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What is the circular economy?

In recent years there is much talk about circular economy, but are you sure what it is?

The circular economy aims to reduce the amount of waste by making the most of raw materials and resources. 

In the 50s that is when plastic began to be manufactured industrially, 2 million tons were produced. Today this figure has increased to 8,500 million tons per year, so it is not surprising that more than 8 million tons of plastic end up in the oceans.


The circular economy aims to reuse and give a new life to raw materials and products. From post-industrial or post-consumer recycling processes through the sale of reconditioned or second-hand products.

Based on the Ellen MacArthur Foundation – one of the most important in the field of circular economy – it has four basic pillars:

  • Eco design : product designed with a low environmental impact throughout its life cycle.
  • Reverse logistics : connect the end of the supply chain (returns or waste) to start a new supply chain to convert it into raw material or put it back on sale.
  • Circular business models : product rental
  • Organizational boundaries

According to the Ellen MacArthur Foundation, the circular economy has four basic components: ecological design (everything related to the product specification), reverse logistics (everything related to the end of the useful life), commercial models (such as loans or leases) and organizational limits (cultural and legal conditions: the context of the company).

Another arduous task of the circular economy is to fight against programmed obsolescence by manufacturers whose main intention is to reduce the life cycle of a product and that the user must acquire a new one. This linear cycle is not sustainable.

But how is the circular economy being implemented in the different retail sectors?

Circular economy in the retail sector


In recent decades, we have seen how the fast fashion has been implemented by the retail textile giants. In cycles of less than 3 weeks, the collections of these colossi are designed, made and distributed. It is another model of programmed obsolescence that psychologically makes us think that the garments we acquired a few weeks ago are already outdated and therefore obsolete.

In contrast, Circular Fashion appears. The term was first used in 2014 by H&M and today it already has parades,
events, conferences y grandes marcas como Nike
that have Circular Fashion programs.

What are the characteristics of this new circular strategy?

  • Designing in a way that it is easy to repair and disassemble the parts to be able to recycle it or give it a second life.
  • Designing with quality materials with a timeless design to maximize its usability.
  • Made biodegradable or at least recyclable materials.

  • Manufactured generating the minimum waste.
  • Distributed and transported in a sustainable way

  • That can be used by more than one user throughout its useful life
Current programs

H&M Garment Collecting encourages users to bring clothing that they do not use or that they don’t want anymore to recycle and transform it. In exchange, the user receives a check worth € 5, € 25 or more to spend in their stores.

The denim brand
Levi’s offers a 20% discount when delivering garments that we no longer want.

Nike has a shoe recycling program. You just have to find a physical store where you can deposit used shoes and they will transform them into raw material again to be reused as insulators, rubber floors among others.

The denim company Mud Jeans rents jeans for $7,50 monthly. It is a circular business model.


The Dutch supermarket brand Albert Heijn has opened its first supermarket built 100% sustainable.

For example, the building has been constructed so that steel, roof and facade can be easily disassembled. Lighting, roof cladding, and many other elements have been manufactured with recycled materials.


The bases of the circular economy in the restaurant business are:


    1. Local seasonal products if possible ecological to minimize the carbon footprint in transport and avoid water problems in atemporal crops.
    2. Sustainable products (fishing, livestock, fair trade)
    1. Waste management
    2. Efficiency and energy saving

    1. Social project
    2. Training and awareness

The mobile applicationToo Good To Go offers food left over from restaurants like Greene King (British chain) at half price. It is estimated that after the first year more than 1000 meals were saved from ending up in the landfill. They are proud to help the planet and the economy.

Casa Elena

This restaurant in Toledo has become an example of circular economy. Periodically they carry out training courses for their workforce where they are educated in terms of sustainability and reduction of energy consumption. They also recycle 85% of their waste and have an organic garden where they plant seasonal and zero kilometer products


This tapas restaurant in Madrid fully meets all the principles of sustainability. To start the restaurant has been built with sustainable natural materials and to maximize the energy efficiency coefficient to spend as little as possible. In terms of suppliers, they only work with local, km 0, fair trade and sustainable products.

In addition, they only use recycled materials and utensils, compostable, manage their waste and recycle them, maintain a temperature in a sustainable place, family reconciliation for their employees, etc. For all this they have the highest rating of the Ecocook certificate .


The electrical and electronics sector grows 4% every year in the EU. It is estimated that by 2020 it will manufacture 12 million tons of products. In addition to the quantity, these products entail a danger to the environment as they contain hazardous materials. Despite being a sector that is constantly and rapidly evolving, they do not evolve so easily in a circular matter. This sector is governed by selling cheap large quantities of products not mattering the life cycle or their durability. Other difficulties it faces is the fear that circularity might cannibalize their sales. However, they should fear other competing companies that are transforming their business into a circular model at an affordable price. Another handicap are the initial costs of moving from a linear to a circular economy

A solution for the sector would be to manufacture products that are easy to repair, disassemble and separate to be reused.


Ikea has some circular economy programs. They have recently announced their program Buy-back where users can deliver their used Ikea furniture in exchange for a gift voucher to spend in the store. They estimate that they will prevent more than 15,000 furniture from ending up in the landfill.

Another of the initiatives they propose is to rent office furniture. The program will begin in Holland, Switzerland, Poland and Sweden where they will test the viability of the project to expand the catalog of products available for rent in more than 30 markets. In the future, they may also rent kitchens in many countries.



The recommerce or inverse trade is the exchange where the user sends to the brand used product to be resold in exchange for discounts to use in new products.

In this way users can renew their products and continue with the life cycle of the used items.

REI o Eileen Fisher are American clothing brands that have this program where users send their used clothing in exchange for credit in their stores.

As we can see, there is a long way to go in terms of circular economy. However, every time society and companies are more aware of the environment and the competitive race ahead. The commercial future goes through a circular economy demanded by users and at some time by governments. Those who start today will be in the lead tomorrow.

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