Understanding Merchandising and Marketing Strategies of Recycled Materials

(About the authors of this study: Ally Botwinick is a 2021 University of Delaware Summer Scholar and Dr. Sheng Lu is an Associate Professor from the Department of Fashion and Apparel Studies at the University of Delaware)

Today we're featuring research from the University of Delaware, examining how recycled materials are showing up in top fashion retailers' assortments.

Fashion companies, whether it be fast-fashion retailers or luxury brands, are selling more and more clothing made from recycled materials, and consumers' knowledge of and demand for this type of apparel is also on the rise. In fact, industry studies predict that the recycled clothing market could grow into a $7.6 billion annual business by 2027.

Despite the growing popularity of the recycled clothing market, many of the specifics regarding the production and selling strategies remains a mystery, even to industry professionals; so this article intends to explore fashion retailers’ detailed merchandising and pricing strategies for clothing made from recycled materials, outlining the key players in the market, assortment strategies, and pricing strategies in comparison to regular apparel. So whether you're a fashion brand or retailer interested in entering or expanding their business into the booming recycled clothing market, these insights will be of interest to you.

This data originates from StyleSage's AI-powered e-commerce analytics solution for the fashion industry, which tracks the detailed product assortment and pricing information of millions of clothing items at the stock-keeping unit (SKU) level in the retail market. The data covers all clothing items sold by a set of key US retailers from June 2018 to June 2021 (i.e., the most recent three years) to capture the latest development trends of the market. This study specifically examined the following three types of clothing:

● “recycled clothing” refers to clothing items that explicitly mention it uses or contains recycled textile materials in the product description.

● “100% recycled clothing” refers to clothing items that explicitly mention it is 100% made from recycled textile materials in the product description.

● “regular clothing” refers to new clothing that does not mention using recycled textile materials in the product description.

Overview of the US recycled clothing market

Consistent with other industry estimates, data from StyleSage suggests that clothing made from recycled materials is already commonly available in the US retail market. From June 2018 to June 2021, US retailers launched more than 18,500 new clothing items using recycled materials, or around 5 percent of these retailers’ total new clothing offers over that period. However, clothing using 100% recycled materials is still a niche category, accounting for less than 1% of US retailers’ total product offers.

Meanwhile, different from the public perception, top US sellers of clothing made from recycled materials include both sustainability-oriented brands and fast-fashion brands. As Table 1 shows, it is not surprising to see clothing companies or brands well-known for their sustainability efforts, such as Cos, Everlane, and Madewell, carry a substantial share of clothing made from recycled materials. Notably, Gap and fast-fashion brands like H&M already offer more than 10% of their clothing items using recycled materials. The result reminds us that the recycled clothing market is relevant to fashion apparel retailers of all kinds. We could anticipate even more players entering this fast-growing market in the years to come.

Table 1: Top US apparel retailers selling clothing made from recycled materials

Data source: compiled from StyleSage (2021)

On the other hand, recycled clothing sold in the US market heavily concentrates on certain fiber content due to restrained raw material supply and current recycling technology.

As Table 2 shows, polyester is the top-picked fiber for recycled clothing (56.3%), followed by nylon (9.7%) and cotton (7.9%). According to industry sources, thermoplastic polymer-based fibers are the most preferred fibers repurposed into apparel because of the ease and feasibility of reprocessing them. In comparison, much of the recycled nylon fiber is produced with old fishing nets found in the ocean, which requires substantial cleaning work before beginning the recycling process. Likewise, recycled cotton is usually blended with new cotton to ensure it upholds the utmost quality. Clothing using recycled cashmere and wool is less seen in the retail market due to the limited supply of textile raw materials and the technical difficulty of recycling them.

Table 2: Clothing made from recycled materials by fiber content

*Data source: compiled from StyleSage (2021); Note: refers to all clothing made from recycled materials and sold in the US retail market from June 2018 to June 2021.

Retailers’ product assortment strategies for clothing made from recycled materials

Table 3: Product assortment: recycled vs. regular clothing in the US retail market

Data source: compiled from Stylesage (2021)

US retailers adopt a unique product assortment for clothing made from recycled materials.

As Table 3 shows, compared with regular new clothing, apparel made from recycled materials tends to focus more on specific product categories, including shorts and outerwear. For example, Lululemon, a well-known athleticwear brand, recently launched several popular short products using recycled polyester (e.g., Swift Ultra Light Mesh Layered Shorts and Balancer Slim-Fit Mesh-Panelled Everlux Shorts). Similarly, Adidas has sold numerous men’s and women’s windbreakers using recycled polyester (like Men’s PrimeKnit Jacket, and Big Trefoil Outline Track Jacket).

However, US retailers carry much less sleepwear, underwear & Intimates, and dresses using recycled materials. Consumers’ shopping preferences and psychology could be significant contributing factors. For example, as sleepwear and underwear touch skin directly, consumers could prefer “brand new” clothing rather than those “worn by others.” Likewise, with dresses typically bought for special occasions like weddings, consumers are more likely to prioritize aspects such as style, aesthetics, and fitness over clothing’s sustainability implications.

Furthermore, fiber content is another factor affecting the availability of particular categories of clothing made from recycled materials. For example, clothing using recycled polyester is most popular for shirts & tops (22.9%), pants & leggings (15.3%), and sweaters & sweatshirts (13.7%). In comparison, recycled nylon is mostly used to make swimwear (59.9%), and recycled cotton is widely used to make jeans (38.1%), shirts & tops (15.7%), and shorts (13.9%).

Table 4: Product assortment by color: recycled vs. regular clothing in the US retail market

Data source: compiled from Stylesage (2021)

Additionally, US retailers adopt a unique color assortment for clothing made from recycled materials. As Table 4 shows, clothing items in “black” make up a higher percentage of the total product assortment for clothing using recycled materials (i.e., “recycled” and “100% recycled”) as opposed to new clothing. However, US retailers carry fewer “neutral” colored clothing items using recycled materials, possibly due to the varying natural hues of the recycled fibers.

Pricing strategies for clothing made from recycled materials

In general, US retailers price clothing made from recycled materials differently from new ones. Table 5 shows that US retailers typically price clothing made from recycled materials 40% lower than new clothing in the same category. The price difference was particularly notable for categories including “casual jackets and blazers” and “outwear, coats, and jackets.” Part of what drives this difference is the sheer number of choices across price points for non-recycled clothing when compared to those recycled. In addition, consumers may still see clothing made from recycled materials as “less valuable” than regular new clothing items.

Nevertheless, the result debunks the myth that promoting sustainability in the fashion industry necessarily means a more expensive price tag for consumers. Furthermore, given the much lower retail price, the profitability of selling clothing made from recycled materials leaves a question mark.

Table 5: Average retail price comparison: recycled vs. regular clothing in the US market

Data source: compiled based on StyleSage (2021).

“Much lower” means the average retail price is at least 40% lower; “Lower” means the average retail price is 10-39% lower; “Similar” means the average retail price difference is within 10%. *N/A: very few suits and Bridal clothing 100% using recycled material were sold in the US retail market during the examined period.

In conclusion, clothing made from recycled materials is a promising market with tremendous growth potential. The findings also suggest that the raw material supply, available recycling techniques, and consumers’ preferences are critical factors behind US retailers’ unique merchandising and pricing strategies for clothing made from recycled materials. It will be interesting to continue to explore the recycled clothing market beyond the US and see if any new market trends are emerging in the post-COVID recovery as consumers’ demand for clothing shifts.