The smartest way to handle overstock? A circular business model

It isn’t often in life, least of all business, that you stumble across a genuine ‘win-win’. But when it comes to shoes and clothing, circularity is just that. 

In fact, data shows circularity can be the most cost-effective, moral business model for brands: boosting your profits, energizing your people, and protecting the planet. Actually, make that a ‘win-win-win’. 

So, let’s investigate the evidence behind circularity’s claim—and explore how your business can start using this invaluable strategy today.

What is a circular business model? 

According to Harvard Business Review, there are three different types of business circularity: 

• ‘Retain product ownership’, in which the producer rents or leases its product to the customer rather than selling it
• ‘Product life extension’, where companies design their products to last longer to attract customer loyalty and justify premium pricing
• ‘Design for recycling’, in which brands redesign their products and processes to maximize the recoverability of the materials involved

Shoes and clothing brands can get involved, in one way or another, in all three of these models. And circular business strategies such as rental, resale, repair, and remaking all represent a significant economic opportunity.

Why should my brand go circular?

Some people think that the benefits of circularity are simply environmental. And while the fashion industry is responsible for 10% of global carbon emissions, and buying just one pair of second-hand jeans can save over 30 kg of CO₂ emissions (equivalent to making 600 cups of tea), circularity’s climate-saving advantages are only the beginning. 

Perhaps the most important motive for circularity comes from changing customer trends. As consumers grow increasingly eco-conscious, data shows they’re willing to spend an average of 9.7% more on sustainably produced or sourced goods, even in today’s tough economic climate. 

Meanwhile, more than half (52%) of US customers shopped for secondhand apparel in 2023, including almost two-thirds (65%) of Gen Z and Millennials. And with 98% of clothing made outside of the US, 59% of consumers say they will seek more affordable options like second-hand clothing if trade tariffs hike the prices of clothing and shoes.

In fact, the Ellen MacArthur Foundation estimates that circularity could claim 23% of the global fashion market by 2030, translating to a $700bn revenue opportunity. In the US alone, the circular apparel market is projected to reach $77bn by 2026. 

But circularity won’t just make you money—it can save you money, too. 

Can circularity reduce my overheads while boosting brand perception? 

Clothing and shoe manufacturers need to regularly release new products to keep up with consumer trends, seasons, and fashion cycles. But this constant production often results in huge amounts of stock, a lot of which goes unsold. 

The carrying cost of excess inventory, such as warehouse rental fees and monthly insurance, can be as high as 30% of the stock’s value. It’s why inventory and supply chain managers work so hard to minimize overstock and liquidate any leftovers.

But while selling your overstock at a discount helps to free up cash and warehouse space, it can also significantly damage your brand image. In fact, over-discounting may train customers to expect sales and only buy at reduced prices, or associate your brand with cheap items—making it difficult for retailers to sustain loyalty and profitability. 

Meanwhile, some brands still burn or landfill their unsold stock, an environmental disaster we’d rather not dwell on. But there is an alternative model that protects both profits and the planet, all while supporting people in need.

How can I make circularity work for everyone? 

At Soles4Souls, we turn shoes and clothing into opportunity for people. How? By providing shoes and clothing to people in crisis situations, getting new athletic shoes to children experiencing homelessness, and supporting entrepreneurs in low-income countries to start businesses. 

It’s simple: you donate products or funds to us, and we channel them to those who’d treasure them most. You get to put the shoes and clothing you no longer need to real, good use. 

By keeping products out of warehouses and landfills, it’s no surprise that our partners see significant business benefits, too. 86% say Soles4Souls helps them solve a business need, another 86% have seen qualitative improvements (an increase in customer sentiment, employee engagement, and positive PR), and 96% would recommend partnering with us. 

It all goes to show that circularity is no longer a nice to have, it’s a business imperative. Especially since California’s 2024 ‘Responsible Textile Recovery Act’ mandated manufacturers to make sure their products get collected, repaired, reused, and recycled. Don’t be surprised to see other states, and other countries, soon follow suit. Get ahead of the law—and to the top of your customers’ minds—with Soles4Souls. 

Ready to learn more about the power of circularity? Download our free report, ‘Waste not, Want not’, for actionable insights on stitching social impact into clothing & shoe circularity today.