Over the next few years and decades, we can expect to see an immense shift: the linear economy will gradually become circular. Following years of boundless consuming and the harmful emissions that has produced, society is now faced with tough questions. The answers are manifold. Some people interpret the increasing scarcity of resources and the damage to the environment as a call to action. Others are more focused on the opportunities this new paradigm will produce. For retailers, the circular economy means a whole new set of roles to fulfil: new business models will be needed as retail becomes more of an intermediary between producer and consumer.

Sustainable = circular, right?

So what is it exactly, the circular economy? Sometimes it is the business model for shaping a sustainable management of a company. Other times it may aim to conserve resources for the (production) cycle, bearing in mind that transport, deconstruction and reassembly of materials will all have environmental effects, too. Sustainable retail is not completely the same as circular retail. The former can be described as enabling consumers in making conscious and environmentally sensitive purchases, mindful of every possible aspect of the manufacturing process. Circular retail then is the conserving of the value of goods, parts thereof and the required resources – through efficiency of use and through facilitating/stimulating reuse. Sustainable and circular do go hand in hand, are intrinsically entwined and are likely to impact future decades. Every single part of the retail value chain will feel their effects, that’s for sure.

Linear vs. circular

Right now, we have based our economy on a linear system. We use resources from our planet and transform them into goods, which are then destroyed at the end of their lifecycle. A staggering 80 percent of goods are discarded after six months’ use. It is an economy of take-make-dispose. Not sustainable, not circular, to say the least. In their book Waste to Wealth, Peter Lacy and Jakob Rutqvist describe four types of waste in the linear economy: wasted resources, wasted lifecycles, wasted capabilities and wasted embedded values. We know now that the linear economy has irreversible consequences, which future generations are going to be faced with. Changing this means adopting a new mindset, a less wasteful, more sustainable mindset. In a word: circular.

What can retail do? Improving efficiency is now more important than ever. Traditional stores are generally more intent on doing this than webstores. The latter are often so caught up in their fast growth rate, that they forget to address issues of the circular economy – such as improving and minimizing packaging. In the circular economy, the consumer is not the end of the cycle. The circular model keeps going, optimizing the reuse of resources and goods, minimizing the destruction of value. In my next blog, I will describe this at length, using the model of 10 R’s, featured in Circular Economy by José Potting. The first three R’s are refuse, rethink, reduce. Focusing on smarter production and use, prolonging the lifespan of products and finding sensible uses for materials. Watch this space for the other seven!

This is blog 18, based on my book ‘The end of online shopping. The future of retail in an always connected world’, published by Business Contact (Dutch/Flemish editions), Nubiz (English edition) Post & Telecom Publishers, Beijing (Chinese edition, May 2018). The book will also be translated into Danish, German, Italian and Portuguese in 2018.