Remanufacturing of deadstock and customer claims apparel

Remanufacturing of deadstock and customer claims apparel Perspectives on business strategy adoption, consumer perceived value, and economic feasibility Authors: Adrian Zethraeus, Ann Vellesalu

re:textile

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Foreword Re:textile is a research and innovation project lead by Science Park Borås, and funded by Västra Götalandsregionen and Naturvårdsverket. The ambition with Re:textile is to develop structures for circular processes in the textile industry to facilitate the creation of new business opportunities and use less planetary resources. The focus is to design for longevity through the approaches conditional design, redesign and remanufacturing, and service innovation. Re:textile works in collaboration with companies and organisations by carrying out workshops and projects to find new redesign ideas and business models, and investigate their feasibility.

This report has been written within the continuation of the project, funded by Naturvårdsverket, and continues to investigate the different perspectives of remanufacturing in collaborative networks. Three sub-studies have been carried out, with the first one focusing on understanding the enabling conditions and challenges when transitioning towards circularity by adopting remanufacturing activities. The second study investigates consumer perceived values when choosing to purchase between newly manufactured and remanufactured apparel, and the third examines the economic feasibility of such business strategy.

Special thanks to Elvine, XV Prodution, Korallen and Easycom for the collaboration and support with information in different parts of the study, and other stakeholders of the industry for their interest and participation. In addition, we would like to thank Emma Gunnebrink and Ella Johansson from the Textile Management MA programme, for conducting research related to the business strategy implementation and consumer perceived values.

Adrian Zethraeus, Project Leader, Science Park Borås Ann Vellesalu, Research Assistant, Textile Management

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Remanufacturing of deadstock and customer claims apparel

Abstract Despite the textile and apparel industry’s efforts to reduce environmental and societal impacts, apparel production and consumption has increased tremendously in the last decades, while utilisation of textile products has decreased. While the efforts of the industry are focused on reducing the impact of the current linear system, the industry is fourth highest pressure category in the European Union in terms of the use of primary raw materials and water. Thus, systemic change is required for transition towards circularity to facilitate slowing and closing of resource loops. The report investigates remanufacturing as a potential solution, through a holistic perspective. The aim of the study is to gain an understanding of the enabling conditions and challenges facilitating the adoption of remanufacturing activities and business models. Furthermore, the consumer perspective is investigated through identification of values that are crucial for consumer interest in remanufactured apparel.

Lastly, economic feasibility is investigated by developing different scenarios. Besides feasibility assessment, the study identifies key decision-making variables and critical success factors facilitating decision-making towards the transition to circularity.

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Remanufacturing of deadstock and customer claims apparel

Table of contents 1. Introduction................................................................................................................................................................ 7 1.1 Background and motivation...........................................................................................................................7 1.2 Purpose and research questions.................................................................................................................. 8 2. Remanufacturing..................................................................................................................................................... 9 2.1 Remanufacturing of textiles and apparel as defined by Re:textile............................................... 10 3. Methods.......................................................................................................................................................................11 3.1 Data collection and analysis..........................................................................................................................11 3.1.1 Business strategy implementation..................................................................................................11 3.1.2 Consumer perceived values............................................................................................................. 12 3.1.3 Economic feasibility.............................................................................................................................. 13 4. Business strategy implementation...............................................................................................................14 4.1 Challenges............................................................................................................................................................ 14 4.1.1 Industry-level challenges................................................................................................................... 14 4.1.2 System-level challenges..................................................................................................................... 14 4.1.3 Process-level challenges.................................................................................................................... 15 4.2 Enabling conditions......................................................................................................................................... 16 4.2.1 Industry-level enabling conditions............................................................................................... 16 4.2.2 System-level enabling conditions................................................................................................. 16 4.2.3 Process-level enabling conditions.................................................................................................17 4.3 Online survey results....................................................................................................................................... 18 4.3.1 Probability and impact........................................................................................................................ 18 4.3.2 Importance of the propositions...................................................................................................... 19 5. Consumer perceived value...............................................................................................................................21 5.1 Consumer perceived value........................................................................................................................... 21 5.2 Consumer perceived value of environmentally friendly apparel................................................23 5.3 Other factors........................................................................................................................................................23 5.3.1 Environmental knowledge................................................................................................................23 5.3.2 Consumer familiarity and ambiguity tolerance......................................................................23 5.3.3 Warranty.....................................................................................................................................................24 5.3.5 Cannibalization......................................................................................................................................24 5.3.6 OEM (original equipment manufacturer) and third-party remanufacturer...............24 5.3.7 Willingness to pay..................................................................................................................................25 5.4 Results....................................................................................................................................................................26 5.4.1 Customer profile....................................................................................................................................26 5.4.2 Consumer perceived value of new and remanufactured apparel.................................29 5.4.3 Relationship between customer profile, shopping habits,

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environmental knowledge, and consumer perceived values..................................................... 31

Remanufacturing of deadstock and customer claims apparel

6. Economic feasibility.............................................................................................................................................34 6.1 Scenario 1..............................................................................................................................................................38 6.2 Scenario 2.............................................................................................................................................................39 6.3 Scenario 3 and 4............................................................................................................................................... 40 7. Conclusions.............................................................................................................................................................. 42 7. 1 Key decision variables....................................................................................................................................42 7.2 Critical success factors...................................................................................................................................42 7.3 Feasibility assessment.....................................................................................................................................43 8. References................................................................................................................................................................. 44

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Remanufacturing of deadstock and customer claims apparel

1. Introduction 1.1 Background and motivation The consumption and production of textile products is extremely globalised, and involves producers and consumers across the world (European Topic Centre Waste and Materials in a Green Economy 2019). Across Europe, an average of 26kg of textiles is consumed per person per year (European Topic Centre Waste and Materials in a Green Economy 2019), with the number in Sweden being around 13kg per year per person (NaturvĂĽrdsverket 2016). On the other hand, the production of clothing has doubled in the last few decades, and the average number of times a garment is used has decreased by 36%. Furthermore, less than 1% of all materials are recycled into new garments, with a total of 75% of all materials processed in the fashion value chains are lost in landfills (Ellen MacArthur Foundation 2017, Global Fashion Agenda and The Boston Consulting Group 2018).

From an EU consumption perspective, the supply chains of clothing, footwear and household textiles are the fourth highest pressure category in terms of the use of primary raw materials and water. Furthermore, it is the second highest for land use, and fifth highest pressure category in terms of greenhouse gas emissions (European Topic Centre Waste and Materials in a Green Economy 2019). While some environmental and societal problems are already being addressed by the industry, most of the efforts are focused on reducing the impact of the current linear system. Some of the examples include using more efficient production techniques or reducing the impact of materials (Ellen MacArthur Foundation 2017). However, systematic change towards circularity is crucial to facilitate the reduction of environmental and climate pressures and impacts while sustaining economic and social benefits (European Topic Centre Waste and Materials in a Green Economy 2019).

As the production stages have the highest environmental impact (Roos et al. 2016), the aim in transitioning towards circularity should be on keeping fibres, textiles and garments at their highest value during use and re-entering phases (Ellen MacArthur Foundation 2012; 2017). By doing so, closing and slowing the resource loops will be facilitated, thus making a connection between post-use and production (Bocken et al. 2016). Furthermore, some of the key actions identified to access and maintain clothing by the Ellen MacArthur Foundation (2017) are related to emphasising the advantages of durability, and further boosting clothing utilisation through policy and extended producer responsibility. Therefore, a strategy such as fashion remanufacturing facilitates recirculating materials for added value, and highlights the importance of exploring alternative solutions related to operations, business models and structures for remanufacturing (Pal et al. 2018).

The following work is resulting from Re:textile’s project focusing on the investigation of remanufacturing form a holistic perspective, and includes local stakeholders in Sweden, forming a collaborative network. The project has been carried out in three sub-studies, aiming to examine the implementation of remanufacturing activities for slowing the resource loops from different stakeholder perspectives in the whole value chain.

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Remanufacturing of deadstock and customer claims apparel

1.2 Purpose and research questions The purpose of the first sub-study is to gain an understanding of the enabling conditions and challenges for transitioning towards circular business models, by implementing strategies such as remanufacturing. The understanding aims to provide practitioners with preliminary knowledge facilitating the transition to circularity through remanufacturing. Thus, the research questions for the first sub-study are the following: RQ1 Which enabling conditions and challenges are most probable to occur, and which of them have the most impact from the practitioners´ perspective?

RQ2 What is the relative order of importance of the enabling conditions and challenges when transitioning to circularity through remanufacturing practices?

The purpose of the second sub-study is to gain understanding of which values consumers perceive as most relevant when purchasing remanufactured garments (i.e. refurbish, recouple and reconstruct), in comparison to newly manufactured garments. This understanding aims to provide an understanding about the relationship between the customer profile and consumer perceived value for remanufactured apparel, helping the textile and apparel industry to target the right customers, and to decrease demand for newly manufactured garments. Thus, the research questions are defined as following: RQ3 How do consumers perceive values (i.e. emotional, social, price, quality, environmental) when purchasing: – newly manufactured apparel, and – remanufactured (i.e. repaired and redesigned) apparel?

RQ4 Is there a statistically significant relationship between the consumer profile, shopping habits, knowledge related to environmentally friendly apparel, and consumer perceived values (i.e. emotional, social, price, quality, environmental) when purchasing: – new apparel, and – remanufactured apparel?

The third sub-study examines the economic feasibility of implementing remanufacturing activities within collaborative networks. The evaluation of the economic feasibility is aimed at various stakeholders in the textile and fashion industry, such as fashion brands, retailers and remanufacturers, interested in exploring circularity through remanufacturing.

RQ5 Is remanufacturing of customer claims and deadstock economically feasible?

The following section will provide an overview of the remanufacturing concept and its definition, along with benefits and challenges that have been identified in literature.

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Remanufacturing of deadstock and customer claims apparel

2. Remanufacturing Facilitating the transition towards circularity is the concept closed-loop supply chain (CLSC) that refers to a supply chain system where manufacturing and remanufacturing coexist.

Therefore, the entire life cycle of the product is taken into account by also including reverse supply chain design and management activities for the recovery and remanufacturing of products (Kerr and Ryan 2001, Michaud and Llerena 2011; Wen-Hui et al. 2011). Remanufacturing processes and reverse logistics activities include the steps of collection, disassembly, inspection, sorting, cleaning, reprocessing, reassembly, checking, testing and redistribution (Pal et al. 2018). Remanufacturing recaptures and adds value to the use of the product (Charter and Gray 2008), and is an advanced form of recycling (Wen-Hui et al. 2011) as remanufactured components keep their original function (Michaud and Llerena 2011).

Remanufacturing comes with several benefits, due to its nature for sustainable production and waste management when comparing to replacing virgin fibres (Armstrong et al. 2015, Krystofik et al., 2015, Dahlbo et al. 2017). By reducing the production of new textiles, the use of water, energy and chemicals is decreased leading to a reduction in greenhouse gas emissions (Atasu et al. 2010, Dahlbo et al. 2017). Furthermore, as many components of the products used as raw materials are still functioning, the process becomes less expensive (Ferguson 2009). Additionally, the quality and performance of a remanufactured product can be compared to a new product, with added benefits relating to shorter processing times and decreased negative impacts on the environment (Wen-Hui et al. 2011). However, even when considering the range of benefits, many uncertainties are still present, especially related to the reverse flows of materials, lead times, quality and market demand (Ferguson 2009).

All the steps and their sequence in the remanufacturing process affect the quality and feasibility of the activities carried out and the final product. Furthermore, the quality standard of the process and product depends on the quality of the waste material, level of complexity of the activities required, and the available technologies (Pal et al. 2018). For example, the value of the waste material depends of the market, material demand and supply, legislation surrounding the remanufacturing activities, and technologies used (Charter and Gray 2008).

Additionally, the disassembly stage has a direct impact on the quality, as it is highly time consuming and labour intensive, and therefore is subjected to higher risk for human error (Gallo et al. 2012).

Due to challenges, such as lack of adequate experience and infrastructure, majority of original equipment remanufacturers (OEMs) are not keen to explore the potential of remanufacturing (Ferguson 2009). While fashion remanufacturing has been tested in small volumes for a niche market (Niinimäki and Hassi 2011, Dissanayake and Sinha 2015, Choi 2017), adopting the circular mindset is yet to emerge at large (Niinimäki and Hassi 2011). This can be further attributed to a lack of motivation for increased collaboration due to unfamiliarity of remanufacturing operations (Hermansson and Sundin 2005), along with globalisation and low-cost sourcing from offshore manufacturing (Ferguson 2009), and a lack of understanding of consumer perception and purchase behaviour towards remanufactured products (Atasu et al. 2010, Paras et al. 2018, Wang et al. 2018).

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Remanufacturing of deadstock and customer claims apparel

In conclusion, while many benefits and challenges of remanufacturing in the textiles and apparel industry have been identified, a holistic understanding is required for successful scaling up of remanufacturing activities in the transition towards circularity. As emphasised for example by Jensen et al. (2019), a combination of integrated business activities and collaboration is required, relating to the purposes of the three sub-studies in this report.

2.1 Remanufacturing of textiles and apparel as defined by Re:textile Remanufactured fashion is defined as garments that are constructed by reclaimed fabrics, originating from post-industrial or post-consumer waste, or in combination of both. In the textile and apparel industry, activities such as pattern development, cutting and sewing are included in the remanufacturing process. It differs from remanufacturing in other industries, as the garments don’t necessarily keep their original shape (Dissanayake and Sinha 2015).

Most relevant steps to focus on for strategic advantage in fashion remanufacturing are identified as design, cutting, assembly, modular manufacturing and quality control (Sinha et al.

2016).

Remanufacturing of textiles and apparel as defined by Re:textiles refers to the EU Waste Framework Directive points ‘Preparing for re-use’ and ‘Recycling’ defined as checking, cleaning or repairing recovery operations for re-use, and reprocessing waste materials into products, materials or substances whether for the original or other purpose, respectively. As seen on Figure 1 below, remanufacturing is defined in three levels of complexity depending on the state of the raw material and wished design for the new product. Starting from the most preon the state of the raw material and wished design for the new product. Starting from the ferred option, re:furbish entails attaching new labels, or minor fixes to bring the product into most preferred option, re:furbish entails attaching new labels, or minor fixes to bring the like-new condition. Re:couple refers to updating the garment, for example through added product into like-new condition. Re:couple refers to updating the garment, for example embroidery, prints or dyeing the fabric, while the least preferred option re:construct involves through added embroidery, prints or dyeing the fabric, while the least preferred option a more complicated process of disassembly and reassembly into a completely new product.

re:construct involves a more complicated process of disassembly and reassembly into a completely new product.

Figure 1. Levels of remanufacturing.

Figure 1. Levels of remanufacturing.

3. Methods

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The study was carried out in collaboration with the main actors of the project, and external researchers, practitioners from retailers that work within circular business models and large fast fashion companies, and end-customers interested in remanufactured apparel. The study followed different methods for the three sub-studies. For the first two sub-studies, a mixed Remanufacturing of deadstock and customer apparel methods approach was taken, whereclaims the qualitative and quantitative data support each other, while in the third sub-study the focus is on analysing quantitative data for economic feasibility

3. Methods The study was carried out in collaboration with the main actors of the project, and external researchers, practitioners from retailers that work within circular business models and large fast fashion companies, and end-customers interested in remanufactured apparel. The study followed different methods for the three sub-studies. For the first two sub-studies, a mixed methods approach was taken, where the qualitative and quantitative data support each other, while in the third sub-study the focus is on analysing quantitative data for economic feasibility analysis.

3.1 Data collection and analysis The following sections describe the data collection and analysis specific to each of the sub-studies.

3.1.1 Business strategy implementation The sub-study follows a modified Delphi approach, where the systematic literature review is forming the foundation for identifying enabling conditions to transitioning towards circularity with remanufacturing as a business strategy. The Delphi method is a consensus development tool applicable in topics with limited evidence (Avella 2016), and the knowledge from a practical perspective from professionals working in the industry is relevant (Hsu and Sandford 2007). As Delphi has already been used by other researchers as a key method for identifying factors of business model transformation (Melynk et al. 2009), it was found to be applicable to this study, by using online surveys for data collection.

