VF Corporation Shifts To a Circular Business Model

“We need to make the second life of apparel second nature,” says Letitia Webster, VF Corporation’s vice president of global corporate sustainability. When she considers the company’s recognizable brands and extensive retail stores, she sees potential to scale up that kind of circular economy thinking through a strategy involving recommerce.

Originally founded in Pennsylvania in 1899 as a glove and mitten manufacturer, VF Corporation has become a global $12 billion apparel, footwear, and accessory company. Their brands include the North Face, Timberland, Eagle Creek, and Vans. The company also has more than 1,500 owned and operated retail locations around the world across its brand portfolio.

Recently Webster spoke with us about VF Corporation’s strategy for moving from a linear business model to a circular one, the ripple effect on operations, and what success could mean for the apparel industry as a whole.

What is VF Corporation’s sustainability strategy?

Our 1.0 strategy around people, product, planet was about getting our house in order. We were very internally focused, which was important. Almost 30% of our products are made within our own internal manufacturing. There was work to do ensuring that we were best in class. In about 2016, we were starting to realize the 1.0 goals and successes.

We came to 2.0 with a fundamental question: How will we transform VF and the apparel industry to make it sustainable for the long-term?

We have to change to a circular business model. We have to leverage our scale around our three biggest material issues: climate change, worker wellbeing, and materials. And we need to move from sustainability being the sustainability team’s responsibility to our biggest stakeholders adopting, integrating, and helping to activate it. Underpinning this strategy is the concept that the more value we can create through a sustainable and responsible lens, the more impact we will have throughout the industry.

What does the circular economy mean to you?

When you look at the overall impact of any company within the apparel industry, roughly 70 or 80%, if not more, comes from materials. The apparel industry is also incredibly wasteful, driven by a lot of fast fashion. How can we change that?

In a circular business model, we can extend the relationship and therefore the value proposition with our consumers through more engagement, connection, and conversation. We extend the life and the value proposition of our products and materials. When we take that apart, we’re focused on three areas: rental, recommerce, and design for circularity.

How are you approaching this internally?

We were inspired by the idea that we need to make the second life of apparel second nature. We’re working with a number of our brands now to explore what recommerce means for them.

One thing that validated that circular business models have some legs is we’ve been doing takeback programs with a number of our brands. We’ve had tremendous success with the North Face and Timberland at our retail stores. Consumers come back with lightly used jackets, shoes, clothes, and they get some type of incentive to purchase something new. We take those products and, through a third party, clean, resell, and recycle them. We try not to downcycle as much as possible.

Every time we put a takeback program into one of the retail stores, our traffic to that store goes up, the conversion rate goes up, and the average retail sale goes up. Consumers are interested. There is something tangible that resonates with them.

What are the biggest challenges here?

The entire economic system is not based on taking products back from consumers. There is not a lot of infrastructure. How do you get consumers comfortable with the idea of putting clothes into a box to send back to a brand? Who does it go back to? Our distribution centers aren’t set up to take products back, wash them, clean them, repair them, and put them on an e-commerce site to sell them again.

Now, we can do it on the one-off and with warranty. The North Face has a lifetime warranty program. Eagle Creek also has an extensive warranty program. We’ve been working with those warranty leaders because they have experience bringing products back.

It’s one thing to say we’re going to bring back a couple hundred units. If this is going to work, we have to bring back hundreds of thousands of units. So we need new systems in place that are streamlined and efficient — just as streamlined and efficient as getting the products out the door to the consumer. That is the biggest challenge we’re up against.

Are there other internal leaders involved?

We’re talking to our distribution center leaders and saying, “Can you set up an area that can take these products back, store them, log them, take pictures of them so we can get them up on an e-commerce site?”

When someone clicks yes I want to buy it, how do we send that signal to a distribution center so someone can go pick it up in the right place, box it, and send a one-off? I know that sounds easy. Amazon does some of that, but we have to reverse the logistics on all of this.

It’s a whole system. It’s marketing. It’s e-commerce teams. It’s our product photography teams, our distribution center teams, our packaging teams, it’s all of that working together. One-off is expensive. How do you make this a profitable model?

Are there interesting recommerce and rental examples you’re seeing in the apparel industry?

REI is figuring out how to better serve their members through recommerce and rental concepts. They’ve been a great partner with us. Some of our brands are working with them.

And you look at what is happening in the marketplace with ThredUP, RealReal, Yerdle. They’re starting to show that it’s working. Goldman Sachs invested a significant amount of money in ThredUP. That was a huge demand signal for us.

We have to figure out how to unlock this, and VF is in a unique place to drive that commercialization and make it large-scale. That’s the long-term vision.

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