Evaluation of emerging circular economy business models and their

suitability for luxury brands

Literature Review

Paper Name - Enabling circular business models in the fashion industry: the role of digital
innovation

The paper explores digital-based circular business models in the fashion industry, uncovering
three archetypes: block chain-based supply chain, service-based, and pull demand-driven
models. Emphasizing the transformative potential of the pull demand-driven model, the study
underscores the importance of intrinsic business capacities, technological competences, and
circular economy strategies. It recommends collaboration between fashion incumbents and
technology suppliers to foster innovation, while also highlighting the necessity of supportive
policies in navigating the transition to digital fashion models (Huynh, 2021).

Gap –

 A gap in understanding persists concerning how different-sized fashion companies

distinctively adopt and implement digital circular economy strategies.
 The study suggests that collaboration between large fashion incumbents and technology
suppliers/startups is essential for incubating radical innovations. However, the gap lies in
understanding the dynamics of such collaborations, the challenges faced, and how these
innovations can be seamlessly integrated into existing business models.

Paper Name – A Sustainable Business Model for the Fashion Sector

This study investigates sustainable practices in the fashion industry, reviewing historical context,
categorizing types, and proposing real-world-based business models. Using various methods, it
emphasizes the evolution of sustainable fashion, highlighting its environmental impact. The
chapter also explores early pioneers, key events, and the role of technology, particularly artificial
intelligence, in enhancing sustainability efforts. The conclusion addresses challenges and
suggests future research directions (Salamzadeh et al., 2023).
Gap –

 There is a notable lack of in-depth exploration into consumer behavior. Understanding

the factors that drive consumers to choose sustainable fashion products, as well as the
barriers they face, is essential for the successful implementation of sustainable business
models.
 Author talks about technologies like 3D virtual sampling and artificial intelligence
without thoroughly exploring their adoption challenges, impact assessment, and potential
for scalability.

Paper Name – Online Luxury Resale Platforms and Customer Experiences: A Text Mining
Analysis of Online Reviews

The fashion industry undergoes a notable shift towards sustainability and circular fashion, with
luxury resale gaining prominence. Platforms like The RealReal and ThredUp play key roles,
using advanced technologies to foster a sustainable circular economy. Success factors for luxury
resale platforms include curated brand selections, reliable authentication, and broad customer
engagement. Challenges, such as potential consumer saturation, pose hurdles to scalability,
requiring a deeper understanding of consumer interactions and value perceptions. (Liu, Xia and
Lang, 2023).

Gap –

The paper does not delve deeply into the motivations behind consumers' engagement in circular
fashion consumption on luxury resale platforms. Specifically, there is a gap in understanding
how economic, environmental, and experiential values influence consumers' decisions to buy or
sell pre-owned products.
Paper Name - Sustainability and Quality Management in the Italian Luxury Furniture
Sector: A Circular Economy Perspective

The luxury furniture industry exhibits a notable awareness of sustainable practices, with Circular
Economy adoption driven by economic and environmental motivations. The study highlights a
partial understanding of the social impact and underutilization of certifications. It underscores
the necessity for a cultural shift, internal training, and improved communication within
companies. Recommendations involve recyclable materials, internal training, and consumer
communication strategies, with future research directions focusing on end-of-life applications
and circularity assessments. (Barbaritano, Bravi and Savelli, 2019).

Gap –

 Though there is acknowledgement about awareness of the circular economy practices in

luxury furniture industry but reveals a gap in practical implementation, particularly in
reuse and recycling actions. There is gap in positive attitude towards sustainable practices
and its implementation.
 There is scope qualitative analysis and explorative research, particularly in the under-
explored area of Circular Economy applications during the end-of-life phase of luxury
furniture products.
 There is scope to identify organizational shifts that are required to facilitate the
development of Circular Economy practices.
Paper Name – Trends in the Fashion Industry. The Perception of Sustainability and
Circular Economy: A Gender/Generation Quantitative Approach

The study examines the fashion industry's response to evolving competition and changing
consumer lifestyles, emphasizing the impact of sustainability and the circular economy.
Generation Z, with a heightened focus on sustainability, influences fashion preferences, with
gender differences in perception. The research advocates for fashion companies to adopt circular
policies and extend product lifecycles through recovery and reuse, underscoring the importance
of suitable business models in staying competitive (Gazzola et al., 2020)

Gap –

The study mentions the need for fashion companies to redirect their strategic approach, but there
is limited exploration of specific business models that align with sustainability and circular
economy principles.
Reference list

Barbaritano, M., Bravi, L. and Savelli, E. (2019). Sustainability and Quality Management in the
Italian Luxury Furniture Sector: A Circular Economy Perspective. Sustainability, 11(11), p.3089.
doi:https://doi.org/10.3390/su11113089.

Gazzola, P., Pavione, E., Pezzetti, R. and Grechi, D. (2020). Trends in the Fashion Industry. The
Perception of Sustainability and Circular Economy: A Gender/Generation Quantitative
Approach. Sustainability, 12(7), p.2809. doi:https://doi.org/10.3390/su12072809.

Huynh, P.H. (2021). ‘Enabling circular business models in the fashion industry: the role of
digital innovation’. International Journal of Productivity and Performance Management, 71(3),
pp.870–895. doi:https://doi.org/10.1108/ijppm-12-2020-0683.

Liu, C., Xia, S. and Lang, C. (2023). Online Luxury Resale Platforms and Customer
Experiences: A Text Mining Analysis of Online Reviews. Sustainability, 15(10), p.8137.
doi:https://doi.org/10.3390/su15108137.

Salamzadeh, A., Paramba, J.N., Brandstrup, M. and Dana, L.-P. (2023). 19 A Sustainable
Business Model for the Fashion Sector. Fashion and Environmental Sustainability, pp.237–250.
doi:https://doi.org/10.1515/9783110795431-019.