[case by case #3] Marie-Cécile Cervellon: exploring the ACS circular business model
In this interview, Marie-Cécile Cervellon, EDHEC Professor and Head of the Marketing department, presents her latest case, wrote together with her two co-authors, Lindsey Carey, Reader in Marketing at GCU, and Aileen Stewart, Lecturer in Fashion and Marketing at GCU. They have explored the marketing challenges faced by Advanced Clothing Solutions, a circular fashion hub based in Glasgow.
Advanced Clothing Solutions (ACS) is a Scottish company enabling fashion brands and retailers to join the circular economy. How does this hub operate?
ACS is Europe’s largest Circular Fashion Hub which provides sustainable services to fashion brands and retailers such as reverse logistics, cleaning, and repair. ACS facilitates the transition of the fashion industry, from the current linear ‘Buy-Wear-Replace’ approach into the circular ‘Rent-Repair-Resale’ model. The aim is to extend the life of clothes and divert textile waste from landfill. They are driven by a logic of closed loop: internal processes optimize material and energy efficiency, as well as recycling; in addition, through their services, they promote responsible consumption practices such as second-hand purchases and access-based consumption, like rental, over ownership.
ACS became B-Corp certified in May this year. How does this firm create sustainable value?
The B Corp certification requires companies to meet very high social sustainability and environmental performance standards. ACS is a purpose-driven company that puts profitably in second after the environment and society. It is quite unsettling to study a company that doesn't put profit first, but the prosperity of the community. They are “restorative and regenerative by intention and design” (Ellen MacArthur Foundation, 2013). Along the value chain, the efforts toward minimizing the negative impact of the business on the environment are numerous: collecting microplastics from the washing cycle, reusing cleaning fluid multiple times, using a rainwater capture system in the washing machines, among others. In other terms, they also enable a sustainable eco-system through greening their clients’ supply chain and proposing a solution to clothes’ waste.
They also seek to have a positive impact on society through engagement in community projects, recruiting and developing local disadvantaged jobseekers to resource their growth and maintaining a high level of employee well-being.
Our case highlights ACS socially responsible ethos, and adherence to strong and sincere sustainable values that drive the strategy.
Why teaching this case in a Marketing Course?
The ACS case is a strategic marketing case. It teaches students on how to design a customer-centric marketing strategy, based on an in-depth analysis of the macro and micro-environment. Students should understand the trends in fashion consumption, the reasons behind the development of the second hand and rental markets, but at the same time they must consider how ACS create value for business customers, retailers and fashion brands that are ACS source of revenue.
Over the last decade, many businesses have been created embracing a circular business model, particularly in the sector of services. The case teaches students about sustainable business practices, circular economy principles, and the practical application of these concepts in real-world scenarii.
How do you teach the case?
This case was designed to be taught fully online, thanks to the expertise of EDHEC Online (1). It is a 360° experience, with more than 8 hours of interviews with all ACS top managers, the factory workforce, the business customers and Circularity Capital, the Private Equity fund that sustains the growth of ACS business.
The discussion around the case involves the input of academic papers, one of them being co-authored by my EDHEC marketing colleague Arne De Keyser (2). The case might be adapted to different international contexts. This year, we organized a live business challenge in EDHEC GMBA program on how to scale such a circular business model in European countries. Students did a fantastic job conducting a market analysis, studying ACS capability to serve the market, and recommending a go-to-market strategy for different European countries.
More generally, what is going to support the development of this type of businesses?
In July 2023, the EU proposed mandatory and harmonised Extended Producer Responsibility (EPR) schemes for textiles in all EU countries (3). EPR is making fashion brands accountable for their environmental impact and responsible for the lifecycle of their products including the waste they generate. Circular and social businesses active in the recycling of textiles and treatment of clothes will have increased business opportunities.
Currently, 50% of returns in the UK go directly to landfill, even if the clothes are in good condition. 84% of the clothes returned and processed in ACS factory are saleable. This means extra-revenue for fashion companies at the same time as compliance with the legislation. This is going to be an area of development for actors like ACS in the future.
In addition, they benefit from the development of the resale market thanks to the growth of online resellers and fuelled by young eco-conscious consum-actors. More than in the past, consumers tend to invest in quality that has a resale value (4). The luxury and premium pre-loved market indicate the highest potential due to the timeless and durability of the clothes; actually, it is growing four times faster than the primary luxury market.
References
(1) Created in 2020, EDHEC Online is a 100% online digital platform that offers a portfolio of online programs and courses from the specialized Bachelor of Science to executive and Master of Science programmes.
(2) Pushing Forward the Transition to a Circular Economy by Adopting an Actor Engagement Lens (2023), Journal of Service Research - https://journals.sagepub.com/doi/abs/10.1177/10946705231175937. See also Arne De Keyser EDHEC Vox article on this paper.
(3) Press release (July 2023), "Circular economy for textiles: taking responsibility to reduce, reuse and recycle textile waste and boosting markets for used textiles" https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3635
(4) Selling second-hand luxury: Empowerment and enactment of social roles (2020), Journal of Business Research - https://www.sciencedirect.com/science/article/abs/pii/S0148296319307349?via%3Dihub
