Alexis DeSalva Kahler
Alexis is a Senior Research Analyst at Mintel. Alexis focuses on US Retail and eCommerce reports.

Prior to the COVID-19 pandemic, interest in circular retail options such as renting and resale, was high with more than two in five consumers interested in either option, according to Mintel research on the circular economy. Some of the top reasons consumers expressed interest in these alternative shopping options centered around sustainability, particularly being less wasteful and better for the environment than traditional retail.

Here, we break down what you need to know about the circular economy emerging in retail:

What was happening

This year was supposed to be the year circular retail boomed – and on Earth Day – would have been the prime occasion to attract more shoppers. However, the pandemic has resulted in sudden shifts for many. Saving money is still top of mind, but so is cleanliness, an issue for circular retailers. As many shoppers watch their spending, how many will be willing or able to prioritize sustainability over price? More than half of consumers voiced concerns with cleanliness prior to the pandemic, which will presumably grow as many are hyper-aware of sanitation. In a time when consumers have to maintain a six-foot distance, how many will really want to buy something pre-owned or worn by someone else?

What needs to happen now

Retailers need to reevaluate the type of information and control they provide to shoppers. In order to convince customers to rent and that secondhand shopping is safe and clean, retailers should consider sharing an item’s point of origin information. Where did it come from? Who owned or wore it before them? How and when was it cleaned?

Enabling more customer-controlled sharing settings would also be appealing, such as allowing shoppers to select the users they want to swap clothes within a given time frame. This type of control will be especially appealing to consumers as they navigate uncertain times.

What will happen?

This doesn’t mean the end of circular shopping, but Mintel predicts the competition will thin. The pioneers – retailers solely focused on circular retail, such as Rent the Runway and The RealReal – will be the most likely survivors. However, traditional brick-and-mortar retailers, that had begun testing the waters in addition to linear models of business, such as Ann Taylor and Bloomingdale’s, will be the ones to exit.