The systematic literature review follows explicit criteria for article inclusion, to ensure a focus on the topic of this study, and quality of the data collected. ABI/INFORM was utilised as the primary database, and Science Direct and Scopus as secondary databases to improve the reliability of the data collected (Oghazi & Mostaghel 2018). The initial sample consisted of 129 peer-reviewed articles, of which 28 were selected based on analysing the abstract.

The final sample from the literature review consisted of 12 articles, that were categorised after the aim, focus and used methods in order to obtain a descriptive analysis of each. The step was followed by categorisation of the collected data following a modified three-level model introduced by Kurilova-Palisaitiene et al. (2018), that is industry-level, system-level and process-level. The propositions, representing the enabling conditions and challenges for transitioning to circularity, were developed as an outcome of the key points presented under each category.

The online survey was piloted for content validity, reliability and feasibility (Gill et al. 2013) to two externals, of which one of them had knowledge in the field investigated, and one with limited knowledge. The survey was delivered using SurveyMonkey, and included information about the purpose of the study. The first two rounds of the survey entailed the probability of the proposition, its impact on the industry, and desirability of the outcome, with controlled feedback provided to the participants in the second round. The third round offered the same controlled feedback from the first round, while focusing on ranking the propositions instead, in order to understand which of the propositions the participants thought were most relevant for transitioning towards circularity through remanufacturing.

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Remanufacturing of deadstock and customer claims apparel

Sampling followed the process described by Okoli and Pawlowski (2004), focusing on practitioners active in Sweden. A list of members of the Swedish textile trade and employers’ association TEKO (TEKO 2019) was taken as a basis, where the selection criteria included being a fabric manufacturer or an apparel brand, and communication of their sustainability work. Additional practitioners included companies and researchers involved in the project and with the topics, and those interested in the study through personal networks. The participants from the respective companies or institutions are experienced in areas such as sustainability, purchasing, R&D, and retail, etc., allowing to generate knowledge sharing between different perspectives to shred light in remanufacturing within the industry.

Interquartile range (IQR) was used to measure agreement in the first two rounds. It is suggested a value less than 25 to represent agreement between the practitioners (Gnatzy et al.

2011; Melander et al. 2019). In this study both a 0-100% scale and a 5-point Likert scale were used, with the value less than 25% to be a consensus among the practitioners. To measure the ranking from the third round of the online questionnaire, the methodology by Schmidt (1997) was followed. Schmidt (1997) uses a nonparametric statistic Kendall’s W, which is preferable as it emphasises whether any agreement has been reached among the practitioners (Schmidt, 1997). The result of Kendall’s W goes between 0 to 1, where 1 indicate that all practitioners agree, a result of 0,5 shows a moderate agreement and 0,3 and lower indicates of a lower degree of agreement. Comments from the first round were analysed and synthesised to provide controlled feedback in the second and third round for each proposition respectively.

3.1.2 Consumer perceived values For this sub-study, qualitative data was collected to develop an instrument for quantitative data collection. The foundation of the study is developed through a literature review, in order to form an overview of the concepts addressed in the study, and to develop a foundation for the interviews and online surveys. With the PERVAL scale proposed by Sweeney and Soutar (2001) as a basis for testing consumer perceived values, the review supported the forming of the statements, and adding an additional value group due to its relevance as motivation for purchasing remanufactured apparel.

Pre-testing of the self-completion online surveys was carried out, in order to validate the respondents´ comprehension of each developed item, and if that understanding answers the researchers´ intentions. In this study, think-aloud cognitive interviews were carried out with seven respondents that were local to the researchers. The respondents were asked to think aloud while simultaneously answering the survey in order to reveal the thought process in interpreting the question and arriving to the answer (Peterson et al. 2017). The data was collected by taking notes during the interview, and then analysed by one researcher, by examining each interview notes individually, followed by studying key phrases relevant to item interpretation across respondents (Peterson et al. 2017). The findings from the cognitive interviews will not be addressed separately, as they describe the item development from literature review to the final items presented in the survey, as presented in the results section.

The survey was structured as follows: (1) respondent profile, including their age, level of education, profession, and monthly income; (2) shopping habits, including frequency, purchase amounts, brand segments, and preference to types of garments; (3) environmental know-

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Remanufacturing of deadstock and customer claims apparel

ledge related true/false statements regarding the textile and apparel industry and environmentally friendly apparel. The fourth and last section (4) focused on the consumer perceived values as identified from literature, by asking the respondents to evaluate whether the statements in each group were found to be important when purchasing new or remanufactured garments in a 5-point Likert scale, from strongly disagree to strongly agree.

The survey was offered both in Swedish and English, and the potential respondents were targeted through: (1) posters, (2) Re:textile´s social media, and (3) the participating brand´s social media and subscription lists, as the aim was to reach consumers that are interested in environmental issues and solutions for them, and additionally those interested in the brand to gain an understanding of brand-specific interest for remanufactured apparel. An incentive in the form of a lottery to win a freely chosen jacket from the partnering apparel brand was offered to the respondents of the online survey.

In total, 81 complete responses were collected through the online surveys. As the survey was shared through off- and online calls with an added incentive, the snowball sampling effect was expected to lead to a higher number of individuals sharing the previously described characteristics of the research interest of this study (Crouse and Toni 2018). However, the snowball sampling method leads to an unknown response rate, as it is not known how many people were reached and decided not to participate in the study. Nevertheless, the final sample size was assessed to be sufficient due to the quality of additional qualitative data provided by the respondents.

The data collected through the self-completion online surveys was analysed through frequency of an answer occurring for the first three sections of the survey. The fourth section of the survey was analysed using arithmetic mean and standard deviation, allowing to answer the first research question. Pearson’s r correlation was used to find causality between the customer profile, shopping habits, environmental knowledge, and consumer perceived values, thus allowing to answer the second research question.

3.1.3 Economic feasibility The data for the economic feasibility was collected from the stakeholders in the project, and was analysed by adapting the “Leeway model for process cost”1 developed by Re:textile, due to the nature of the presented case. A detailed description of the analysis is presented in section 6.

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Re:textile – Feasibility of Fashion Remanufacturing (2018)

Remanufacturing of deadstock and customer claims apparel

4. Business strategy implementation The following section describes the results from the first sub-study. First the propositions developed from the literature review are presented, followed by the results from the online surveys.

4.1 Challenges 4.1.1 Industry-level challenges Customer perspective Considering the customers’ attitude in transitioning towards new business models, more specifically remanufacturing practice is critical (Hazen et al. 2017), as it has been challenging to observe (Gurita et al. 2018). Furthermore, it has been described that without motivation, customers are not interested in more sustainable options (Veleva and Bodkin 2018).

– P1: Consumer attitudes and preferences are challenging when working with remanufactured products.

Political perspective Large companies have been described to have a lack of interest or motivation for implementing or scaling up circular activities, such as reuse, remanufacturing or upcycling (Veleva and Bodkin 2018). With a lack of policy incentives, such as tax reductions product standards (Vogtlander et al. 2017), companies’ interest in transitioning towards circularity can be inhibited (Singh and Ordoñez 2016).

– P2: The lack of policies, standards and guidelines inhibits the implementation of remanufacturing activities.

4.1.2 System-level challenges Business model perspective Designing circular revenue models becomes more complicated, as it is necessary to not only predict initial sales, but also circulation of the offering, when comparing to linear business models where the costs are only predicted once (Linder and Williander 2017). Thus, costs that occur later in the product’s lifetime are necessary to account for, such as additional materials for remanufacturing, stock of materials, etc. (Linder and Williander 2017). As companies don’t yet have a sufficient understanding of the market, more investigation is necessary by including other stakeholders, such as the customers in order to reach a suitable revenue model (Jensen et al. 2019).

– P3: Visualising the economic value created through remanufacturing is more challenging as the revenue models become more complex.

Marketing strategy perspective A lack of customer demand and awareness for sustainable products (Veleva and Bodkin 2018), along with limited sales arguments including sustainability for remanufactured products (Vogtlander et al. 2017), has led to concerns relating to weak and uncompetitive selling approaches for such goods (Kurilova-Palisaitiene et al. 2018).

– P4: Fluctuation of consumer demand and awareness for sustainable products makes it challenging to market remanufactured products.

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Information and knowledge perspective Information sharing and knowledge relating to circularity is quite rare (Kurilova-Palisaitiene et al. 2018), potentially leading to a lack of awareness regarding environmental and social impacts of waste generation and disposal (Veleva and Bodkin 2018).

– P5: Lack of knowledge and awareness regarding environmental and social impact of waste generation and disposal within fashion companies challenges the implementation of remanufacturing business models.

Design for remanufacturing perspective The main challenges here relate to designing a system that is able to compete with novel design and innovation on a volatile market (Bakker et al. 2014), as designers need to create attractive products from a variety of materials that can be in different conditions, and thus not standardised, leading to limited knowledge along designers (Singh and Ordoñez 2016).

– P6: Limited knowledge on aspects related to designing remanufactured products puts the designers in a challenging position.

4.1.3 Process-level challenges Core perspective The core perspective relates to the materials used in remanufacturing and information regarding the type, model and condition of the goods used for remanufacturing (KurilovaPalisaitiene et al. 2018). Issues related to availability, demand timing and technical capacity to remanufacture products that meet market demands (Krystofik et al. 2018), along with uncertainties regarding remanufacturing potential due to quality and function (Gurita et al. 2018), indicate a lack of regulations for remanufacturing.

– P7: Missing product regulations regarding standards and quality challenge the development of remanufactured products.

Operational perspective Scaling up of remanufacturing activities due to lack of financing, and knowledge and expertise related to the activities have been found challenging (Veleva and Bodkin 2018), indicating the relevance of the operational perspective on process-level (Kurilova-Palisaitiene et al. 2018).

– P8: Lack of operational knowledge and expertise within the apparel and textile industry challenge the implementation of remanufacturing.

Cost perspective Remanufacturing activities are highly dependent on manual work (Kurilova-Palisaitiene et al.

2018), meaning that costs related to labour are higher compared to mass production (Vogtlander 2017, Veleva and Bodkin 2018). Additional costs can occur due to extra material use, leading to challenges related to pricing of remanufactured products, and scaling up of such activities (Östlin et al. 2009, Krystofik et al. 2018).

– P9: Higher operational costs related to an increase in manual work challenge the scaling up of remanufacturing.

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Remanufacturing of deadstock and customer claims apparel

4.2 Enabling conditions 4.2.1 Industry-level enabling conditions Consumer perspective Companies understanding price differentials and their role in environmental initiatives enables them to guide the customer towards remanufactured goods (Hazen et al. 2017). Furthermore, an understanding of what influences the customer and their acceptance of new ownership models (Bakker et al. 2014) facilitates communication with customers.

– P10: To attract more customers through personal interest and attitude towards remanufactured products, companies need to understand the factors that influence the customers’ acceptance process, as well as communicate their environmental initiatives.

Political perspective Transitioning towards circularity through remanufacturing requires the implementation of strategies and policies questioning consumerism and driving industry behaviour (Jensen et al. 2019). Policymakers can therefore advance the implementation of circular practices by for example enacting effective regulations; providing incitement to engaged companies, raising awareness and providing financial support (Veleva and Bodkin 2018 pp. 21). However, companies need to take action to influence policymakers (Hazen et al. 2017).

– P11: To facilitate the adoption of and transition towards remanufacturing activities, stakeholders (manufacturers and brands) need to take action to influence policymakers to enact regulations, such as tax reduction.

4.2.2 System-level enabling conditions Business model perspective Integration of several business activities has been described as relevant for the successful implementation of remanufacturing (Jensen et al. 2019). Additionally, rethinking business strategies from selling volumes to selling products is relevant (Veleva and Bodkin 2018). A focus on the triple bottom line allows companies to increase sales, brand awareness, identify new sales opportunities, along with decreasing environmental impact and creation of jobs (Jensen et al. 2019).

– P12: Rethinking the business model for remanufactured products enables companies to both increase the revenue and decrease the environmental impact, through focus on the product, rather than volume.

Marketing strategy perspective Emphasising personal benefit, rather than environmental benefits has been highlighted by Vogtlander et al. (2017), while others have highlighted the importance of customer service and flexibility (Veleva and Bodkin 2018). By shaping the customers’ attitude towards remanufactured products through emotional values (Hazen et al. 2017), companies are able to build a strong product and brand (Vogtlander et al. 2017), potentially leading to increased demand for remanufactured products.

– P13: Marketing the personal benefit for the customers, such as emotional value and environmental impact will increase the demand for remanufactured products.

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Information, supply and demand perspective Information regarding the condition and utilisation of products, combined with the duration and point of return enable remanufacturers to predict the supply, and facilitate meeting demand (Östlin et al. 2009). Furthermore, this information along with data related to customer demand needs to be communicated within the supply chain (Kurilova-Palisaitiene et al.

2018).

– P14: Adoption of data collection and analysis systems facilitate the prediction of supply of “end-of-use materials” and to meet customer demand.

Design for remanufacturing perspective As the design of a remanufactured product should compensate for the desire of buying a newly manufactured product (Singh and Ordoñez 2016), customers could be involved in the process to understand extending the life of a product (Bakker et al. 2014), and a focus should be on long lasting design to reduce potential obsolescence (Linder and Williander 2017).

Streamlining the remanufacturing process by only replacing as few components as possible (Jensen et al. 2019), and selecting high quality components that are also easy to replace (Bakker et al. 2014) are expected to optimise the design process.

– P15: Optimisation of the design process to develop durable products enhances the attractiveness and competitiveness of remanufactured products, compared to newly manufactured products.

4.2.3 Process-level enabling conditions Core perspective With the potential of materials moving between different industries and branches, the position of firms can change from within the industry-specific supply chain to material cycles (Fischer and Pascucci 2017). Furthermore, quality of such materials is easier to identify when it comes from industry, preventing issues of uncertainties (Singh and Ordoñez 2016).

– P16: A solid flow of reliable end-of-use materials enhances the interest of adopting remanufacturing activities within remanufacturers and brands.

Operational perspective Coordinated networks of entrepreneurs, corporations and other stakeholders has been identified as one solution facilitating scaling up of localised production and consumption (Veleva and Bodkin 2018). This indicates the importance of supplier relationships, improving remanufacturing processes through feedback loops (Kurilova-Palisaitiene et al. 2018). Furthermore, implementing lean improvements with the help of technology should reduce unnecessary activities within remanufacturing and shorten lead times (Kurilova-Palisaitiene et al. 2018, Veleva and Bodkin 2018).

– P17: Technology is crucial for establishing remanufacturing process and creating efficient information and material flows between the stakeholders.

Cost perspective Potential financial benefits can occur through remanufacturing and resale of products that normally are discarded (Veleva and Bodkin 2018). In some cases, the core materials can be free of cost, indicating that the focus is on transport and material handling costs (Östlin et al.

2009). Therefore, the higher costs related to increased manual work can be outweighed by a

17

Remanufacturing of deadstock and customer claims apparel

potential in reduction of raw material costs, new revenues from novel products and markets, etc. (Jensen et al. 2019) – P18: High operational costs around remanufacturing can be decreased by optimising the process, and through establishing collaboration that can enhance the benefits with remanufacturing.

4.3 Online survey results The online surveys were carried out in three rounds, with the first two rounds focusing on the probability and impact, and the last round examining the relative order of importance of the propositions through ranking. The response rate throughout the surveys was at 65%, 57% and 52% respectively, with the sample decreasing due to issues such as lack of time and commitment.

4.3.1 Probability and impact To measure the agreement on the probability, IQR was set to 25% for probability (with a range up to 100%), and 1,25 for impact on the industry (on a 5-point Likert scale). The first round showed an agreement on five of the propositions for the probability, and on ten of the propositions for the impact. After the controlled feedback during the second round, agreement was found on ten of the propositions for the probability, and five of the propositions for the impact.

