A Study on Circular Fashion: Profitability and Environmental Impact Analysis

The current environmental crisis the planet is facing is mainly due to high consumption and waste production. The fashion industry is one of the main waste generators and consumers of natural resources. Consequently, many companies in the industry are now focusing on sustainable solutions. But sustainable fashion has a long way to go in comparison to other sectors, such as food. There are issues that create ambivalence in the decision-making process for customers, retailers, and producers. Sustainable products cost more for various reasons, so ultimately the price is higher. Retailers often ask themselves questions about investing extra money in this competitive market. If they are not sure about the return, they most likely do not invest eliminating potential initiatives toward a sustainable fashion industry. However, customer preferences are changing toward more environmentally friendly products. Such behavior will eventually influence producers, but at which level and intensity is still unclear. In this paper, we proposed an agent-based model tool based on important criteria to understand how the decision-making process will be influenced by the bottom-up emergent behaviors of environmentally friendly customers. It also might help them to find out the optimum level of selling price required to avoid any monetary loss and, additionally, help retailer invest in promotional activities that are needed to influence the customer for sustainable apparel. Thus, the decision-making process will be more informed, and retailers will feel more confident to go forward to invest in and implement sustainable manufacturing solutions. The preliminary result shows that introducing recycled items reduces the environmental impact and may increase the revenue, and customer influence can play a vital role here.