Unleashing Europe’s recycled clothing market potential

Consumers’ increasing sustainability awareness has encouraged fashion retailers to carry more clothing made from recycled textile materials.

According to the European Commission’s latest strategy for sustainable textiles, all clothing sold in the EU market could be required to be recyclable or use a certain amount of recycled content as of 2030.

By leveraging industry sources and a content analysis of companies’ websites, this study explores how retailers carry and sell clothing made from recycled textile materials.

Recycled clothing in the analysis refers to an apparel item with a product label or online description that explicitly mentions it contains recycled textile materials. In comparison regular new clothing refers to an apparel item with a product label or online description that explicitly says it does not use recycled textile materials.

The analysis will look at five of Europe’s largest economies – the United Kingdom (UK), Italy, Germany, France, and Spain.

These five countries account for nearly 60% of Europe’s clothing sales due to their high-income level. The analysis will focus on retailers’ product assortment and pricing strategies for recycled clothing products.

The aim is to help fashion companies better understand the business aspect of recycled clothing and explore the potential market access opportunities in Europe.

The recycled clothing market in the five European countries included in this study have enjoyed fast growth over the past three years. Industry sources estimate that about 650,000 Stock-Keeping Units (SKUs) of clothing items made from recycled materials were newly launched in the five European countries in 2021, a substantial increase of nearly eight-fold from 2018 (or 147% average compound annual growth, CAGR). In comparison, the SKUs of regular new clothing available in the five markets increased by only about 28.3% over the same period.

However, despite the significant growth, recycled clothing remains a niche product in the five countries. Ultimately, recycled clothing only accounted for 1.5% of clothing launched in the five markets as of 2022 (Jan-May), although it was a notable rise from 0.4% in 2018.

Data also indicates that top fashion brands selling recycled clothing in the five markets include Adidas, Etam, Zara, Vera Moda, Undiz, Patagonia, H&M, VILA, Puma, and North Face. These retailers primarily launch recycled clothing to the mass market.

However, the top fashion brands with the largest market shares in the five countries are not necessarily big sellers of recycled clothing, such as Shein, Boohoo, Nike, Next, Tommy Hilfiger, Only, and Aliexpress.

Retailers in the five countries adopt a distinct product assortment strategy for clothing made from recycled materials.

First, clothing made from recycled materials concentrates on specific product categories, including outwear, swimwear, and bottoms. For example, from January 2018 to May 2022, about 20.2% of recycled clothing sold in the five countries was in the category of outwear, compared with only 10.9% of regular new clothing available in the market over the same period. Likewise, swimwear accounted for 6.4% of total recycled clothing sold in the five countries, but only 3.1% for regular new clothing.

In comparison, clothing made from recycled materials is less likely to be available for categories including tops and dresses. Previous studies show that consumers often do not see the value of recycled clothing and are unwilling to sacrifice a clothing’s functional needs or aesthetic benefits in exchange for ‘sustainability.’ Consumers’ preferences explain why specific apparel categories like formal dresses or wedding gowns rarely use recycled textiles.

Second, affected by the recycling technologies and the raw material supply, recycled clothing sold in the five countries mainly use recycled polyester or a combination of two or more recycled fibres. For example, from January 2018 to May 2022, about 47% of recycled clothing sold in the five countries used a mix of recycled cotton and polyester, followed by items using 100% recycled polyester (29.1%). Apparel using a combination of recycled polyester and recycled nylon is also quite common (18.6%).

Notably, recycled polyester can be generated by mechanical and chemical processes using cheap inputs like plastic bottles, which explains its widespread usage. In comparison, it is still rare to see clothing made from 100% recycled cotton (less than 1% of the market total), given the technical difficulty of making recycled cotton strong and durable enough. The unbalanced supply of recycled textile raw materials by fibre types also contributes to the phenomenon that recycled clothing concentrates on specific categories. For example, swimwear and outwear are more likely to use recycled polyester than other textile fibres.

Third, recycled clothing also adopts an interesting colour assortment different from regular new clothing in the five markets. For example, compared with regular ones, recycled clothing seems less likely to be in colours such as white and grey but more likely in colours such as black, green, and navies. One possible explanation is that recycled textile fibres’ physical limitations could make using specific dyeing processes (e.g., bleaching to white) or dyeing materials more challenging.

Retailers in the five countries carefully leverage pricing to promote recycled clothing and communicate its value to consumers. Either too high or too low, pricing could deter consumers’ purchase interest and affect a retailer’s profit.

Two patterns are noteworthy:

• Retailers in the five countries generally tend to price recycled clothing lower than regular new clothing in the luxury & premium segment but often higher in the mass & value market.

Notably, studies show that pricing recycled clothing faces a dilemma: whereas the production costs could be higher, consumers do not often see the value of such product (i.e., unwilling to pay a price premium). Thus, retailers may have to offer a relatively more attractive price to attract consumers to purchase recycled clothing, especially those targeting the high-end market. 

• Retailers’ pricing for recycled clothing varies by product category in the five countries. 

For example, regardless of the market segments, retailers set a higher price for bottoms using recycled materials than regular new clothing. However, for outwear and underwear, recycled clothing is often priced lower. 

The recycled clothing sector will continue to expand in the years ahead with promising market potential. Advancing recycling technologies will be critical for the industry to overcome the physical shortcomings of recycled clothing and to diversify the product offers in the market.

Meanwhile, in collaboration with other stakeholders, retailers can do more to help consumers better understand the benefits of shopping for recycled clothing and change their perceptions about its low value and inferior quality.