The relative importance of the propositions after the second round is presented through positioning the probability in relation with the impact for each of the propositions (see Figure 2 below). As seen on the figure, enabling conditions from the consumer perspective (P10) on the industry-level and core perspective (P16) on the process-level are the most likely to occur and are evaluated to have the highest impact on the industry. Regarding the challenges, the business model perspective (P3) on the system-level, and the cost perspective (P9) on the process-level are most likely to occur and are evaluated to have the highest impact. On the contrary, enabling conditions from the information, supply and demand perspective (P14) and design for remanufacturing perspective (P15) are the least likely to occur and are evaluated to have the least impact on the industry. Furthermore, challenges from the marketing strategy perspective (P4) and design for remanufacturing perspective (P6) on the systemlevel are the least likely to occur and are evaluated to have the least impact on the industry.

18

Remanufacturing of deadstock and customer claims apparel

4,50 P2 4,00

Impact

P3

P18

P16

P11 P6

P14 P15

3,50

P1 P5

P12

P9

P10 P7

P17 P13

P8

P4 3,00

2,50 45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

Probability Figure 2. Probability Probabilityand and impact of the developed propositions.

Figure 2. impact of the developed propositions.

4.3.2 Im portance of thof e pthe ropopropositions sitions 4.3.2 Importance

To get get an an understating understating of To of the the relative relative importance importanceof ofthe thepropositions, propositions,the thepractitioners practitionerswere were asked to rank the propositions in the last round of the online surveys.

The propositions were asked to rank the propositions in the last round of the online surveys. The propositions were presented in the same order as in the previous two rounds, avoiding any potential to affect presented in the same order as in the previous two rounds, avoiding any potential to affect the practitioners’ decision. The results of the ranking are presented in Table 1 below. Low the practitioners’ decision. The results of the ranking are presented in Table 1 below. Low dedegree of consensus was found in the third round, with a Kendall’s W value of 0,13 for the gree of consensus was found in the third round, with a Kendall’s W value of 0,13 for the chalchallenges and 0,10 for the enabling conditions. While only a low level of agreement was lenges and 0,10 for the enabling conditions. While only a low level of agreement was found, found, the results provide an indication of which aspects enable and inhibit the adoption of the results provide an indication of which aspects enable and inhibit the adoption of remaremanufacturing activities. However, as some of the findings are controversial when nufacturing activities. However, as some of the findings are controversial when comparing to comparing to the results of the second round (e.g. P9 related to high operational costs), the the results of the second round (e.g. P9 related to high operational costs), the consideration consideration of results of the third round in managerial decision-making should be critically of results of the third round in managerial decision-making should be critically evaluated. evaluated.

Table 1. Relative importance of the propositions.

Rank Enabling conditions

Challenges

1.

P18: High operational costs around remanufacturing can be decreased by optimising the process, and through establishing collaboration that can enhance the benefits with remanufacturing.

P6: Limited knowledge on aspects related to designing remanufactured products puts the designers in a challenging position.

2.

P15: Optimisation of the design process to develop durable products enhances the attractiveness and competitiveness of remanufactured products, compared to newly manufactured products.

P1: Consumer attitudes and preferences are challenging when working with remanufactured products.

3.

P17: Technology is crucial for establishing P8: Lack of operational knowledge remanufacturing process and creating and expertise within the apparel and 17

19

Remanufacturing of deadstock and customer claims apparel

remanufacturing activities. However, as some of the findings are controversial when comparing to the results of the second round (e.g. P9 related to high operational costs), the consideration of results of the third round in managerial decision-making should be critically evaluated.

Table 1. Relative importance of the propositions.

Rank Enabling conditions

Challenges

1.

P18: High operational costs around remanufacturing can be decreased by optimising the process, and through establishing collaboration that can enhance the benefits with remanufacturing.

P6: Limited knowledge on aspects related to designing remanufactured products puts the designers in a challenging position.

2.

P15: Optimisation of the design process to develop durable products enhances the attractiveness and competitiveness of remanufactured products, compared to newly manufactured products.

P1: Consumer attitudes and preferences are challenging when working with remanufactured products.

3.

P17: Technology is crucial for establishing remanufacturing process and creating efficient information and material flows between the stakeholders.

4.

P10: To attract more customers through personal interest and attitude towards remanufactured products, companies need to understand the factors that influence the customers’ acceptance process, as well as communicate their environmental initiatives.

P8: Lack of operational knowledge and expertise within the apparel and textile industry challenge the implementation of remanufacturing.

17 P4: Fluctuation of consumer demand and awareness for sustainable products makes it challenging to market remanufactured products.

5.

P13: Marketing the personal benefit for the customers, such as emotional value and environmental impact will increase the demand for remanufactured products.

P5: Lack of knowledge and awareness regarding environmental and social impact of waste generation and disposal within fashion companies challenges the implementation of remanufacturing business models.

6.

P14: Adoption of data collection and analysis systems facilitate the prediction of supply of “end-of-use materials” and to meet customer demand.

P2: The lack of policies, standards and guidelines inhibits the implementation of remanufacturing activities.

7.

P16: A solid flow of reliable end-of-use materials enhances the interest of adopting remanufacturing activities within remanufacturers and brands.

P7: Missing product regulations regarding standards and quality challenges the development of remanufactured products.

8.

P11: To facilitate the adoption of and transition towards remanufacturing activities, stakeholders (manufacturers and brands) need to take action to influence policymakers to enact regulations, such as tax reduction.

P3: Visualising the economic value created through remanufacturing is more challenging as the revenue models become more complex.

9.

P12: Rethinking the business model for P9: Higher operational costs related to remanufactured products enables an increase in manual work challenge companies to both increase the revenue the scaling up of remanufacturing. and decrease the environmental impact, through focus on the product, rather than volume.

Table 1. Relative importance of the propositions.

5. Consumer perceived value

The following chapter describes the concept of consumer perceived value, and identifies further aspects affecting those values.

20

5.1 Conof sum er perceived value Remanufacturing deadstock and customer claims apparel

Consumer perceived value (CPV) is often described as Zeithaml’s (1988, p. 14) definition as a “consumer’s overall assessment of the utility of a product (or service) based on perceptions

5. Consumer perceived value The following chapter describes the concept of consumer perceived value, and identifies further aspects affecting those values.

5.1 Consumer perceived value Consumer perceived value (CPV) is often described as Zeithaml’s (1988, p. 14) definition as a “consumer’s overall assessment of the utility of a product (or service) based on perceptions of what is received and what is given.” The most common definition of value itself is the ratio or trade-off between quality and price, which is a value-for-money conceptualization (Sweeney and Soutar 2001). This indicates how the consumer compares the price of the product to the perceived quality of the product, and then determines whether or not to purchase the product (Lee et al. 2011). However, the CPV differs, some consumers perceive higher value when there is a low price, others perceive value when there is a balance between quality and price. Hence, for different consumers, the components of perceived value might be differentially weighted (Zeithaml 1988).

Sweeney and Soutar (2001) argue on the other hand that viewing values as a trade-off between only quality and price is too simplistic, they thereby added emotional and social value into the discussion and put all four factors together in a 19-item PERVAL-scale. The scale and its four dimensions showed results of having stable psychometric properties. It demonstrates that consumers assess products, not only in functional terms of expected performance value for money and versatility, but also in terms of the enjoyment or pleasure derived from the product (i.e. emotional value) and the social consequences of what the product communicates to others (i.e. social value). The result of their study implies that each value dimension plays an important and separate role in forming attitudes and behaviors in the purchase process. They thereby argue that the 19-item PERVAL-scale is a great tool for investigating consumption value (Sweeney and Soutar 2001).

According to Chi (2015), Sweeney and Soutar (2001)’s proposed PERVAL scale has generally been considered as one of the most optimal tools for empirical investigation of CPV. A study

by Walsh et al. (2014) show further support for the PERVAL-scale, as it implies the scale as viable in measuring CPV. The scale also show potential to become widely used to measure perceived value in international retailing and service contexts (Walsh et al. 2014). Walsh et al.

(2014) also developed two shorter forms of the scale, an 8-item and a 12-item PERVAL scale.

A shorter PERVAL scale takes up less space in a questionnaire, allowing the inclusion of other measures and constructs (Walsh et al. 2014). However, although four dimensions can capture most variance of CPV for EFA, some underlying factors that contribute to the unexplained variance in the model may be further explored (Chi 2015). Later, Orth et al. (2005) also made an extended version of Sweeney and Soutar’s (2001) PERVAL-scale by adding an environmental and humane dimension.

5.2 Consumer perceived value of remanufactured apparel As remanufacturing is a relatively new phenomenon in the textile industry, there are only a few academic publications about the subject. Hence, the literature review is mainly based on a combination of academic publications of consumers perceptions of remanufacturing in other industries and environmentally friendly apparel. Environmentally friendly apparel (EFA) has been defined as apparel that is made from recycled materials, apparel aimed for

21

Remanufacturing of deadstock and customer claims apparel

long-term use, apparel made of organic materials and with no or low use of chemicals, and apparel labelled or packaged as environmentally friendly (Chi 2015). As previously described, this study focuses on remanufactured apparel as EFA, of which the latter has been examined more in relation to CPV. Previous studies have found price and emotional values as important for consumer perception of EFA (Chi 2015) and remanufactured products (Gaur et al. 2015). In addition, quality implies to be one of the main values influencing purchase decisions of remanufactured products (Michaud and Llerena 2011). Consumers perception of quality also affects consumers’ willingness to pay (WTP) for remanufactured products (Hazen et al. 2011).

Previous studies additionally show that consumers have strong doubts about the quality of remanufactured products (Guide and Li 2010; Michaud and Llerena 2011; Cui et al. 2017) and circular apparel (Armstrong et al. 2015; Vehmas et al. 2018). Also, a majority of consumers feel the term “remanufactured” as undesirable because they think that remanufactured products are somehow dirty or second-grade (Khor and Hazen 2017; Wang et al. 2018). Previous studies made in Finland show that consumers perceive style as a main concern regarding circular apparel (Armstrong et al. 2015; Vehmas et al. 2018), mainly because the patchwork look of the redesigned garments did not reflect the consumers personal style (Armstrong et al. 2015).

Moreover, remanufactured products could be considered as ‘green products’ since they provide both conventional use functions to the consumer, and environmental benefits related to energy and material savings, as well as solid waste reduction (Michaud and Llerena 2011).

Hence, a remanufactured product can also provide the consumer with environmental value (Michaud and Llerena, 2011; Wang et al. 2013; Gaur et al. 2015). Additionally, by purchasing a green product, individuals not only contribute voluntarily to a public good (i.e. the natural environment), but also satisfy a private need (Michaud and Llerena 2011). Previous studies demonstrate the products´ environmental benefit as a main factor that affect the consumers purchasing decision of EFA (Niinimäki and Hassi 2011; Armstrong et al. 2015). Other important values to the consumers are ethical manufacturing and local production (Niinimäki and Hassi 2011).

Gaur et al. (2015) identified socio-cultural norms as one of the major drivers of US consumers purchase intentions for remanufactured products. The respondents indicated that societal norms in the USA approve and appreciate the use of remanufactured products, and thereby lead them to purchase such products. In addition, a study by Chang and Watchravesringkan (2018) found subjective norms (e.g. important people’s opinion on buying sustainable apparel) as a main factor of US consumers purchase intention of EFA. Moreover, a study

by Chi (2015) of Chinese CPV of EFA, found the social value as the most desired value, since purchasing and wearing EFA helped the consumers gain social approval and make a good impression on other people. However, a study by Wang et al. (2018) show that the Chinese consumers purchase intention is not strongly influenced by social norms when considering remanufactured products. They argue the reasonable explanation of the result to be that most participants in the survey where young and had a high level of education and thereby where less susceptible to social pressures (Wang et al. 2018). Wang et al. (2018) further point out that in the Chinese face culture, it is shameful to use second-hand products and that remanufactured products are often mistaken for second hand products by some consumers.

Therefore, even though consumers already have sufficient knowledge and information about remanufactured products, they are reluctant to buy remanufactured products because of a 22

Remanufacturing of deadstock and customer claims apparel

possible decrease in reputation in their culture (Wang et al. 2018). In conclusion, as environmental values have been found to be relevant, besides those related to the emotional, price, quality and social dimensions, using the adapted PERVAL-scale is found to be a suitable tool for investigating the CPV of remanufactured apparel.

5.3 Other factors As previous literature indicates the complexity of investigating CPV of EFA and remanufactured products, other factors discussed below have also been taken into account when examining CPV of remanufactured apparel in this study.

5.3.1 Environmental knowledge Previous studies show that consumers environmental knowledge and especially consumers knowledge of sustainability in the apparel industry affect their perceived value of both products and brands, hence also their purchasing behaviour, WTP, brand trust and brand loyalty (Harms and Linton 2016; Park and Kim 2016; Sadachar et al. 2016). More specifically, a study by Sadachar et al. (2016) implies that environmental apparel knowledge has a significant positive influence on environmentalism, which in turn has a significant positive influence on environmentally responsible apparel consumption behaviour. Furthermore, a study

by Harms and Linton (2016) indicate that a higher pro-environmental attitude is related to a higher WTP for repaired- and eco certificated products (Harms and Linton 2016). Previous studies also identified the level of environmental consciousness as one of the main factors that influence consumers purchase intentions of remanufactured products (Gaur et al. 2015) and EFA (Chang and Watchravesringkan 2018). However, without proper knowledge, it is impossible for average consumers to discern between apparel firms’ authentic efforts to enhance sustainability and greenwashed messages for easily-marketable solutions. Hence, consumer education is of great importance in fostering the consumption of EFA (Park and Kim 2016).

5.3.2 Consumer familiarity and ambiguity tolerance Circular apparel is not very common yet (Vehmas et al. 2018), consumers are thereby unaware of the environmental benefits of remanufactured products (Atasu, Guide and Van Wassenhove 2010; Armstrong et al. 2015; Khor and Hazen 2017). As a result, it is difficult to witness greater growth in the remanufacturing industry considering that the supply chain does not create demand, and vice versa (Khor and Hazen 2017). Consumers’ knowledge about remanufacturing in general may have a huge effect on consumers’ preference and valuation of remanufactured products (Guide and Li 2010).

A study by Wang et al. (2018) indicates that consumer familiarity and ambiguity tolerance both have significant and positive effects on the consumer attitude toward remanufactured products. However, the study also implies that consumer familiarity has a significant negative influence on consumer intention to buy remanufactured products in China due to their societal-norms and negative perspective of second-hand products. Hence, this indicates that the more consumers are familiar with remanufactured products in China, the less likely they are to be willing to purchase these products (Wang et al. 2018).

Ambiguity surrounding the remanufacturing process has a negative effect of how the consumers perceive quality, and reduces the levels of consumers’ WTP for remanufactured products (Hazen et al. 2011; Wang et al. 2013; Wang et al. 2018). To tackle this problem and 23

Remanufacturing of deadstock and customer claims apparel

eliminate the consumers uncertainty about remanufactured products and thereby increase their brand trust and willingness to buy and pay for remanufactured products, remanufacturers and sellers could make the remanufacturing processes and procedures more transparent (Hazen et al. 2011; Park and Kim 2016; Wang et al. 2018). This sheds light on the importance of educating the population, and creating awareness about remanufacturing and its benefits for both consumers and other stakeholders in the supply chain, in order to successfully close the loop and increase the profitability of remanufacturing activities (Hazen et al. 2011; Khor and Hazen 2017; Paras et al. 2018).

5.3.3 Warranty Previous studies argue the importance of remanufactured products having the same quality and warranties as new products (Michaud & Llerena 2011; Wang et al. 2013). However, other studies indicate that offering warranties for remanufactured products does not have a significant influence on consumers’ valuations of these products (Tereyağoğlu, 2016). The findings instead suggest that seller reputation and the identity of the remanufacturer may dominate the mitigating buyer uncertainty about remanufactured product quality (Subramanian, & Subramanyam, 2012).

