The Challenging Market for Recycled Clothing

Renewcell had a great product idea: recycling discarded garments into new materials for new clothes.

The company had plans to produce 120,000 metric tons of cellulose pulp a year to supply retail brands such as H&M, Tommy Hilfiger, and Levi. In the end, Renewcell was not able to deliver a reasonably priced quality pulp from recycled garments to its customers and filed for bankruptcy.

Video Spotlight:  

This post is based on the GreenBiz article, Why Renewcell Failed, by Elsa Wenzel, March 20, 2024, and the YouTube videos in the Spotlight. Image source: HollyHarry/Shutterstock

Discussion Questions:

1. What was Renewcell’s sustainability initiative?

Guidance: Renewcell’s sustainability initiative focused on recycling discarded garments into new materials for new clothes. Discarded garments were not dumped into landfills but recovered, cleaned, and processed into sheets of new material called Circulose, to supply retail brands with apparel made from this sustainable alternative.

2. What were the promises of Renewcell’s sustainability initiative?

Guidance: The promises included providing (1) an environmentally friendly alternative to cotton, called Circulose, for the fast-fashion industry, (2) a means to reduce waste, to enable discarded garments from the fast-fashion industry to be routed into recycled new clothing rather than landfills, (3) a way to recover materials from discarded garments and cotton scraps into new materials so apparel businesses can meet their sustainability goals.

3. What lessons can be learned from Renewcell’s failed sustainability attempt?

Guidance: The lessons learned are (1) a sustainability strategy must focus not only on environmental but also economic (e.g., cost competitiveness) and social (e.g., consumer responsibilities) goals, (2) a supply chain strategy must involve building close relationships with both its upstream (e.g., recycling centers) and downstream (e.g., fiber makers) partners, and (3) an operations strategy must align with the organization’s competencies on price, responsiveness, and quality.

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