Investors See the Value in Circular Fashion

The fashion industry is on its way to a systemic recalibration. For decades, it has operated on a high-volume, low-margin model driven by trend cycles, accelerated by social media, and in-built overproduction. But that model is cracking under its own weight. As mounting waste, environmental costs, and unsold inventory threaten

both margins and reputations, a new approach is required. The writing is on the wall when reality show Love Island, a cultural barometer of trend-driven consumerism, has dumped fast fashion giant Pretty Little Thing for Ebay, a second-hand resale platform, as its lead sponsor.  

Circular business models are increasingly being explored to tackle several issues the industry faces. According to the Ellen MacArthur Foundation, over $500 billion is lost every year due to underutilisation of clothing and lack of recycling infrastructure. A significant share of that comes from clothes that are never sold. Recent estimates suggest that 30–40% of clothing produced globally remains unsold, and much of it ends up in landfills, incinerated, or discounted at loss-leading prices.

Opportunities for all

According to Andrew Rough, CEO of Advanced Clothing Solutions (ACS), a leading circular fashion logistics provider, there are  great opportunities to adopt circular solutions for both legacy brands and new entrants.

“Circularity as a concept has really grown arms and legs over the last 10 years,” Rough observed. Traditionally, the industry was built on a linear model of make, sell, discard. But overproduction has created deep inefficiencies and companies are looking for alternatives. 

Fashion’s surplus problem is staggering. A 2023 McKinsey study found that 30% of clothing made each season is never sold at full price, and 10% is destroyed before ever reaching the shops. That surplus is a direct financial liability, but also an environmental one. Globally, 40% of all clothing ends up in landfill or incineration, while less than 1% is recycled into new garments.

Access over ownership

ACS aims to create circular solutions to remove waste from the lifecycle of fashion. “For us, circularity is keeping fashion apparel or fashion footwear in use, allowing many different people to have access to those items,” said Rough. He likens it to how we now consume music or cars — access over ownership. “Fashion to me should be no different… you don’t actually own it, you just get access to it.” It is a mindset shift that moves fashion and clothing from a short-term product to a long-term - but not permanent - investment. 

While a shift away from rapid consumerism may initially seem like a loss-making move, Rough argues the opposite” Circularity is revenue generating, because you're fundamentally trying to cut down the amount of waste that was traditionally generated across lots of different processes.”

Waste reduction is being driven from the bottom up. Gen Z and millennial consumers are increasingly rejecting fast fashion's disposability. ThredUp's 2024 Resale Report revealed that 88% of Gen Z shoppers want brands to help them reduce their environmental footprint, and that they're 2.5x more likely to buy secondhand compared to older generations.

The global secondhand apparel market is forecast to reach $350 billion by 2028, growing three times faster than the overall apparel sector. Though resale has existed for decades, Rough notes that it remained largely confined to a niche market, primarily male event wear, for much of that time. Incumbent platforms Vinted, Depop, and Vestiaire Collective have not only disrupted the traditional fashion economy but also legitimised circular models as both profitable and culturally relevant. 

Vinted, now Europe’s largest online resale marketplace, reported over €800 million in revenue in 2024 with nearly 75 million users, turning consistent profits through peer-to-peer simplicity and scale. Depop, acquired by Etsy for $1.6 billion in 2021, has become synonymous with Gen Z fashion culture. Eighty percent of its users are under 25, blending sustainability, community, and trend-led resale into one platform. Meanwhile, Vestiaire Collective has carved out leadership in luxury resale, raising over €700 million, achieving unicorn status, and partnering with legacy brands like Gucci to professionalise secondhand shopping. Together, these platforms have moved the secondhand market from a cost-conscious compromise to a style-forward, values-driven alternative.

Recapturing resale 

According to Rough, established fashion brands are working to recapture the value being diverted to C2C resale platforms. “Resale is happening… but it's controlled by the peer-to-peer platforms… and the brands are missing out on that value,” said Rough. It does not benefit the original fashion houses to see their pieces going viral on these resale platforms nor does it benefit them when their clothes are being resold, labels still attached, for a fraction of the price. 