5.3.5 Cannibalization A topic that often appears in the literature regarding remanufacturing is cannibalization.

Cannibalization occurs when the purchase of a remanufactured version of a product displaces the sale of a new product. On the other hand, supply of remanufactured products depends on new product sales, as the latter determines the quantity and timing of used product returns to a large extent. Hence cannibalizing new product sales reduces the supply for remanufacturing in the future (Atasu, Guide and Van Wassenhove 2010).

Differences between price ranges and marketing approaches would help to minimise the potential competition between new and remanufactured collections (Dissanayake and Sinha 2015). However, the outcome of the different-price strategy may depend on how much the remanufactured product differs from the new. According to Atasu, Guide and Van Wassenhove (2010) cannibalization becomes a concern when a firm offers a remanufactured version of a product at a different price point than the new version of the same product. However, cannibalization is not a major concern when remanufactured versions are perfect substitutes for new products. A perfect substitute means the remanufactured product is indistinguishable from the new version by a consumer (Atasu, Guide and Van Wassenhove 2010). Moreover, according to Guide and Li (2010) is cannibalization not a significant managerial concern, since the remanufactured products and new products attract different consumer segments, especially if the remanufactured product is offered at a lower price (Atasu, Guide and Van Wassenhove 2010).

5.3.6 OEM (original equipment manufacturer) and third-party remanufacturer Just as for new products, seller reputation and seller identity also influence consumer valuation of remanufactured products (Subramanian and Subramanyam 2012). Hence, brand image is an important driver for purchase decision of remanufactured products (Gaur et al.

2015). According to a study by Gaur et al. (2015) consumers would purchase remanufactured products without any hesitation if it was offered by a good brand from their perspective. Armstrong et al. (2015) argue that sustainable product-service systems for clothing is most ideal for firms with a well-established brand image, since brand trust affect consumers 24

Remanufacturing of deadstock and customer claims apparel

purchase intention of EFA. A study by Subramanian and Subramanyam (2012) shows that consumers indicate a higher WTP for products remanufactured by OEMs than for those remanufactured by third-party remanufacturers.

However, the question is whether an OEM with a product portfolio that includes remanufactured products generates more profit than a product portfolio without remanufactured products (Guide and Li 2010). If an OEM offers remanufactured products there is a risk for cannibalization of their new product sales (Atasu, Guide and Van Wassenhove 2010; Subramanian and Subramanyam 2012). Nevertheless, if OEMs do not offer remanufactured versions of their products, there is a great risk that third-party vendors will offer it instead due to the significant demand for lower-price-point versions (Atasu, Guide and Van Wassenhove 2010; Guide and Li 2010). Allowing an independent third-party remanufacturer to take the opportunity essentially creates competition and may lead to damage of the OEMs brand name and a loss of control of the intellectual capital embedded in the product design and quality (Atasu, Guide and Van Wassenhove 2010; Michaud and Llerena 2011). On the other hand, if an OEM offers remanufactured products at a lower price, they may reach additional market segments and help block new low-priced competition (Atasu, Guide and Van Wassenhove 2010; Guide and Li 2010; Ovchinnikov 2011). Hence, implementation of remanufacturing in OEMs can generate economic advantages and help companies improve their competitiveness (Rubio and Corominas 2008).

5.3.7 Willingness to pay Consumers’ perception and WTP for remanufactured products is an inevitable question when studying product acquisition, remanufacturing, and market competition. A lack of knowledge about consumers’ WTP and cannibalization results in researchers using assumptions that best supports modelling tractability (Guide and Li 2010). Moreover, further growth in the repaired product market depends on consumers’ acceptance of and WTP for repaired products. Higher consumer WTP allows for higher sales prices and margins, stimulating producers to offer more repaired products (Harms and Linton 2016). For remanufactured products, WTP is determined by consumer perceptions (Atasu, Guide and Van Wassenhove 2010). If a consumer perceives a product to have a high value, he or she will be more willing to buy the product, be more willing to recommend the product and expect fewer problems with the product (Sweeney and Soutar 2001). In addition, different characteristics of remanufactured products interact with each other in the overall valuation of the product (Michaud and Llerena 2011; Ovchinnikov 2011). Hence, it is not just important to know whether consumers are willing to purchase remanufactured products but also which trade-offs they are likely to accept (Michaud and Llerena 2011).

By comparing the WTP of consumers for the new and remanufactured products, it can be decided how to price new and remanufactured products to maximize profits and minimize cannibalization (Atasu, Guide and Van Wassenhove 2010). However, the decision is dependent on the understanding of the different consumer segments that exist and how large they are (Atasu, Guide and Van Wassenhove 2010; Ovchinnikov 2011). If this is well understood, managers can effectively market and price their products so that remanufactured products can become an important part of a sales portfolio that maximizes profits for the firm (Atasu, Guide and Van Wassenhove 2010). A study by Atasu, Guide and Van Wassenhove (2010) shows that the average consumer has a 15 percent lower WTP for a remanufactured product than for a new product. By charging a lower price for the remanufactured product, the firm

25

Remanufacturing of deadstock and customer claims apparel

can thereby minimize demand cannibalization of the new product; at the same time, it can attract more price-sensitive consumers (Atasu, Guide and Van Wassenhove 2010; Ovchinnikov 2011).

However, according to Ovchinnikov (2011) the consumer behaviour can not only be explained by the WTP; rather, when the remanufactured product’s price is very low, consumers assume poor product quality from price and few decide to switch. Hazen et al. (2011) supports the findings, describing that perception of quality of remanufactured products affects consumers’ WTP for remanufactured products. Although improving the quality allows remanufacturers to attract more consumers and improve their reputation, remanufacturers must identify the cost coefficient to understand their position. Generally, if a product is of higher quality, then the product also has a higher cost (Cui and Tseng 2017). Nevertheless, when the price difference is small between the new and remanufactured products, the consumers tend to buy new rather than remanufactured products in order to avoid risks (Wang et al. 2018).

A study by Janigo and Wu (2015) of how consumers perceived redesigned apparel implies that the consumers were price sensitive and not WTP a premium for redesign. On the other hand, the study of Choi (2017) implies that when the market base demand for the remanufactured fashion product is sufficiently large, the price sensitivity coefficient of the remanufactured fashion product is sufficiently small, or the new fashion product’s selling price is sufficiently small, it is in fact optimal for the fashion retailer to price the remanufactured fashion product at a price point higher than the selling price of the new fashion product.

Hence, fashion retailers do not always need to sell remanufactured products at a lower price than new products. Instead, the fashion retailer should sell at a higher price and make a higher revenue from the remanufactured fashion product. Choi (2017) further argue that this is especially relevant nowadays because consumers in the market care about environmental sustainability and treasure remanufactured fashion products. The conventional wisdom of having a lower priced remanufactured fashion product is hence not necessarily valid. Moreover, according to Dissanayake and Sinha (2015) can fashion retailers use remanufactured fashion as a valuable marketing point to inform the world about their sustainable initiatives.

Dissanayake and Sinha (2015) further argue that setting a high price in that case is necessary, since retailing remanufactured products at a cheap price would be a wrong strategy as it would encourage more consumption. However, the costs of the collections would still need to consider the mass market consumers expectations of price and recoup the costs of production (Dissanayake and Sinha 2015).

Nevertheless, whether consumers are effectively willing to pay more for green products or not is still an open question. There is indeed a wide gap between what consumers state in surveys about their environmental awareness and their actual purchase decisions observed at the point of sale (Michaud and Llerena 2011). Additionally, it is important to mention that differences in WTP vary from product to product (Harms and Linton 2016).

5.4 Results 5.4.1 Customer profile The profile of the survey respondents is summarised in Table 2. Most respondents are female at 74%, with male respondents at 25%, while 1% of respondents preferred not to answer. With the study focusing on Swedish consumers, 81% of the sample were living at Sweden. As the survey was shared through different channels online, the rest of the sample at 19% are resi26

Remanufacturing of deadstock and customer claims apparel

dents in other countries, most of them in Europe. More than 50% of the respondents were 25-34-year olds, aligning with the education levels of the respondents accounting to 72% of BA- and MA-level education. The rest of the sample was divided equally between the age groups of 18-24, 35-44 and 45-54, with some respondents being younger or older.

As presented in the table, 55% of respondents are students or have an entry level employment, with many are managers, self-employed, or in positions not described in the question.

While monthly income is a sensitive topic, most respondents did answer the question. A majority of respondents (57%) have an income lower than 24 999 SEK per month, implying to the results being skewed for the question regarding profession. Second largest proportion of respondents fell into the 25 000-34 999 SEK category, followed by the 35 000-44 999 SEK category.

Table 2. Profile of the respondents.

Characteristic

Percent (%)

Gender

Characteristic

Percent (%)

Country of residence

Female

74

Sweden

81

Male

25

Other

19

Prefer not to answer

1

Age

Level of education

Under 18

1

High school

15

18-24

14

College/Polytechnic

9

25-34

52

Bachelors

40

35-44

15

Masters

32

45-54

15

PhD

2

55-64

2

Other

2

Over 65

1

Profession

Monthly income (SEK)

Student

44

< 4999

10

Entry level

11

5000 – 14 999

37

Manager

15

15 000 – 24 999

10

Executive

1

25 000 – 34 999

19

Self-employed

11

35 000 – 44 999

11

Retired

1

45 000 – 54 999

5

Other

16

> 55 000

2

Prefer not to answer

6

Table 3 presents the respondents shopping habits, comparing the frequency, spending and Table 2. Profile of the respondents.

preferred segments of new and remanufactured garments. Most of the respondents buy new garments at least once a month or every three months, while 41% of respondents have never Table 3 presents the respondentsgarments. shopping habits,about comparing frequency, spending purchased remanufactured Although the samethe amount of people (43) have and garments once a year, or even once three months, 83%buy of new preferred purchased segmentsremanufactured of new and remanufactured garments.

Mostevery of the respondents has spent none or thanthree 499 SEK per month on remanufactured garments.

For never garmentsthe at sample least once a month orless every months, while 41% of respondents have new garments, most people spend Although as much perabout month,the while manyamount also spend purchased remanufactured garments. same of between people 500(43) have 1499 SEK per month.

purchased remanufactured garments once a year, or even once every three months, 83% of Thehas respondents wereoralso asked about brand segments they prefer, or would prefer the sample spent none less than 499which SEK per month on remanufactured garments.

27

to purchase new or remanufactured garments from, with the possibility of selecting multiple options. In terms of new garments, sustainable and fast fashion, and sportswear were most popular, followed by outdoor/functional and luxury fashion. Some respondents also mentioned second-hands.

Regarding remanufactured garments, the division was similar, Remanufacturing of deadstock and customer claims apparel

For new garments, most people spend as much per month, while many also spend between 500-1499 SEK per month.

The respondents were also asked about which brand segments they prefer, or would prefer to purchase new or remanufactured garments from, with the possibility of selecting multiple options. In terms of new garments, sustainable and fast fashion, and sportswear were most popular, followed by outdoor/functional and luxury fashion. Some respondents also mentioned second-hands. Regarding remanufactured garments, the division was similar, while sustainable and luxury fashion were more preferred than in thein new category. while sustainable and luxury fashion were more preferred than the new category.Second-hand Secondhand was againasmentioned as an based alternative based on experience, previous experience, while few was again mentioned an alternative on previous while few respondents respondents mentioned the prioritisation highnatural quality and natural materials. also mentioned the also prioritisation of high qualityofand materials.

Table 3. Shopping habits of the respondents.

Purchasing frequency

Percent (%)

Purchasing frequency

New garments

Percent %

Remanufactured garments

More than once a week

1

More than once a week

0

Once a week

2

Once a week

5

More than once a month

5

More than once a month

5

Once a month

27

Once a month

6

Once every three months

51

Once every three months

22

Once a year

10

Once a year

21

Never

4

Never

41

Spending per month (SEK)

Percent (%)

Spending per month (SEK)

New garments

Percent (%)

Remanufactured garments

0 – 499

59

0 – 499

83

500 – 1499

31

500 – 1499

16

1500 – 2499

7

1500 – 2499

1

2500 – 3499

1

2500 – 3499

0

> 3499

1

> 3499

0

Segments

Percent (%)

Segments

Fast fashion

49

Fast fashion

38

Outdoor/functional

40

Outdoor/functional

54

Sustainable fashion

54

Sustainable fashion

73

Sportswear

48

Sportswear

46

Luxury fashion

11

Luxury fashion

41

Other

12

Other

15

New garments

Percent (%) Remanufactured garments

Table 3. Shopping habits of the respondents.

When it comes to the types of garments that are purchased, or preferred when there is an

When it comes to the typesare of topgarments that are purchased, orAs preferred when thereforis an option, most popular or mid-layer garments (Table 4). the question allowed option, most popular are topor mid-layer garments (Table 4).

As the question allowed multiple choice answer, most respondents used the possibility. As seen in the table, jackets for and coatsanswer, were most preferred, at 85% and 75% respectively, with As other types dresses, multiple choice most respondents used the possibility. seen insuch the as table, jackets and shirtspreferred, are preferred equally. and coatspants were most at almost 85% and 75% respectively, with other types such as dresses, pants and shirts are preferred almost equally.

28

Remanufacturing of deadstock and customer claims apparel

26

Preferred type of garment as a remanufactured one

Garment type

Percent (%)

Jacket

Coat

Dress

Pants

Shirt

Sweater

85

Garment type

Percent (%)

Skirt

53

Table 4. Preferred type of garment for remanufactured garments.

Preferred75 type of garment as a remanufactured one T-shirt

Garment type Jacket

68

Coat

67

Dress

Percent (%)

65

Pants

62

Shirt Sweater

Garment type

85

SuitSkirt

75

T-shirt Underwear

68 67

Percent (%) 53

35

47

9

Suit

35

Underwear

9

Other

47

65

None Other

5

62

None

1

5 1

Table 4. Preferred type of garment for remanufactured garments.

he environmental the sample was was assessed based True/False of Theknowledge environmental of knowledge of the sample assessed based on on True/False questionsquestions of 10 statements, with the respondents being categorised intobased 5 5groups on howquestions muchhowofmuch The environmental knowledge of being the sample was assessed on based True/False 0 statements, with the respondents categorised into groups based on knowledge environmental aspects of the fashioninto industry they have.

A “don’t know” statements, withabout the respondents being categorised 5 groups based on how much nowledge10about environmental aspects ofpossibility the fashion industry they have.

A “don’t know” option was included, to exclude the of the respondents guessing the right answer. knowledge about environmental aspects of the fashion industry they have. A “don’t know” Thus,to theexclude environmental knowledge wasof assessed based on the percentage of how many ption wasoption included, the possibility the respondents guessing the right answer. was included, to exclude the possibility of the respondents guessing the right answer. questions they answered correctly. As seen on Figure 3 below, a majority of the respondents hus, the Thus, environmental knowledge wasofassessed onthethe percentage ofmany how many the(74%) environmental knowledge assessedbased based on percentage of how has high or very high levels was environmental knowledge. they answered correctly.

As seen Figure below, aa majority of of thethe respondents uestions questions they answered correctly.

As seen on on Figure 3 3below, majority respondents 4% knowledge. high high or very high levels of environmental 7% 74%) has (74%) high has or very levels of environmental knowledge.

4%

39%

7%

15%

15%

39% 35% Very low

Low

Average

High

Very high

Figure 3. Environmental knowledge of the respondents.

5.4.2 Consumer perceived value of new and remanufactured apparel As the consumer perceived value groups were presented on a Likert scale, the statements are not analysed separately in each group, but rather as35% a whole value based on their importance when purchasing newly manufactured or remanufactured garments. Figure 4 below presents the results for newly manufactured garments. Emotional values are perceived on average as most importantVery at 4,1 out of Low 5 on the Average Likert scale, that the customer feels when using low Highis howVery high the garment, followed by quality, environmental and price on similar levels of importance.

Social values are perceived at the lowest at 2,65, that is how a person is perceived by others 3. Environmental knowledge of the respondents.

