Circularity improves customer loyalty, drives profitable sales growth

The circular economy, from reselling pre-owned products to new ownership formats, is not only sustainable but can help retailers to improve customer loyalty and generate profitable sales growth, according to experts at DELIVER Europe 2024 in Amsterdam this week.

Those were the key messages from the three female panellists in a discussion entitled “The Future Is Circular” and covering a diverse range of topics, from business models and strategies to practical steps for retailers.

Different ‘circular offers’

Laurence Fontinoy, Head of Circularity at French retailer Decathlon, stressed how circularity at the company had full management and employee support. Staff dedicated to pre-owned goods were in place throughout the business and these products had been integrated into the sales business model, she said.

Decathlon had developed four different kinds of “second life” offers in a number of different markets, Fontinoy explained. These included repurchasing goods from customers and reselling them; renting out seasonal products such as winter sports equipment; product subscriptions; and in-store repairs to enable reselling of reconditioned products.

One example of a product subscription was refurbished children’s bicycles, enabling families to obtain the right size of bicycles as their children grew up and without having to buy a new bicycle every few years.

Financial benefits

Amy-Marie Allen, Head of Fulfilment, Supply Chain, for British luxury retail chain Selfridges, stressed how circularity also enabled retailers to increase sales of the same asset while benefiting from the lower inventory costs of pre-owned stock.

She cited the examples of refillable perfumes and lipsticks and noted that Selfridges had so far generated £13 million worth of sales of pre-owned goods. 

Customer loyalty

Stephanie Crespin, Founder & CEO of Reflaunt.com, told attendees how the technology company aimed to “connect the first-hand and second-hand retail worlds” by integrating re-sale solutions into fashion retailer websites and apps.

“We are building a loyalty tool for retail customers who can interact more with their customers,” she explained. Customers whose goods were resold earned a payment or credits for another purchase with the same retailer.

In general, product re-selling “can drive sales” and enable retailers and brands to win new customers, she pointed out.

Circularity “needs to involve everyone”

Asked by moderator John Acton about their main learnings and advice for other retailers, Crespin underlined that circularity “cannot be a silo” in a company. “All the executive team needs to be fully on board and to put investment into it. It needs to be driven by all the departments,” she said.

Fontinoy advised retailers to make circularity into a KPI and to create incentives within the company while planning logistics capacity for this product line. “It can be a big lever of growth,” she commented.

Allen stressed: “Do not be afraid of failing fast… go live and test things.” She underlined the importance of training staff who were used to selling new products to sell second-hand goods, and also of leveraging the existing supply chain to handle these goods.