Lessons on business model scalability for circular economy in the fashion retail value chain : Towards a conceptual model

Circular economy and especially circular business model (CBM), is currently being discussed as a way to enable the fashion industry's transition to sustainable business models wherein pollution and resource waste may be reduced. However, one of the prime reasons for a slow transition is lack of scalability of CBMs operating in the fashion retail value chain. What is lacking in the current discourse is research that summarises and condenses the literature on strategies for how scalability can be attained and what that means in context to CBMs where not only economic values are in focus. Therefore, the main purpose of this paper is to explore the main strategic approaches to scale business models and how these can be applied to CBMs in the fashion retail value chain. To do this, a two-part method is adopted consisting of a systematic literature review of 57 business models and scalability papers followed by a review of activities reported by 76 fashion retail companies on how these have, or are planning to, increase the scale of their CBM initiative. Our suggested model provides a basic understanding of strategies for business model scalability seen from four different business model design perspectives. These are further contextualised for CBMs in the fashion value chain and lessons learned are generated in the form of four central propositions. The propositions account on how organisations can leverage resources from their existing conventional business model for efficient scaling of their CBM initiative, how they can consider strategic partnerships to access complementary resources, while also embarking on adaptability by running business pilots either internally or by engaging in collaborative networks for industry-wide learnings and change.The authors would like to thank Jan Wallanders and Tom Hedelius Stiftelse (P18–0057) for financing the research for this paper.