Figure 3. Environmental knowledge of the respondents. due to usingFigure a specific garment.

perceived apparel .4.2 Consu5.4.2 mer pConsumer erceived va lue of newvalue and rof emnew anuand facturemanufactured red apparel As the consumer perceived value groups presented Likert scale, are are 27 s the consumer perceived value groups werewere presented ononaaLikert scale,the thestatements statements not analysed separately in each group, but rather as a whole value based on their importance ot analysed separately in each group, but rather as a whole value based on their importance when purchasing newly manufactured or remanufactured garments. Figure 4 below presents when purchasing newly manufactured remanufactured garments.

Figure 4onbelow the results for newly manufacturedorgarments.

Emotional values are perceived averagepresents as he resultsmost for newly manufactured garments. perceived on average as important at 4,1 out of 5 on the Likert Emotional scale, that is values how theare customer feels when using the garment, quality, environmental and price on the similar levels of importance. most important at 4,1followed out of 5byon the Likert scale, that is how customer feels when using Social values areby perceived the lowest at 2,65,and that price is how on a person is perceived others he garment, followed quality,atenvironmental similar levels ofbyimportance. due to using a specific garment. ocial values are perceived at the lowest at 2,65, that is how a person is perceived by others ue to a specificofgarment.

Remanufacturing deadstock and customer claims apparel 29 using

5,5 5,0 5,5 4,5 5,0 4,0 4,5 3,5 4,0

4,08 4,08

3,0 3,5

2,65

2,5 3,0

2,65

3,36

3,44

3,41

3,36

3,44

3,41

2,0 2,5 1,5 2,0 1,0 1,5 0,5 1,0 0,0 0,5

Emotional

Social

Price

Quality

Environmental

0,0

Emotional Figure 4. Consumer Quality perceived valuePrice of newly manufactured garments.

Figure 4. Consumer perceived value ofSocial newly manufactured garments.

Environmental

Figure5, 4. Consumer perceived value of newly garments.

As presented on Figure emotional values are still manufactured most relevant, even when purchasing

Asremanufactured presented on Figure 5, emotional values most relevant, even when environmental purchasing garments at a higher level are thanstill those that are new.

However, As presented on Figure 5, emotional values are still most relevant, even when purchasing remanufactured garments at a higher level than those that are new.

However, environmenvalues become more relevant, along with the price of the garments. Here, the perceived remanufactured garments at a higher level than those that are new.

However, environmental talimportance values become morerelated relevant, along with the price the garments. the perceived of values to quality decrease, whileofsocial values areHere, the least important, values become more relevant, along with the price the values garments.

Here, theimportant, perceived importance values related to quality decrease, whileof social are the least similarly toofnewly manufactured garments. importance of values related to quality decrease, while social values are the least important, similarly to newly manufactured garments.

5,5 similarly to newly manufactured garments.

5,5 5,0 5,5 5,0 4,5 5,0 4,5 4,0 4,0 3,5

4,49 4,49

4,00

4,08

4,00

3,16

3,5 3,0

3,16

3,0 2,5 3,0

2,65

3,36

4,19 3,70

4,19

3,70 3,44

3,41

2,5 2,0 2,5 2,0 1,5 1,5 1,0 1,0 0,5 0,5 0,0 0,0 0,0

Emotional Emotional

Social

Price

Quality

Price Figure 5. Social Consumer perceived value of remanufacturedQuality garments.

Environmental Environmental

Figure 4. Consumer perceived value of newly manufactured garments.

perceived value of remanufactured garments.

Figure 5. Consumer perceivedFigure value 5. ofConsumer remanufactured garments.

28 As presented on Figure 5, emotional values are still most relevant, even when purchasing

30

Remanufacturing of deadstock and at customer claims apparel remanufactured garments a higher level than those that are new. However, environmental

28 values become more relevant, along with the price of the garments. Here, the perceived

Additional questions asked related valuesfocusing focusing on price andand quality, in order Additional questions were were asked related to to thethe values on price quality, in to gain further understanding understanding of of willingness to paytoand choosing between OEM and thirdorder to gain a afurther willingness pay and choosing between OEM and party remanufactured based seller reputation.

First, relating to price to theprice participants were third-party remanufactured basedonon seller reputation.

First, relating the participants asked “If both remanufactured clothing and newly manufactured clothing with the same Additional questions were asked related to the values focusing on price and quality, in order were asked “If both remanufactured clothing and newly manufactured clothing with the design quality are provided, I would choose alternative as to gain and a further understanding of willingness to paythe andremanufactured choosing between OEM and…”, thirdsame design and in quality arebelow provided, I5). would choose remanufactured alternative described the table (Table On average, thethe cheaper theparticipants garment is were most…”, as party remanufactured based on seller reputation.

First, relating toprice priceofthe describedrelevant, in the below (Table 5).

On average, themanufactured cheapergarment price of the garment while respondents would buy remanufactured over a new one if is it most asked “If table both more remanufactured clothing andanewly clothing with the same at a similar price rather than regardless of the price of either option. relevant, is while more respondents would buy a remanufactured garment over a new one design and quality are provided, I would choose the remanufactured alternative …”, as if it described in rather thewillingness table below (Table 5). On average, the cheaper of the garment is most is at a similar than regardless ofthe the price ofmanufactured either price option.

Table price 5. Customer to pay when comparing price of newly and remanufactured apparel with the same design and quality. relevant, while more respondents would buy a remanufactured garment over a new one if it is at a similar price rather than regardless of the price of either option.

Strongly Strongly Neutral Agree Table 5. Customer willingness to pay when comparing the price ofDisagree newly manufactured and remanufactured apparel with disagree agree

“…if one at a cheaper price is available” “…if one at a similar price is available” “…if one at a cheaper price is available” “…regardless of price”

the same design and quality.

0% Strongly disagree 1% 0% 5%

4%

7%

35%

Disagree

Neutral

Agree

4% 4% 22%

10% 7% 31%

42% 35% 26%

54% Strongly agree 43% 54% 16%

“…if one at a similar price is 4% manufactured 10% 42% 43% apparel Table 5. Customer willingness to payreputation, when comparing the price of newly and remanufactured Inavailable” relation to seller the 1% respondents were asked who they would buy with the same design and quality. remanufactured apparel from connecting to the perceived values of quality (Table 6).

While “…regardless of price” 5% 22% 31% 26% 16%

with each choice a majority of people agree with all options, most preferable choice at 89% is

In relation seller remanufactured reputation, the respondents werebrand asked who they would buy remanuto to purchase apparel fromrespondents the same that provided the original garment.

In relation to seller reputation, the were asked who they would buy factured remanufactured apparel from connecting to the perceived values of quality (Table 6).

While with Following preferences are a brand with a strong focus on redesign and remanufacturing, and apparel from connecting to the perceived values of quality (Table 6). While any company thataof the customer is familiar each choice aeach majority people with all options, most preferable 89% with choice majority ofagree people agreewith. with all options, most preferablechoice choice atat89% is is to purchase remanufactured apparel from the same brandthat thatprovided provided the original garment.

Table 6.apparel Preference of seller of remanufactured apparel based on seller reputation. purchasetoremanufactured from the same brand the original garment. preferences a brand a strongfocus focus on andand remanufacturing, and FollowingFollowing preferences are a are brand withwith aStrongly strong onredesign redesign remanufacturing, Strongly any company that the customer is familiar with. Disagree Neutral Agree and any company that the customer is familiar disagreewith. agree Table 6. Preference of seller of remanufactured apparel based on seller reputation.

Any company that provides it

A brand with a strong focus on redesign and remanufacturing Any company that provides it The same brand that provided the original A brand garment with a strong focus on redesign and remanufacturing A multi-brand retailer The same brand that provided the A third-party remanufacturer original garment Any company I am familiar with A multi-brand retailer A third-party remanufacturer

Strongly 0% disagree

2%

20%

15%

49%

Disagree

Neutral

Agree 43%

Strongly 38% agree

2% 0% 0% 5%

20% 1% 2% 11%

15% 10% 16% 23%

49% 52% 43% 46%

14% 37% 38% 15%

1% 0%

4% 1%

26% 10%

51% 52%

19% 37%

0% 5%

6% 11%

14% 23%

53% 46%

27% 15%

1%

4%

26%

51%

19%

2%

16%

14%

5Any .4.3 company RelationsIham ip b etween customer pro0% file, shoppin6% g habits, e14% nvironmen53% tal knowled27% ge, and familiar with consumer perceived values Table 6. Preference of seller of remanufactured apparel based on the sellercustomer reputation.profile, shopping habits, When looking into the correlation between environmental 5.4.3 Relationshknowledge, ip between and custoconsumer mer profilperceived e, shoppinvalue, g habitthe s, efocus nvironismon entunderstanding al knowledge, athe nd

5.4.3 Relationship profile, shopping habits, first three and consumer perceived value. environmental However, the crelationship onsumer percbetween eivbetween ed valuethe s customer relationships within the first three characteristics were examined as well, no significant knowledge, and consumer perceived values When looking into the correlation between the customer profile, and shopping habits,

environmental andbetween consumer the perceived value, profile, the focusshopping is on understanding the When looking into theknowledge, correlation customer habits, environrelationship between the first three and consumer perceived value. However, the mental knowledge, and consumer perceived value, the focus is on understanding the relarelationships within the first three characteristics were examined as well, and no significant 29 tionship between the first three and consumer perceived value. However, the relationships within the first three characteristics were examined as well, and no significant correlation was found. As presented in Table 7 below, when looking into the customer profile and 29 environmental knowledge, significant correlation was only found between the level of income and emotional values, and the profession and environmental values, both for newly manufactured garments.

31

Remanufacturing of deadstock and customer claims apparel

correlation was found. As presented in Table 7 below, when looking into the customer profile and environmental knowledge, significant correlation was only found between the level of income and emotional values, and the profession and environmental values, both for newly manufactured garments.

Table 7. Correlation between customer profile, environmental knowledge, and consumer perceived values.

correlation was found. As presented in Table 7 below, when looking into the customer profile Emotional Social Price Quality Environmental and environmental knowledge, significant correlation was only found between the level of new/renew/renew/renew/renew/reincome and emotional values, and the profession and environmental values, both for newly manufactured garments.

Age ns/ns ns/ns ns/ns ns/ns ns/ns Sex

Table 7. Correlation between customer profile, environmental knowledge, and consumer perceived values.

Education Profession Age Income Sex Environmental knowledge Education

ns/ns Emotional ns/ns

ns/ns Social ns/ns

ns/ns Price ns/ns

ns/ns Quality ns/ns

ns/ns Environmental ns/ns

new/rens/ns

new/rens/ns

new/rens/ns

new/rens/ns

ns/ns -.257*/ns ns/ns ns/ns

ns/ns ns/ns ns/ns ns/ns

ns/ns ns/ns ns/ns ns/ns

ns/ns ns/ns ns/ns ns/ns

new/re.318**/ns ns/ns ns/ns

ns/ns

ns/ns

ns/ns

ns/ns

* Profession Correlationbetween is significant at the 0.05 level (2-tailed) Correlation customer profile, environmental ns/ns ns/ns

ns/ns ns/ns ns/ns

** Correlation is significant at the 0.01 level (2-tailed) knowledge, and consumer values. ns/ns ns/ns perceived .318**/ns

Table 7. * Correlation is significant at the 0.05 level (2-tailed) Income -.257*/ns ns/nsof income, ns/ns ns/ns The results indicate, that the higher the level the lower are the perceivedns/ns emotional ** Correlation is significant at the 0.01 level (2-tailed)

values when choosing tons/ns buy newly manufactured garments, and ns/ns vice versa. In terms Environmental ns/ns ns/ns ns/nsof the profession, the results relate to the level the respondents are currently in their career. The knowledge The results indicate, higherthe the levelwas of income, theoption lower“retired”, are the while perceived emohighest value that whenthe analysing results given to the only one * Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed) tional values when choosing to buy newly manufactured garments, and vice versa.

In respondent chose that option. Furthermore, 13 respondents chose the option other, which terms of the profession, to the level respondents arethe currently their career. might alterthe theresults results.

Regardless, higher level inthethe respondents’ careerinemotional indicates The results indicate, thatrelate the higher thealevel ofthe income, lower are perceived increased importance of perceived environmental values.

The highest value when analysing the results was given to the option “retired”, while only values when choosing to buy newly manufactured garments, and vice versa. In terms of the

one respondent chose that option.

13 respondents choseinthe profession, the results relate toFurthermore, the level the respondents are currently theiroption career.other, The The following table (Table 8) shows the relationship between shopping habits, where the highest value when analysing the results was given to in thethe option “retired”, while onlyindicates one which might alter the results.

Regardless, a higher level respondents’ career frequency and spending are in focus in relation to the perceived values for newly chose option. Furthermore, 13 respondents chose the option other, which increasedrespondent importance of that perceived environmental values. correlation manufactured and remanufactured apparel. Significant was found between

might alter the results. Regardless, a higher level in the respondents’ career indicates frequency of purchasing new garments and perceived environmental values, indicating that increased importance of perceived environmental values. the more the8) respondent newbetween garments, the more they where perceivethe The following tableoften (Table shows the purchases relationship shopping habits, environmental values toinbefocus relevant.

While thistofinding indicatesshopping controversy, is where important frequency and spending are in relation the perceived valueshabits, foritnewly manuThe following table (Table 8) shows the relationship between the to recognizeand thatspending consumerare perceived values reflect what the perceived respondents observe their in Significant focus in relation to the forinfrequency newly factured frequency and remanufactured apparel. correlation was foundvalues between behaviour andand mayremanufactured not reflect reality.

Furthermore, increased was spending onbetween newly manufactured apparel.

Significant correlation foundthat of purchasing new garments and perceived environmental values, indicating the more manufactured apparel indicates increased importance of perceived emotional and frequency of purchasing new garments and perceived environmental values, indicatingsocial that often thevalues. respondent purchases new garments, the more they perceive environmental This often meansthe thatrespondent the more is purchases spent on newly the better the the more new manufactured garments, theapparel, more they perceive values toenvironmental be relevant.

While this finding indicates controversy, itcontroversy, is important recognize customer feels and thinks that is perceived highly by others. values to be relevant.

Whilemore this finding indicates it istoimportant

that consumer perceived values reflect what thereflect respondents observe in observe their behaviour 8. Correlation between shopping habits andwhat consumer values. to recognize thatTable consumer perceived values theperceived respondents in their and and Furthermore, may not reflect reality. Furthermore, spending on apparel newly may not behaviour reflect reality. increased spending onincreased newly manufactured Emotional Social Price Quality Environmental apparel indicates increasedemotional importance and of perceived emotional socialthat indicatesmanufactured increased importance of perceived social values.

Thisand means new/renew/renew/renew/renew/reThison means thatmanufactured the more is spent on newly apparel, the better the morevalues. is spent newly apparel, themanufactured better the customer feels andthe thinks customer feels and thinks that is perceived more highly by others. ns/ns Frequency ns/ns -.224*/ns that is perceived more highly ns/ns by others. ns/ns Spending

Table 8. Correlation between shopping habits and consumer perceived values.

.223*/ns

.240*/ns

Emotional * Correlation is significant at the 0.05 level (2-tailed) Social

ns/ns Price

ns/ns Quality

ns Environmental

new/re-

new/re-

new/re-

new/re-

new/re-

Frequency

ns/ns

ns/ns

ns/ns

ns/ns

-.224*/ns

Spending

.223*/ns

.240*/ns

ns/ns

ns/ns

ns

30

* Correlationbetween is significant at the 0.05 level (2-tailed) Table 8. Correlation shopping habits and consumer perceived values. * Correlation is significant at the 0.05 level (2-tailed)

Lastly, the relationships between perceived values for new and remanufactured apparel 30 were investigated, in order to understand if significant correlation is found between the relevance of perceived values when choosing to buy remanufactured garments instead of those that are newly manufactured. The results are presented in Table 9 below. Significant correlation was found between all of the perceived value groups, with strongest correlations found

32

Remanufacturing of deadstock and customer claims apparel

Lastly, the relationships between perceived values for new and remanufactured apparel were investigated, in order to understand if significant correlation is found between the relevance of perceived values when choosing to buy remanufactured garments instead of those that are newly manufactured. The results are presented in Table 9 below. Significant correlation was Lastly, the relationships perceived valueswith for new and remanufactured apparel were found between all of thebetween perceived value groups, strongest correlations found between investigated, in order to understand significant correlation found between the relevance emotional, and price price andifquality focused values. isThe direction both of those betweensocial socialand and emotional, and and quality focused values.

