Business Models That Keep Products In Use

Circular fashion is not only about materials. It depends on services and models that make circulation work for customers, with fashion brands and fashion products at the center of circular business models.

  • Resale and trade-in are innovative business models that extend product life and recover value from pre-owned fashion products. These models often involve multiple owners, as garments and footwear change hands through resale or rental, maximizing extended use and reducing the need for new clothing.
  • Repair and care services keep old clothes and other fashion products in use, supporting extended use and strengthening customer loyalty. Many online platforms now facilitate repair, resale, and remaking, making it easier for consumers to participate in circular fashion.
  • Rental and subscription services are innovative business models that monetize access to fashion products for event-driven or premium categories. These models encourage multiple owners and extended use, reducing reliance on new clothes and supporting sustainability.
  • Take back programs and recycling programs collect old clothes and other items, triaging them for the highest value next use, including recycling and effective end of life management. These initiatives are essential for minimizing waste and supporting a closed loop system, where circular products are designed, used, and recycled continuously.

A closed loop system is central to circular fashion, ensuring that circular products are designed for durability, recyclability, and reuse, so they can be reintegrated into the production cycle at end-of-life.

Leading fashion brands like Patagonia and Eileen Fisher are at the forefront of circular fashion, offering repair and resale services to extend the life of their products. The Fashion ReModel initiative, involving brands such as H&M and Tommy Hilfiger, explores repair and resale to decouple revenue from new production. Leasing and rental models are also gaining traction, providing consumers with access to fashion products without the need to purchase new clothes. Circular fashion promotes economic growth through these innovative business models and sustainable practices, and is increasingly recognized as a strategic industry standard, with major brands embedding circularity into their business models by 2026.

Why Recycling Alone Isn’t Enough

Textile to textile recycling is important but not a silver bullet. Current recycling technologies face significant limitations, especially when dealing with complex blends that are difficult or impossible to separate at scale, and infrastructure is uneven. The development and use of new raw materials, along with better management of raw materials throughout the lifecycle, are essential for advancing circular fashion.

The supply chain plays a crucial role in enabling effective recycling and circularity by improving transparency and resource efficiency. Keeping garments in use longer through design, repair, and resale often delivers higher value sooner, with recycling as a complementary pathway.

Achieving a circular economy in fashion requires significant innovation and investment to decouple the industry from raw material production and the current growth-based model. Challenges to this transition include consumer behavior, the limitations of recycling technologies, and regulatory frameworks.

Enablers For Scale

  • Clear product data, supported by digital product passports and digital technologies like blockchain, enables identification, repair, resale pricing, and lifecycle management, enhancing transparency and traceability throughout the supply chain.
  • Customer participation is increased by encouraging consumers through simple returns, incentives, convenient service options, and personalized experiences that promote sustainable behaviors such as recycling and responsible care of clothing.
  • Educating consumers through targeted educational campaigns raises awareness about the environmental impact of fashion choices and the benefits of sustainable, circular fashion practices.
  • Community initiatives, such as clothing swap events, foster collective responsibility and further engage consumers in sustainable fashion.
  • Collaboration across the chain ensures designers, suppliers, logistics, and service partners can execute circular routes reliably, supporting a more sustainable and circular fashion system.

Getting Started: A Simple Roadmap

  1. Pick one high volume category and set specific design rules for durability, repairability, and material choices. The circular economy begins with the use of new materials and recycled materials, guided by circular design principles. Brands are increasingly turning to organic cotton, recycled polyester, and other eco-friendly materials to support circular fashion.
  2. Launch one circulation model that fits your products and customers, for example repair for technical outerwear or resale for durable accessories. Focus on supporting circular products and building a circular system, where products are designed for longevity, reuse, and recyclability.
  3. Measure what matters such as time in use, repair turnaround, resale sell through, and avoided waste. Use findings to refine design briefs and service SLAs.
FAQs
  • What is circular fashion
    A fashion system that keeps garments and materials in use for as long as possible while reducing waste and pollution, aligned with circular economy principles. Circular fashion is central to the circular fashion economy, which aims to decouple growth from raw material use by adopting a circular model. This model focuses on designing products and systems for reuse, recycling, and longevity, creating a circular system where resources are continually cycled and waste is minimized.
  • Is circular fashion only about recycling
    No. Recycling is one tool. Circular fashion also emphasizes circular products—items designed for durability, repair, and eventual recyclability. Circular design principles ensure garments are made for longevity and easy disassembly. Circular business models, such as resale, rental, and take-back schemes, further extend product lifecycles and retain value before materials are recycled.
  • How does circular fashion relate to circular economy
    Circular fashion is the sector specific application of circular economy concepts in apparel, translating system principles into product and service decisions.
  • What trade offs should brands expect
    Durability can make disassembly harder. Brands should decide case by case whether longer life or future recyclability is the priority and design accordingly.
  • What is extended producer responsibility (EPR) in circular fashion?
    Extended producer responsibility (EPR) is a regulatory approach that holds brands accountable for the entire lifecycle of their products, including end-of-life management. The European Parliament is moving towards implementing EPR schemes for textiles to improve recycling and reuse rates. These policies encourage brands to adopt sustainable design, establish collection systems, and support the shift towards circular models in the fashion industry.

If you want a structured path to apply these concepts, consider Circular Economy Courses & Certificates designed for professionals at different stages.

Submitted By: CEA Team

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