Circularity is increasingly recognized as a key driver in transforming the fashion industry. By decoupling revenue from the production of virgin materials, circular business models not only reduce environmental impacts but also foster sustainable growth. As concerns over resource depletion and waste management intensify, adopting circular practices such as rental, resale, and recycling is becoming essential for businesses seeking long-term profitability and relevance in a rapidly evolving market.
This article highlights real-world examples of major players who have successfully implemented circular business models and scaled them to profitability.
Here are two case studies that illustrate this success:
Case 1: Nuuly
Urban Outfitters’ rental business, Nuuly, is expanding up to 15x faster than the company’s traditional retail segment. It now accounts for 7% of URBN’s total revenue and achieved profitability in 2024.
Nuuly’s success is largely attributed to its low inventory costs—around 50% of its rental pieces come from in-house brands, offering a significant cost advantage over competitors like Rent The Runway. Additionally, the company leverages Urban Outfitters’ extensive operational and logistics infrastructure developed over decades.
Case 2: Vinted
Vinted reached profitability in 2023 with €18M in profit, and saw a remarkable surge in profits in 2024 (€77M), while competitors such as Vestiaire Collective and ThredUp remain unprofitable.
Vinted’s success is credited to a “relentless focus on cost control,” along with investments in in-house logistics and payments infrastructure, allowing it to maintain strong margins in its P2P marketplace.
Both Nuuly and Vinted demonstrate that circular models, such as rental and resale, can not only scale but can also become profitable.
Yet, financial success alone is not enough. It’s equally important to continuously assess the real-world impact of these models—such as replacement rates and their effect on clothing usage—to ensure that we are driving sustainable change in the industry.