Theofdirection of both of perceived is values when choosing to buy remanufactured garments of thosewith thathigh are correlations positive, meaning high importance of one value groupinstead is associated of those correlations is positive, meaning high importance of one value group is associated newly manufactured.

Thevalue results are presented in Table 9 below. Significant correlation was importance of the other group. with highfound importance of of the value group. between all theother perceived value groups, with strongest correlations found between Table 9. Correlation between consumer perceived values when choosing to buy newly manufactured apparel. social and emotional, and price and quality focused values. The direction of both of those correlations is positive, meaning high importance of one value group is associated with high Newly Emotional Price Quality Environmental importance of the other value group.Social manufactured Table 9. Correlation between consumer perceived values when choosing to buy newly manufactured apparel.

Emotional ns .428** .294** .329** ns Newly Social .428** ns ns .328** ns Emotional Social Price Quality Environmental manufactured Price .294** ns ns .458** ns Emotional ns .428** .294** .329** ns Quality .329** .328** .458** ns .418** Social .428** ns ns .328** ns Environmental ns ns ns .418** ns Price .294** ns ns .458** ns (2-tailed) * Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level Table 9. Correlation between consumer perceived values when choosing to buy newly manufactured apparel. .329** .328** .458**perceived ns .418** for * Correlation is significant at thethe 0.05 level (2-tailed) consumer InQuality Table 10 below, correlation between values are presented ** Correlation is significant at the 0.01 level (2-tailed) remanufactured wasnsfound mostly related to quality and Environmental apparel. ns Significant correlation ns .418** ns environmental values. example, values isare related are * Correlation is significant at theFor 0.05 level (2-tailed)higher perceived ** Correlation significant at theto 0.01quality level (2-tailed) In Table 10 below, with the higher correlation between consumer perceived values are presented associated importance of perceived emotional, price and environmental values.for In Table 10 below, theoncorrelation between consumer perceived are presented for Environmental values the other hand are associated with socialvalues and quality remanufactured apparel.

Significant correlation was found mostly related to values, qualitywith and enremanufactured apparel.

Significant correlation was found mostly related to quality and the correlation between quality and environmental values being the strongest. vironmental values. For example, higher perceived values are related to quality are associated environmental values.

For example, higher perceived values are related to quality are Table 10.

Correlation between consumer perceived values when choosing to buy remanufactured apparel. Environmewith higher importance of perceived and environmental values. associated with higher importanceemotional, of perceivedprice emotional, price and environmental values. ntal values on the other hand associated with social values, with the correlaEnvironmental values on are the other hand are associated with quality social and quality values, with Remanufactured Emotional Social Priceand Quality Environmental the correlation between quality and environmental values the strongest. tion between quality and environmental values being the being strongest.

Emotional ns ns ns .309** ns Table 10. Correlation between consumer perceived values when choosing to buy remanufactured apparel.

Social ns ns Remanufactured Emotional Social Price ns ns Emotional ns ns Quality .309** ns Social ns ns Environmental ns .240* Price ns ns * Correlation is significant at the 0.05 level (2-tailed)

ns ns .240* Price Quality Environmental ns .256* ns ns .309** ns .256* ns .431** ns ns .240* ns .431** ns ns .256* ns ** Correlation is significant at the 0.01 level (2-tailed)

Quality .309** ns .256* ns apparel.431** When comparing perceived values between new and remanufactured (Table 11), significant correlations can be found between respective value groups.

Environmental ns .240* ns .431** Furthermore, ns higher price related values for new garments associate with higher values of quality for * Correlation is significant at the 0.05 level (2-tailed) ** Correlation is significant at the 0.01 level (2-tailed) Table 10. Correlation betweenapparel. consumer perceived values when choosing to buy remanufactured apparel. remanufactured When comparing perceived between new and remanufactured apparel (Table 11), * Correlation is significant at the 0.05 levelvalues (2-tailed) Table 11. Correlation between consumer perceived values when choosing to buy between newly manufactured and significant correlations canlevel be found between respective value groups. Furthermore, higher ** Correlation is significant at the 0.01 (2-tailed) remanufactured apparel. price related values for new garments associate with higher values of quality for Remanufactured remanufactured apparel.

When comparing perceived values between new and remanufactured apparel (Table 11), Table 11. Correlation between consumer between perceived when Price choosingvalue to buy between newlyFurthermore, manufactured and higher significant correlations can be found respective groups.

New Emotional Socialvalues Quality Environmental remanufactured apparel. price related values for new garments associate with higher values of quality for remanuRemanufactured factured apparel.

New

Emotional

Social

Price

Quality

31 Environmental

31

33

Remanufacturing of deadstock and customer claims apparel

When comparing perceived values between new and remanufactured apparel (Table 11), significant correlations can be found between respective value groups. Furthermore, higher price related values for new garments associate with higher values of quality for remanufactured apparel.

Table 11. Correlation between consumer perceived values when choosing to buy between newly manufactured and remanufactured apparel.

Remanufactured New

Emotional

Social

Price

Quality

Environmental

.375**

ns

ns

ns

ns

Social

ns

.371**

ns

ns

ns

Price

ns

ns

.260*

.297**

ns

Quality

ns

ns

ns

.456**

ns

Environmental

ns

.231*

ns

.408**

.494**

Emotional

31

* Correlation is significant at the 0.05 perceived level (2-tailed) ** Correlation significantnewly at the 0.01 level (2-tailed)and Table 11. Correlation between consumer values when choosing to buyisbetween manufactured remanufactured apparel. the results from the study indicate the importance of perceived emotional In conclusion, * Correlation is significant at the 0.05 level (2-tailed) garments, followed by environmental and price, values when choosing to buy remanufactured ** Correlation is significant 0.01manufactured level (2-tailed)garments becomes less relevant. Furthermore, while which comparedattothe newly

the environmental knowledge of the sample was high or very high (at 74% in total), no

significant relationship knowledge and consumer In conclusion, the results fromwas the found study between indicate environmental the importance of perceived emotional perceived values to forbuy bothremanufactured newly manufactured and remanufactured When it comes values when choosing garments, followed apparel. by environmental and to the price level when comparing new and remanufactured with the same quality and design, price, which compared to newly manufactured garments becomes less relevant. Furthera majority of the respondents would choose remanufactured only when a cheaper version is more, while the environmental knowledge of the sample was high or very high (at 74% available.

Similarly, the respondents would choose a remanufactured version when the in total), nooptions significant relationship wasprice. found between environmental knowledge and consuare available at a similar mer perceived values for both newly manufactured and remanufactured apparel. When it Regarding the choice of the seller of remanufactured apparel, no clear preference stands out. comes toHowever, the price and remanufactured with thefollowed same quality thelevel samewhen brand comparing that provided new the original garment is most preferable, by and design, a majority of thefocus respondents would choose remanufactured only when a cheaa brand with a strong on redesign and remanufacturing, and any company that the customer is familiar with. Significant correlation would was found between the customer profile, per version is available.

Similarly, the respondents choose a remanufactured version and perceived Furthermore, the sample showed significant correlation when theshopping optionshabits are available at avalues. similar price. between the perceived values for newly manufactured garments, while also showing stronger associations for quality and environmental qualities for remanufactured garments.

Regarding the choice of the seller of remanufactured apparel, no clear preference stands out.

However,6the the original garment is most preferable, followed by . Ecsame onombrand ic feathat sibiliprovided ty a brand with a strong focus onaffect redesign and remanufacturing, andremanufacturing any companyare that The main variables that the economic feasibility of apparel thethe customerretail is familiar Significantgarments, correlation found between customer price ofwith. remanufactured and was the costs related to thethe process.

Whileprofile, the process costs mayFurthermore, change depending on the extent of significant the repairs and shoppingremanufacturing habits and perceived values. the sample showed correlaredesign the manufacturer charges their customersgarments, on an hourlywhile basis. also This means tion between theplanned, perceived values for newly manufactured showing that the time and volume are not considered, as the number of garments that were stronger associations for quality and environmental qualities for remanufactured garments. remanufactured in this small-scale pilot did not affect the costs. Thus, the feasibility is determined based on the break-even point for the brandâ&#x20AC;&#x2122;s gross margin, by taking into account the variables listed below. While only reaching a break-even point will not mean that implementing remanufacturing activities is profitable, it is aimed to serve as an indication of feasibilitythat of moving circularity.feasibility of apparel remanufacturing are the The mainthe variables affecttowards the economic

6. Economic feasibility

retail price of - remanufactured New retail price garments, and the costs related to the process. While the - Remanufacturing for change refurbish depending and redesign2on the extent of the repairs and remanufacturing process costscost may Material cost redesign planned, the manufacturer charges their customers on an hourly basis. This means 3 Purchase price of not the original garmentas that the time- and volume are considered, the number of garments that were remaAs the garments remanufactured in not the study were claims from customers or nufactured in this small-scale pilot did affect thealready costs.existing Thus, the feasibility is determined deadstock, the value of the garment was not determined.

Since the chosen garments also based on the break-even point for the brandâ&#x20AC;&#x2122;s gross margin, by taking into account the variables listed below. While only reaching a break-even point will not mean that implementing 2 Includes fixed and variable remanufacturing activities is costs profitable, it is aimed to serve as an indication of the feasibility 3 Estimation based on the original retail price of moving towards circularity.

32

34

Remanufacturing of deadstock and customer claims apparel

– New retail price – Remanufacturing cost for refurbish and redesign2 – Material cost – Purchase price of the original garment3 As the garments remanufactured in the study were already existing claims from customers or deadstock, the value of the garment was not determined. Since the chosen garments also included those that were used, or presented with quality issues and the common decision in the industry would be to discard them, the correct way to determine the cost of a garment is uncertain. However, in order to develop different scenarios, the purchase price of the original garment was taken into account, as an estimate using the keystone mark-up method. The method entails selling an item at double of the cost of goods, meaning that the retail price is reached by multiplying the FOB price by a factor of two (Hawver 2008, Carroll 2012). While more flexible approaches that take into account other factors, such as competition and other economic factors, are more likely to be used, the method allows to calculate an estimate for the purchase price.

In total, 19 pieces were repaired, or refurbished as defined by Re:textile, and depending the state they were in also washed. The level of required work and extent of the repairs on each specific coat affected the new retail price. Most jackets were unworn, and thus were only refurbished, for example by fixing broken seams, shortening arm cuffs, or replacing zippers and drawstrings. Some pieces had been used, and were thus washed, besides repairing similar issues previously described. The coats chosen for the feasibility calculations, presented on Figure 6 below, required the repair of a broken seam on a sleeve and a hood lining, washing and the repair of a broken seam on a waist pocket respectively. The repaired coats were presented on the brands web shop as Version 2.0, and if a style was also available as new, the repaired version was shown alongside the new, giving customers the opportunity to choose the same quality for a lower price.

2 3

35

Includes fixed and variable costs Estimation based on the original retail price

Remanufacturing of deadstock and customer claims apparel

and the repair of a broken seam on a waist pocket respectively. The repaired coats were presented on the brands web shop as Version 2.0, and if a style was also available as new, the repaired version was shown alongside the new, giving customers the opportunity to choose the same quality for a lower price.

Figure 6. forfor thethe feasibility calculations.

Figure 6.Refurbished Refurbishedcoats coatschosen chosen feasibility calculations.

A total total of of84 84pieces pieceswere wereredesigned, redesigned, and extent of the work done the garments A and thethe extent of the work done withwith the garments vavaried.

As seen on the images below (Figures 7-9), the chosen garments were either recoupled ried. As seen on the images below (Figures 7-9), the chosen garments were either recoupled and reconstructed. reconstructed. For For example, example,the thet-shirts t-shirtsand andsweatshirts sweatshirtswent wentthrough throughsimpler simpler changes, and changes, such as changing the colours of the bottoms, or turning them inside out.

Additional prints such as changing the colours of the bottoms, or turning them inside out. Additional prints were added on most of the pieces.

More complicated changes were done with a jacket style, were added on most of the pieces. More complicated changes were done with a jacket style, from which a vest was made, and the sleeves were constructed into bags, thus resulting in 15 from which a vest was made, and the sleeves were constructed into bags, thus resulting in additional pieces.

The redesign process was carried out by the brand, who along 15 additional pieces. The redesign process was carried out by the brand, who along with with marketing spent approximately 25 hours on the project (not accounted for in the feasibility calculations). The redesigned garments were presented on the brands web shop as a collection that respects resources, and thus remakes surplus products into new classics.

33

36

Remanufacturing of deadstock and customer claims apparel

marketing spent approximately 25 hours on the project (not accounted for in the feasibility calculations). The redesigned garments were presented on the brands web shop as a collection that respects resources, and thus remakes surplus products into new classics.

Figure Figure7.7.Redesigned Redesignedt-shirts. t-shirts.

Figure 8. Redesigned bag, vest and shirt.

Figure 8. Redesigned bag, vest and shirt.

34 37

Remanufacturing of deadstock and customer claims apparel

Figure and parka.

Figure9.9.Redesigned Redesignedcoat, coat,sweatshirt sweatshirt and parka.

Most refurbished, recoupled and reconstructed garments required the use of new materials.

Most refurbished, recoupled and reconstructed garments required the use of new materials.

While the replaced zippers came at no cost, materials such as buttons, prints, and additional While the replaced zippers came at no cost, materials such as buttons, prints, and additiofabric were calculated into the material cost per piece, and were covered by the brand nal fabric were calculated into the material cost per piece, and were covered by the brand separately from the processing costs. The remanufacturing processing costs were provided by separately from the processing costs. The remanufacturing processing costs were provided the manufacturer, who charges its customers by the hour. Thus, the cost of processing by the manufacturer, who charges its customers by the hour. Thus, the cost of processing depends highly on the complexity. When planning the schedule, the manufacturer therefore depends highly on the complexity. When planning the schedule, the manufacturer therefore takes into account the or redesign redesign required, required,and andplans plansthe theuse useof ofthe themachines machines takes into account the type type of of repair repair or accordingly to streamline the work. accordingly to streamline the work.

The following scenarios evaluate economic feasibility for three chosen refurbished coats, as The following scenarios economic feasibility for chosen refurbished as described above, and allevaluate styles that were redesigned.

As three previously explained, thecoats, variables described above, and all styles that were redesigned.

As previously explained, the variables taken into account are the retail price, cost of remanufacturing (including the manufacturers taken into the retail price, of remanufacturing (including the manufacturers direct and account overheadare costs), the cost ofcost materials, and in scenario 2 the purchase price of the direct and overhead costs), the cost of materials, and in scenario 2 the purchase price of original garment is also included. The evaluation of the economic feasibility is aimed at various the original garment is also included.

The evaluation of the economic feasibility is aimed stakeholders in the textile and fashion industry, such as fashion brands, retailers at and various stakeholders in the textile and fashion industry, suchremanufacturing. as fashion brands, retailers and remanufacturers, interested in exploring circularity through remanufacturers, interested in exploring circularity through remanufacturing.

6.1 Scenario 1

Scenario 1 investigates the feasibility of the break-even point for the brandâ&#x20AC;&#x2122;s gross profit by 6.1 Scenario 1 subtracting the cost of goods sold (remanufacturing and material costs) from sales revenue.

Scenario 1 investigates the feasibility of the break-even point for the brandâ&#x20AC;&#x2122;s gross profit by As presented in Table 12, the results indicate that refurbishing coats, that are of higher value subtracting the cost of goods sold (remanufacturing and material costs) from sales revenue. and thus soldinatTable a higher retail price, is feasible based on the statethat andaredifferent levels As presented 12, the results indicate that refurbishing coats, of higher valueof complexity required. and thus sold at a higher retail price, is feasible based on the state and different levels of complexity required.

Table 12. Scenario 1 for refurbished coats.