ACS helps brands implement circularity into their own models to recapture an audience that has migrated. One of their most recent projects is The North Face’s ‘Renewed’ programme: “You can buy inventory on that platform at a reduced rate… ACS has received it, inspected it… cleaned, repaired… photographed it and then we list it on the North Face website.” This strategy isn’t just about sustainability, it’s commercially validated. “Their Renewed programme attracted 50% new North Face customers and of that 50%, half converted to full price North Face customers.”

The consumer move to embracing circularity has been a wake-up call for business and investors alike who have been slightly slow to respond to the success of the agility of new platforms. Financial backers are beginning to recognise the scalable, margin-enhancing potential of reuse-based models. Rough backs this up with data: “We can demonstrate that in some cases we've rented out some dresses over 50, 60 times. We've got some pairs of trousers over 100 times.” He describes rental as a high-efficiency system: “It's all about asset utilisation… maximum sales from the least amount of inventory.”

Sustainable Times recently published ‘From Insight to Impact: Mobilising Institutional Capital for Circular Fashion’. Developed as part of the Green Growth Pillar within the broader CFIN May Report 2025, and led in collaboration with the BFC, UKFT, CFIN, and Innovate UK, the research offers a rare window into how institutional investors perceive and approach sustainable fashion:

And capital is responding. Circular fashion startups have raised over $2.1 billion globally since 2020, with major deals including SoftBank’s €178 million investment in resale leader Vestiaire Collective.

Back to the drawing board 

Yet, as Rough emphasises, the circular economy must not be viewed through the narrow lens of resale alone. “Circularity goes far beyond resale,” he says. “It must begin at the design stage.” According to Rough, longevity in fashion starts with how garments are made, with sustainability claims sometimes obscuring the real impact. “Using organic cotton doesn’t automatically reduce water consumption,” he cautions. “If you design clothes to last longer, they will last longer. It's as simple as that.”

The startup space is seeing new innovations that are thinking about the fashion industry from beginning to end. Gooddrop, in partnership with The University of Nottingham, is pioneering sustainable cotton through indoor vertical farming. In contrast to traditional cotton farming, known for its intensive water use, pesticide dependency, and land demands, Gooddrop’s model uses 95% less water, eliminates chemical inputs, and requires less than 0.5% of the land. By growing cotton in climate-controlled environments they offer an alternative that dramatically reduces environmental impact. Designs crafted from their sustainable cotton are set to hit the runway later this year.

He’s equally clear on the role policy must play. While consumers are embracing change, he argues that true transformation depends on legislation. “The UK is behind Europe when it comes to policy,” Rough warns. “Recycling should be the last resort. The only meaningful solution is to extend the life of garments through reuse and that requires more than just consumer demand.”

This is precisely the gap Reskinned is working to close. The UK-based company is rethinking what recycling can look like in a circular fashion system. Rather than treating returned or worn garments as waste, Reskinned uses a triage model: wearable items are cleaned, repaired, and resold, while damaged goods are mechanically recycled into insulation, upholstery filling, or other industrial uses. Their take-back schemes are embedded directly into brand ecosystems, allowing for seamless integration and maximum recovery. With a zero-waste ethos and partnerships with over 30 brands, including Sweaty Betty, Seasalt, Oliver Bonas, Dune London, and eBay, Reskinned is turning recycling from an end-of-life gesture into a strategic component of long-term sustainability.

One such policy shift Rough supports is eliminating sales tax on resale and rental items. “That would instantly make these products 20% cheaper to the consumer,” he explains. “It’s a powerful lever for accelerating uptake.”

Fashion can also learn a lot from the auto and food industries, Rough said. “Regulation spurred electric vehicles. Consumer demand transformed food transparency. Fashion is next.”

For both investors and brands, circularity represents a fundamental shift in the fashion industry’s business model  and its one consumers are willing to pay for. By reducing risk and boosting revenue per garment, it is resonating with a generation that demands transparency, accountability, and impact.

Each year, billions of garments are produced only to go unworn, draining resources and eroding value.

Rough reminds the fashion houses that this isn’t about optics or reputation it is about securing a stronger commercial future.