It’s hip to reduce, reuse and recycle, once again

Disposable products are so last century. JWT Intelligence's latest trend looks at brands tapping into the "circular economy."

Take, make and dispose. It’s been the traditional way goods are produced and consumed, but today brands from Renault to Ikea to Philips are taking baby steps toward a new way of doing business, according to a recent trend report from JWT Intelligence.

The report argues that the so-called “linear economy” model is not sustainable, due to increasing energy and commodity costs, a natural resource shortage and changing consumer attitudes. For instance, a global report from Neilsen found people are more willing to share and rent items.

As a result of these pressures, some brands are embracing a concept floated about 30 years ago: the circular economy, an alternative model designed to reduce waste that merges older ideas like recycling, with new practices such as collaborative consumption. According to the report, its key principles include understanding that everything within the economy has value, designing with disassembly and reuse in mind,  finding ways to reuse materials, eliminating toxic chemicals and fuelling the system with renewable energy.

“Under this model, the production of goods operates like systems in nature,” the report says. “Where the waste and demise of a substance becomes the food and source of growth for something new.”

It requires a different way of thinking, the report’s editor, Marian Berelowitz, editorial director of JWT Intelligence, says. And while this model is better for the environment, she says brands are also recognizing it can improve their bottom line.

Just as beverage brands that reduced the amount of plastic in bottles found it helped reduce shipping costs, companies today are recognizing that through initiatives like re-manufacturing – replacing a product’s worn-out or obsolete parts with new ones, then reintroducing the product to market – they can also save money, Berelowitz says.

For instance, carmaker Renault re-manufactures engines, injection pumps, gearboxes, injectors and turbocompressors, a process it says is 30 to 50% less expensive than producing a new part.

“It crosses the border of clear, social responsibility and ways of doing business,” Berelowitz says.

In addition to re-manufacturing, companies are “becoming more circular” in several ways: selling temporary ownership – à la car-sharing programs; facilitating second-hand sales or product repairs; finding new uses for waste, like Starbucks, which has applied for a patent on a cattle feed made with coffee grounds that’s being used in Japan; collecting and recycling used goods; recycling through partnerships, like Coca-Cola and Ford’s collaboration to make cushions and other parts of a Ford Fusion Hybrid out of recycled Coke bottles; and designing products for circular use, as Puma did with its biodegradable line of shoes.

Another impact of this economy is it creates ongoing engagement for consumers with a brand, the report says, a buzzword among marketers rarely achieved in the linear economy, as a customer’s relationship with a brand usually ends once a purchase is made. In a circular system, where products are often leased rather than owned, there is great potential to turn periodic customers into ongoing users. But companies will need to find a way to keep people in the loop, it says.

“Companies will need to create these extended relationships so as to keep their goods within the closed loop,” the report adds. “The possibilities are numerous, including monitoring the quality of parts digitally, as Caterpillar does, creating financial incentives for the safe return of used goods, as several apparel retailers are doing; and giving consumers the means to easily repair or reuse goods.

“These programs can make customers feel valued, as their participation becomes key to the success of the circular system.”