Original retail price (incl. moms) Retail price (incl. moms) Remanufacturing cost 38

Coat 1 2 699 kr 2 099 kr 120 kr

Remanufacturing of deadstock and customer claims apparel

Coat 2 2 999 kr 2 399 kr 240 kr

Coat 3 2 199 kr 1 099 kr 255 kr

35

Scenario 1 investigates the feasibility of the break-even point for the brand’s gross profit by subtracting the cost of goods sold (remanufacturing and material costs) from sales revenue. subtracting the cost of goods sold (remanufacturing and material costs) from sales revenue.

As presented in Table 12, the results indicate that refurbishing coats, that are of higher value As presented in Table 12, the results indicate that refurbishing coats, that are of higher value and thus sold at a higher retail price, is feasible based on the state and different levels of and thus sold at a higher retail price, is feasible based on the state and different levels of complexity required. complexity required.

Table 12. Scenario 1 for refurbished coats.

Table 12. Scenario 1 for refurbished coats.

Coat 1 Coat 1 2 699 kr 2 699 kr 2 099 kr 2 099 kr 120 kr 120 kr - kr 1 454 - kr kr - kr Feasible 1 454 kr 1 454 kr Feasible Feasible

Original retail price (incl. moms) Original retail price (incl. moms) Retail price (incl. moms) Retail price (incl. moms) Remanufacturing cost Remanufacturing cost Material cost Cost-benefit Material cost Material cost Cost-benefit Cost-benefit Table 12. Scenario 1 for refurbished coats.

Coat 2 Coat 2 2 999 kr 2 999 kr 2 399 kr 2 399 kr 240 kr 240 kr - kr 1 559 - kr kr - kr Feasible 1 559 kr 1 559 kr Feasible Feasible

Coat 3 Coat 3 2 199 kr 2 199 kr 1 099 kr 1 099 kr 255 kr 255 kr - kr 569 - krkr - kr Feasible 569 kr 569 kr Feasible Feasible

35 35

As presented in Table 13 below, redesigning most of the styles selected for the project is feasible.

An exception is T-shirt, whichmost considering the lower value offor thethe product and As presented in13 Table 13the below, redesigning most of the styles selected for the project is is As presented in Table below, redesigning of the styles selected project As presented in Table 13prices below,compared redesigning most of thelow styles selected costs for the project is higher remanufacturing to relatively production offshore, feasible.

An exception is the T-shirt, which considering the lower value of the product andand feasible. An exception is the T-shirt, which considering the lower value of the product feasible. An is the T-shirt, which considering the lower value of the product and indicated notexception to be economically feasible. higher remanufacturing compared to relatively productioncosts costs offshore, is higher remanufacturing pricesprices compared to relatively lowlow production is indihigher remanufacturing prices compared to relatively low production costs offshore, offshore, is Table 13. Scenario 1 for garments. indicated not to beredesigned economically feasible. cated notindicated to be economically feasible. not to be economically feasible.

Table 13. Scenario 1 for redesigned garments.

Bag garments.

T-shirt Table 13. Scenario 1 for redesigned

Retail price (incl. moms) Retail price (incl.

Remanufacturing Retail moms)price (incl. cost moms) Remanufacturing Remanufacturing Material cost cost cost Cost-benefit Material cost Material cost Cost-benefit Cost-benefit

6.2 Scenario 2

Bag 499 kr Bag 499 kr 250 499 kr

Shirt

Sweatshirt Vest

Parka

Coat

T-shirt 399 kr T-shirt 399 kr 185 399 kr

Shirt 1 499 kr Shirt 1 499 kr 1150 499krkr

Sweatshirt Vest 899 kr 1 299 kr Sweatshirt Vest 899 kr 1 299 kr 185 kr 899 1500 299krkr

Parka 999 kr Parka 999 kr 125 kr 999

Coat 2 499 kr Coat 2 499 kr 2355 499krkr

185 136 kr 185 kr -136 22 kr kr 136 kr Not - 22 kr - 22 kr feasible Not Not feasible feasible

150 kr 50 kr 150 kr 924 kr 50 kr 50 kr 924 kr Feasible 924 kr Feasible Feasible

125 135 kr 125 kr 488 135 kr kr 135 kr 488 kr Feasible 488 kr Feasible Feasible

355 328 kr 355 kr 1328 191krkr 328 kr 1 191 kr Feasible 1 191 kr Feasible Feasible

250 - krkr 250 kr 124 - krkr - kr 124 kr Feasible 124 kr Feasible Feasible

185 136 kr 185 kr 353 136 kr kr 136 kr 353 kr Feasible 353 kr Feasible Feasible

500 - krkr 500 kr 474 - krkr - kr 474 kr Feasible 474 kr Feasible Feasible

Scenario the feasibility of the break-even point for the brand’s gross profit by Table 13. Scenario garments.

6.2 Scen1 a2for riinvestigates oredesigned 2

6.2 Scenariothe 2 cost of goods sold, and the purchase price (i.e. FOB price) of the original subtracting Scenario 2 investigates the feasibility of the break-even point for the brand’s gross profit by

Scenario2from 2 investigates the feasibility of the break-even point for the brand’sasgross profit by garment estimation the purchase was no 6.2 Scenario subtracting thesales costrevenue. of goodsAnsold, and theofpurchase priceprice (i.e. was FOB used, price) ofthere the original subtracting cost of goods sold, and the ofpurchase price remanufactured (i.e. FOB price) of original correct way the to estimate the remaining value the garments in the project.

garment from sales revenue.

An estimation of the purchase price as there was no by Scenario As 2 investigates the feasibility of the break-even point forwas theused, brand’s gross profit garment from sales revenue.

Anrefurbishing estimation of the purchase price was used, there was no presented Table 14 below, coats remains feasible, whileas the gross profit correct way toinestimate the remaining value the of the garments remanufactured in the project. correct the remaining value of With the garments remanufactured incoat thethat project. subtracting the way costtoofestimate goods sold, andlower the purchase price (i.e.

FOB price) of the original garis estimated be at a considerably level. garments such as the third was As presented in Table 14 below, refurbishing the coats remains feasible, while the gross profit As presented in Table 14 estimation below, refurbishing the coats remains feasible, while thethere gross profitno corused, the purchase price of the original garment should not be taken into account.

However, ment from sales revenue.

An of the purchase price was used, as was is estimated to be at a considerably lower level. With garments such as the third coat that was tothe be atremaining a considerably lower level.

With garments such the third in coat that was the coat was chosen how the garments state andnotlevel of as complexity required for rect way is toestimated estimate value of the remanufactured the project.

As used, the purchase pricetoofillustrate the original garment should be taken into account.

However, used, the purchase price of the original garment should not be the taken into account.

However, remanufacturing at a high-cost country such as Sweden affect new retail price and costthe illustrate how state and level of complexity required presented in coat Tablewas 14 chosen below, to refurbishing thethe coats remains feasible, while the grossfor profit is the coatof was chosen to illustrate how the state and level of complexity required for benefit selling similar garments. at a high-cost country suchWith as Sweden affect such the new price coat and costestimatedremanufacturing to be at a considerably lower level. garments as retail the third that was remanufacturing at a high-cost Table 14. Scenario 2 forsimilar refurbished coats. country such as Sweden affect the new retail price and costbenefit of selling garments. used, thebenefit purchase price of the original garment should not be taken into account. However, of selling similar garments.

Scenario 2 for refurbished coats.

Coat 3 the coat Table was14. chosen illustrate how the state required for remanuCoat 1and level Coatof 2 complexity Table 14.

Scenario 2to for refurbished coats.

2Coat 699 1kr affect 2Coat 999 199 Original retail pricecountry (incl. moms) facturing at a high-cost such as Sweden the2kr new2Coat retail 3kr price and cost-benefit Coat 3kr Coat 1kr Coat 2kr 2 2 1 Retail price (incl. moms) of selling similar garments.

2 099 699 kr 2 399 999 kr 2 099 199 kr Original retail price (incl. moms) 4 Original retail price (incl. moms) Purchase price moms) Retail price (incl.(ex. moms) Retail price (incl. moms) Remanufacturing cost 4 Purchase price4 (ex. moms) Purchase price (ex. moms) Material cost Remanufacturing cost Remanufacturing cost Cost-benefit Material cost Material cost Cost-benefit Cost-benefit

4

Estimation based on the original retail price

4 4

Estimation based on the original retail price Estimation based on the original retail price

2 699krkr 2675 099 kr 2120 099 kr 675 kr kr 675 kr - krkr 120 120 kr 780 - krkr - kr Feasible 780 kr 780 kr Feasible Feasible

2 999krkr 2750 399 kr 2240 399 kr 750 kr kr 750 kr - krkr 240 240 kr 810 - krkr - kr Feasible 810 kr 810 kr Feasible Feasible

2 199krkr 1550 099 kr 1255 099 kr 550 kr kr 550 - krkr 255 kr 255 kr 20 kr - kr kr Feasible 20 kr 20 kr Feasible Feasible

36 36 36

39

Remanufacturing of deadstock and customer claims apparel

is estimated to be at a considerably lower level. With garments such as the third coat that was used, the purchase price of the original garment should not be taken into account. However, used, the purchase price of the original garment should not be taken into account. However, the coat was chosen to illustrate how the state and level of complexity required for the coat was chosen to illustrate how the state and level of complexity required for remanufacturing at a high-cost country such as Sweden affect the new retail price and costremanufacturing at a high-cost country such as Sweden affect the new retail price and costbenefit of selling similar garments. benefit of selling similar garments.

Table 14. Scenario 2 for refurbished coats.

Table 14. Scenario 2 for refurbished coats.

Original retail price (incl. moms) Original retail price (incl. moms) Retail price (incl. moms) Retail price (incl. moms) Purchase price44 (ex. moms) Purchase price (ex. moms) Remanufacturing cost Remanufacturing cost Material cost Material cost Cost-benefit Cost-benefit

Coat 1 Coat 1 2 699 kr 2 699 kr 2 099 kr 2 099 kr 675 kr 675 kr 120 kr 120 kr - kr - kr 780 kr 780 kr Feasible Feasible

Coat 2 Coat 2 2 999 kr 2 999 kr 2 399 kr 2 399 kr 750 kr 750 kr 240 kr 240 kr - kr - kr 810 kr 810 kr Feasible Feasible

Coat 3 Coat 3 2 199 kr 2 199 kr 1 099 kr 1 099 kr 550 kr 550 kr 255 kr 255 kr - kr - kr 20 kr 20 kr Feasible Feasible

Table 14. Scenario 2 for refurbished coats.

As presented Table 15 below, the economic feasibilityof of the the chosen styles is indicated to As presented in Tablein15 below, the economic feasibility chosen styles is indicated 4 As presented in on Table 15 below, the economicatfeasibility of theofchosen styles is indicated to Estimation based the original retail pricealthough the same for each specific style, aa lower thethe gross profit as for 4 same to be thebe forbased each specific although at lowerlevel level of gross profit asthe for the Estimation on the original style, retail price be the samecoats. for each specific style, although at a lower levelisof gross profit for the refurbished Similarly to Scenario 1, redesigning T-shirts notthe estimated to beasfeasible. refurbished coats. Similarly to Scenario 1, redesigning not estimated be feasible. refurbished coats. Similarly to Scenario 1, redesigning T-shirts T-shirts is is not estimated to beto feasible.

Table 15. Scenario in 2 for redesigned garments.

As presented Table 15 below, the economic feasibility of the chosen styles is indicated 36 to 36 Table 15. Scenario in 2 for redesignedbelow, garments.

As presented Table the although economicatfeasibility theofchosen styles is indicated to be the same for each 15 specific style, a lower of level the gross profit as for the Bag T-shirtalthough Shirtat a lower Sweatshirt Vest Coat be the samecoats. for each specific style, levelisof the grossParka profit asfeasible. for the refurbished Similarly to Scenario 1, redesigning T-shirts not estimated to be Bag T-shirt Shirt Sweatshirt Vest Parka Coat Retail price (incl. refurbished coats. Similarly T-shirts 499 kr to Scenario 399 kr 1, redesigning 1 499 kr 899 kr is 1not 299estimated kr 999 to kr be2feasible.

499 kr

Retail (incl.

Table 15.price Scenario 2 for redesigned garments. moms) 499 krgarments.

399 kr Table 15. Scenario 25 for redesigned moms)

1 499 kr 899 kr 1 299 kr 999 kr 2 499 kr Purchase price kr 75 kr 281 kr 169 kr 281 kr 187 kr 469 5 Bag T-shirt Shirt Sweatshirt Vest Parka Coatkr Purchase price (ex. moms) - kr 75 kr 281 169 kr 281 187 kr 469 Bag T-shirt Shirtkr Sweatshirt Vestkr Parka Coatkr Retail price (incl. (ex. moms) Remanufacturing 499 399 1150 499krkr 899 1500 299krkr 999 499krkr 250 kr kr 185 kr kr 185 kr kr 125 kr kr 2355 Retail price (incl. moms) Remanufacturing cost 499 399 1150 499krkr 899 1500 299krkr 999 499krkr 250 kr kr 185 kr kr 185 kr kr 125 kr kr 2355 5 moms) Purchase price cost -- kr 136 kr 50 kr 136 - krkr 135 328 Material cost 5 kr 75 kr 281 kr 169 kr kr 281 187 kr kr 469 kr kr Purchase price (ex. moms) - krkr kr 50 kr 136 - krkr 135 328 Material cost 75 281 kr 169 kr 281 187 kr 469 kr 124 -136 96kr kr 643 kr 185 kr 193 kr 301 kr 722 kr Cost-benefit (ex. moms) Remanufacturing 124 -185 96 kr kr 643 kr 185 kr 193 kr 301 kr 722 kr Cost-benefit 250 kr kr 150 kr 185 kr 500 kr 125 kr 355 kr Not Remanufacturing cost Feasible Feasible Feasible Feasible 250 kr 185 150 kr 185 kr 500 kr Feasible 125 kr Feasible 355 kr Notkr feasible cost Feasible Feasible Feasible Feasible Feasible - kr 136 kr 50 kr 136 kr - kr 135 kr Feasible 328 kr Material cost feasible - kr 136 kr 50 kr 136 kr - kr 135 kr 328 kr Material cost 124 kr - 96 kr 643 kr 185 kr 193 kr 301 kr 722 kr Cost-benefit 124 kr 96 kr 643 kr 185 kr 193 kr 301 kr 722 kr Cost-benefit 6.3 Scen2 afor rioredesigned 3 and 4 garments. Not Table 15. Scenario Feasible Feasible Feasible Feasible Feasible Feasible Notfeasibility 6.3 Scenar3ioand 3 an4d 4investigate feasible Scenarios the of the break-even point for the redesigned Feasible Feasible Feasible Feasible Feasible Feasible feasible Scenarios 3 and 4 investigate the feasibility of the break-even pointprice for the redesigned garments at different retail prices, by not considering the purchase of the original

6.3 Scenario 3inat and 4 retail The garments different prices, not considering theatpurchase price and of the original garment the calculations. pricebypoints are calculated 25% decrease increase of

6.33 and Scena4 riothe 3 acalculations. nd 4 theThe garment priceAspoints are break-even calculated at 25% decrease increase of garScenariosthe feasibility of the point for theand redesigned respectively. presented in Table 16, by decreasing the retail price 6 .3 Soriginal cenainr3iinvestigate oretail 3 an4price, d 4investigate Scenarios and the feasibility of the break-even point for the redesigned the original retail price, respectively.

As presented in Table 16, by decreasing the retail price by 25%, the feasibility estimations for reach style remain the same as in Scenario 1.

However, ments atScenarios different3retail by not price of original garment and 4prices, investigate theconsidering feasibility of the the purchase break-even pointprice forthe the redesigned garments different retail prices, not style considering thesame purchase of 1. the original by 25%, theat feasibility estimations forby reach remainasthe as in Scenario However, the cost-benefit for each styleprices, is estimated be lower, assumed. garments atthe different retail by nottoconsidering purchase price of the original in the calculations.

The price points are calculated at 25%the decrease and increase of the garment in calculations.

The price points are calculated at 25% decrease and increase of the cost-benefit for each style is estimated to are be lower, as assumed. garment in the calculations.

