1 / 27

Evaluating the case for new business models in the clothing sector

Evaluating the case for new business models in the clothing sector. Dr Martin Buttle Senior Supply Chain Consultant, MADE-BY. 08/05/13. Introduction. A study of alternative business models in the fashion industry, with an aim to:

maylin
Download Presentation

Evaluating the case for new business models in the clothing sector

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Evaluating the case for new business models in the clothing sector Dr Martin Buttle Senior Supply Chain Consultant, MADE-BY • 08/05/13

  2. Introduction A study of alternative business models in the fashion industry, with an aim to: Assess their commercial viability for take up by a large scale retailer Assess their potential to reduce resource impacts, particularly waste, water and carbon

  3. UK Waste Footprint

  4. Resource Price Index

  5. The Business Models Model 1 – Retailers providing repair and upgrading services and repair workshops for their own garmentsModel 2 - Retailers providing large-scale leasing services (e.g. for baby clothes)Model 3 - Retailers providing large-scale services for one-off hireModel 4 – Retailers offering a reuse section for own-brand garments within their storeModel 5 – Peer to peer exchange

  6. Model 1: Retailers offering in-store repair services

  7. Model 2: Baby Clothes Leasing

  8. Model 3: large-scale online hire services

  9. Model 4: Buy-back & resale

  10. Model 5: peer to peer exchange

  11. Methodology: Scope What was included in the study: IPSOS-Mori data used to gauge consumer demand Desk based research and interviews Scenario analysis Erred on the side of caution in building the conservative scenarios Where possible, validation of assumptions applied What was excluded from the study: Impact on existing small scale business providers Net impact on sales of products under retailers existing models Industry wide implications

  12. Methodology: Financial Analysis A financial model created for each business model Commercial viability measured against the following key performance indicators: - 2 year payback on capital invested - a return on capital of 15% - a positive Net Present Value of cash flow Scenarios created for each model (except Model 3) - a conservative (or realistic) scenario - a tipping point scenario

  13. Methodology: Resource Impacts Calculations: Cotton t-shirt used as basis to calculate resource savings Resource saving of a garment saved or displaced based on weight. 0.33 kg/adult garment & 0.07kg / baby garment Carbon and water saving based on displacement effect applied to each model: Carbon - 21 tonnes of CO2e saved per garment displaced Water - 4695 litres of water saved per garment displaced Waste savings is a combination of garments displaced and saved from going to landfill Displacement effect varied across models

  14. Summary: Financial Performance Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  15. Summary: Financial Performance Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  16. Summary: Financial Performance Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  17. Summary: Financial Performance Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  18. Summary: Financial Performance Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  19. Summary: Resource Impacts Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  20. Summary: Resource Impacts Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  21. Summary: Resource Impacts Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  22. Summary: Resource Impacts Scenario 1: Conservative Assumptions Scenario 2: Tipping Point

  23. Model 4 – reuse & restyling The business model: A retailer provides an incentive for consumers to return used garments A roll out of stores acting as collection points A select number flagship stores carry a ‘pre-used’ collection, consisting of reused and restyled garments. Income generation: dependent on number & quality of garments collected, falling into three categories Recycle (85%) – not sufficient quality for reuse. Income of £0.6 per kilogram Resale (15%)– highest quality. Retail sales price of £30 Restyle (2.5%) – repair required before reuse. Retail sales price of £30 Key Cost base: Discount voucher Logistics Staff costs – picking & packing, restyling Warehousing/retail space cost

  24. Model 4 – reuse & restyling Two scenarios created

  25. Model 4: Financial Outcome • Factors that contribute to the viability of this model: • low set up and running costs • low initial funding required

  26. Model 4: Resource Impacts Garments saved: for every garment collected, 0.7 of a garment is saved from going to waste Garments displaced: for every garment re-sold, including re-styled garments, 0.6 of a garment is displaced *weight in tonnes ** in cubic metres ***includes garments displaced • Scenario 1 - generates acceptable level of resource savings • Scenario 2 - higher volume of clothing collection/sale leads to a good level of resource savings

More Related