The priceAspoints calculated at decreasing 25% decreasethe and increase of by Table 16.

Scenario 3 for redesigned garments. original retail price, respectively.

As presented in Table 16, by the original retail price, respectively. presented in Table 16, by decreasing theretail retail price price Tableoriginal 16. Scenario 3 for price, redesigned garments. the retail respectively.

As presented in Table 16, by decreasing the retail price by 25%, the feasibility estimations for reach style remain the same as in Scenario 1.

However, 25%, the feasibility estimations forT-shirt reach style remainSweatshirt the sameVest as in Scenario 1.Coat However, the Bag Shirt Parka 1. However, by the feasibility estimations for reach style remainasthe same as in Scenario the25%, cost-benefit for each style T-shirt is estimated to be lower, assumed. cost-benefit forprice each style is estimated to beShirt lower, as assumed.

Bag Sweatshirt Vest Parka Coat Retail (incl. the cost-benefit for each style is299 estimated bekrlower, askrassumed.

374 kr kr 1to 124 674 974 kr

749 kr 1 874 kr 1 124 kr 674 kr 974 kr 749 kr 1 874 kr Remanufacturing 250 kr 185 kr 150 kr 185 kr 500 kr 125 kr Coat 355 kr T-shirt Shirt Sweatshirt Vest Parka Remanufacturing Bag cost 250 kr T-shirt 185 kr 150 kr Sweatshirt 185 kr 500 kr Parka 125 kr Coat 355 kr Bag Shirt Vest Retail price (incl. cost - krkr 136 136 kr - krkr 135 kr Material cost 374 299 kr kr 1 50 124krkr 674 kr 974 749 kr 1328 874krkr Retail price (incl. moms) - krkr 50 136 kr - krkr 135 kr 328 Material cost 374 kr 299 1643 124kr 674 974 kr 749 874kr 31 -136 96 kr kr krkr 185 kr 231 301 kr 1722 krkr Cost-benefit moms) Remanufacturing 31 kr -185 96 kr kr 643 kr 185 kr 231 kr 301 kr 722 kr Cost-benefit 250 kr 150 kr 185 kr 500 kr 125 kr 355 kr Not Remanufacturing cost Feasible Feasible Feasible Feasible 250 kr 185 150 kr 185 kr 500 kr Feasible 125 kr Feasible 355 kr Notkr feasible cost Feasible Feasible Feasible Feasible Feasible Feasible - kr 136 kr 50 kr 136 kr - kr 135 kr 328 kr Material cost feasible - kr 136 kr 50 kr 136 kr - kr 135 kr 328 kr Material cost 31 kr - 96 kr 643 kr 185 kr 231 kr 301 kr 722 kr Cost-benefit kr by increasing - Not 96 kr the 643 kr price 185ofkrthe redesigned 231 kr 301 kr 722 kr Cost-benefit As presented in Table3117, retail garment by 25%, Feasible Feasible Feasible Feasible Feasible Feasible As presented in Table 17, style by increasing the retail price of the redesigned garment by 25%, Not remanufacturing of every becomes feasible, including the lower-valued T-shirts that feasible Feasible Feasible Feasible Feasible Feasiblein Feasible feasible remanufacturing of every style becomes feasible, including the lower-valued T-shirts that in the previous scenarios have been estimated to be unfeasible.

Retail (incl.

Table 16.price Scenario 3 for redesigned garments. moms) 374 krgarments.

299 kr Table 16. Scenario 3 for redesigned moms)

the previous scenarios have been estimated to be unfeasible.

Table 17. Scenario 4inforTable redesigned garments.

As presented 17, by increasing the retail price of the redesigned garment by 25%, Table 16. Scenario 3 for redesigned garments

4

Retail (incl.

Table 17.price Scenario 4original for redesigned garments.

Estimation based on the retail moms) 624 kr price 499 kr Table 17. Scenario for redesigned Estimation based on the 4original retailgarments. price moms) Remanufacturing

1 874 kr 250 kr 185 kr 150 kr T-shirt Shirt Remanufacturing Bag cost 250 kr T-shirt 185 kr 150 kr Bag Shirt Retail price (incl. cost Remanufacturing deadstock and claims 624customer kr 499 kr apparel 1 874 kr Retailof price (incl.

5 moms) kr retail499 kr 1 874 kr Estimation based on the624 original price moms) 5 Remanufacturing Estimation based on the original retail price 250 kr 185 kr 150 kr 5

40

Table 17. Scenario 4inforTable redesigned garments.

As presented 17, style by increasing retail including price of the garment 25%, remanufacturing of every becomes the feasible, the redesigned lower-valued T-shirtsbythat in Bag T-shirt Shirt Sweatshirt Vest ParkaT-shirts Coat remanufacturing of every style becomes feasible, including the lower-valued that in the previous scenarios have been estimated to be unfeasible.

Bag T-shirt Shirt Sweatshirt Vest Parka Coat Retail price (incl. the previous scenarios have estimated to be 624 kr been 499 kr 1 874 kr unfeasible.

1 124 kr 1 624 kr 1 249 kr 3 124 kr

1 124 kr 1 624 kr 185 kr 500 kr Sweatshirt Vest 185 kr 500 kr Sweatshirt Vest 1 124 kr 1 624 kr 1 124 kr 1 624 kr 185 kr

500 kr

1 249 kr 125 kr Parka 125 kr Parka 1 249 kr 1 249 kr

3 124 kr 355 kr Coat 355 kr Coat 3 124 kr 3 124 kr

125 kr

355 kr

250 kr - kr - krkr 31 31 kr Feasible Feasible

cost Material cost Material cost Cost-benefit Cost-benefit

185 kr 136 kr -136 96 kr kr - Not 96 kr Not feasible feasible

150 kr 50 kr 50 kr 643 kr 643 kr Feasible Feasible

185 kr 136 kr 136 kr 185 kr 185 kr Feasible Feasible

500 kr - kr - krkr 231 231 kr Feasible Feasible

125 kr 135 kr 135 kr 301 kr 301 kr Feasible Feasible

355 kr 328 kr 328 kr 722 kr 722 kr Feasible Feasible

As presented in Tablein17, by 17, increasing the retail price of of the garmentbyby 25%, As presented Table by increasing the retail price theredesigned redesigned garment 25%, As presented in Table 17, style by increasing the retailincluding price of the garment bythat 25%, remanufacturing of every becomes feasible, including the lower-valued T-shirts inthat in remanufacturing of every style becomes feasible, theredesigned lower-valued T-shirts remanufacturing of every style becomes feasible, including the lower-valued T-shirts that in the previous scenarios estimated beunfeasible. unfeasible. the previous scenarios have have beenbeen estimated totobe the previous scenarios have been estimated to be unfeasible.

Table 17. Scenario 4 for redesigned garments.

Table 17. Scenario 4 for redesigned garments.

Bag T-shirt Bag T-shirt Retail price (incl.

624 kr 499 kr Retail price (incl. moms) 624 kr 499 kr moms) Remanufacturing 250 kr 185 kr Remanufacturing cost 250 kr 185 kr cost 5 Material cost kr 136 kr Estimation based on the original retail price 5 Estimation based on the218 original price kr retail53 kr Cost-benefit - kr 136 kr Material cost Feasible Feasible

218 kr

Cost-benefit

Shirt Shirt 1 874 kr 1 874 kr 150 kr 150 kr 50 kr 1 205 kr 50 kr Feasible

53 kr

1 205 kr Feasible

Table 17. Scenario 4 for redesigned Feasiblegarments.

Feasible

Sweatshirt Vest Sweatshirt Vest 1 124 kr 1 624 kr 1 124 kr 1 624 kr 185 kr 500 kr 185 kr 500 kr 136 kr 522 kr 136 kr Feasible

Parka Parka 1 249 kr 1 249 kr 125 kr 125 kr

Coat Coat 3 124 kr 3 124 kr 355 kr 355 kr

- kr 135 kr 328 kr 718 kr 676 kr 1 660 kr - kr 135 kr 328 kr Feasible Feasible Feasible37

522 kr Feasible

718 kr Feasible

676 kr Feasible

1 37 660 kr Feasible

On Figure 10 below, a comparison of Scenarios 1, 3 and 4 is presented for the redesigned As previously described, of these scenarios1,do3not the originalfor purchase price of On Figurestyles.

10 below, a comparison Scenarios andconsider 4 is presented the redesigned the garments. However, the comparison focuses on the new retail price, which in Scenario 1 On Figure 10 below, a comparison Scenarios 3 and 4 is presented forpurchase the redesigned styles.

As previously described, these of scenarios do1,not consider the original price of is the original price, Scenario 3 is decreased by 25%, and in Scenario 4 is increased by 25%. As styles.

As previously described, these scenarios do not consider the original purchase price of1 the garments.

However, the comparison focuses on the new retail price, which in Scenario seen on the figure, the 25% increase in new retail price facilitates the feasibility of the T-shirt, the focuses on and the new retail price, whichscenarios. in Scenario is the the garments. original Scenario 3comparison is decreased by as 25%, in redesign Scenario is increased by 25%. 1As which price, asHowever, a low-cost garment is not deemed feasible to in4the other is the price, 3and is decreased by 25%, in Scenario is increased 25%.

As Depending on the direct overhead of price theand brand, and time volume of forby each seen onoriginal the figure, theScenario 25% increase in newcosts retail facilitates the4and feasibility the T-shirt, an increased retail mayfacilitates to increased feasibility and seen as onredesigned figure,collection, the 25% increase in new retail price theinfeasibility ofscenarios. the T-shirt, which athe low-cost garment is not deemed as price feasible tolead redesign the other profitability of such activities. which as aonlow-cost garment is not deemed feasible redesign in the otherfor scenarios.

Depending the direct and overhead costs ofasthe brand,toand time and volume each re-

Depending direct and overhead costs of lead the brand, and time and volume for each 3 500on kr the an designed collection, increased retail price may to increased feasibility and profitability collection, an increased retail price may lead to increased feasibility and ofredesigned such activities.

3 000 kr profitability of such activities.

3 500 kr

2 500 kr 2 000 kr

3 000 kr

1 500 kr

Parka

Scenario 4

Scenario 3

Scenario 1

Scenario 4

Scenario 3

Scenario 1

Scenario 4

Coat

Scenario 4

Scenario 3

Scenario 1

Scenario 4

Scenario 3

Scenario 4

Cost-benefit

Scenario 1

Scenario 3

Scenario 3

Scenario 1

Scenario 4

7. Conclusions

Vest Retail price

Figure 10. Comparison of Scenarios 1, 3 and 4 for the redesigned garments.

-500 kr

Scenario 1

Scenario 4

Scenario 3

Scenario 1

Sweatshirt

Material cost

Scenario 3

Scenario 1

Scenario 4

Scenario 3

Scenario 4

Scenario 3

Scenario 1

- kr

Scenario 4

Scenario 3

Scenario 1

Shirt

Scenario 3

T-shirt

Manufacturing cost

Scenario 1

Bag

Scenario 4

500 kr

Scenario 4

-500 kr

Scenario 1

1 000 kr

Scenario 3

- kr Scenario 1

1 500 kr

Scenario 4

500 kr

Scenario 3

2 000 kr

Scenario 1

2 500 kr 1 000 kr

In conclusion, of customer claims and deadstock Bag remanufacturing T-shirt Shirt Sweatshirt Vest is dependent Parka on a variety Coat of aspects related to managerial decision-making on an industry-, system- and process-level, Manufacturing cost Material cost Retail price Cost-benefit along with consumer perceived values in order to meet market demand and facilitate the adoption of remanufacturing activities in collaborative networks. The following sections Figure 10.Comparison Comparison of 4 for thethe redesigned Figure 10. of Scenarios Scenarios 1,3 and 3 and 4 for redesigned garments. define the key decision1,variables, critical successgarments. factors, and assess the economic feasibility of the remanufactured collection for the project and its stakeholders.

7. Co7n.c1luKesyiodencsision variables

41

In conclusion, remanufacturing customer and deadstock is dependent on a or variety The key decision variables in of relation to theclaims implementation of remanufacturing activities of aspects related to managerial decision-making on an industry-, system- and process-level, business models are the following: along with consumer perceived values in order to meet market demand and facilitate the Industry-level: adoption of remanufacturing activities in collaborative networks. The following sections define the key decision variables, critical success factors, and assess the economic feasibility Remanufacturing of deadstock and customer claims apparel of the remanufactured collection for the project and its stakeholders.

38

7. Conclusions In conclusion, remanufacturing of customer claims and deadstock is dependent on a variety of aspects related to managerial decision-making on an industry-, system- and process-level, along with consumer perceived values in order to meet market demand and facilitate the adoption of remanufacturing activities in collaborative networks. The following sections define the key decision variables, critical success factors, and assess the economic feasibility of the remanufactured collection for the project and its stakeholders.

7. 1 Key decision variables The key decision variables in relation to the implementation of remanufacturing activities or business models are the following: Industry-level: – To attract more customers through personal interest and attitude towards remanufactured products, companies need to understand the factors that influence the customers’ acceptance process, as well as communicate their environmental initiatives (consumer perspective).

System-level – Marketing the personal benefit for the customers, such as emotional value and environmental impact will increase the demand for remanufactured products (marketing strategy perspective).

Process-level – A solid flow of reliable end-of-use materials enhances the interest of adopting remanufacturing activities within remanufacturers and brands (core perspective).

– Technology is crucial for establishing remanufacturing processes and creating efficient information and material flows between the stakeholders (operational perspective).

The key decision variables are the enabling conditions defined through the systematic literature review, that the practitioners participating in the first sub-study found to be the most likely to occur, along with having the highest impact on the industry. While identified through different perspectives, all key decision variables identified as most relevant relate to supply and demand. Starting from the consumer perspective on the industry-level, which was found to have most impact and most probable to occur, consumer perceived values need to be understood and taken into account when communicating remanufacturing activities.

As identified from previous literature, marketing the personal benefit to customers related to emotional and environmental values are most relevant, aligning with the results from the second sub-study. Furthermore, by implementing new technologies, and communicating the benefits of remanufacturing to stakeholders in the whole value chain, a solid flow of materials and information should be created, facilitating the establishment of remanufacturing processes.

7.2 Critical success factors Critical success factors for successful adoption of remanufacturing activities or business models in the transition towards sustainability are the following: – High quality and solid flow of waste material – Collaboration and coordination throughout the value chain 42

Remanufacturing of deadstock and customer claims apparel

– Streamlined and flexible reverse flows and remanufacturing processes – Determining the correct value of the waste material for pricing of the remanufactured products to meet customer demand while avoiding cannibalisation – Enforcement of standards and guidelines for certified processes and products – Enforcement of legislations supporting and facilitating the implementation of remanufacturing – Educating stakeholders in the whole value chain, including raw material suppliers and end customers While the proposed critical success factors summarise most relevant aspects to be considered, based on the project conclusions, further studies need to be concluded on scaled-up cases to be able to make concrete conclusions.

7.3 Feasibility assessment The economic feasibility has been calculated based on the break-even point for the brand’s profit margin, when implementing remanufacturing activities with customer claims and deadstock apparel in collaborative networks. First, refurbishing of coats is estimated to be economically feasible in both scenarios, due to the higher value of the garments, even after decreasing the new retail price based on the state and complexity of activities required for refurbishment. Secondly, based on the chosen styles that were redesigned through recoupling and reconstruction, all styles besides T-shirts are economically feasible to remanufacture. With T-shirts being of lower value, and higher costs related to remanufacturing in a high-cost country such as Sweden, remanufacturing is not estimated to be feasible. In comparison, products such as coats, and vests and bags reconstructed from jackets become more valuable to the customer due to novel design solutions. While Scenario 4 that presented a 25% increase in the retail price, also presented economic feasibility in terms of the cost-benefit estimation for the T-shirts, it may not reflect covering overhead costs, that have not been considered in these calculations. However, the economic feasibility needs to further investigated by taking into account the direct and overhead costs, along with a net profit for the brand for a better understanding of the feasibility on an industrial level to interest more fashion brands, retailers and OEMs/remanufacturers to explore novel remanufacturing business models.

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