Category Archives: Retail

Leasing jeans: A business model for a green economy?

Let’s face it: fashion is bad for the environment. I’m not just talking about clothing – I’m talking about our general desire to obtain new things as trends change. How many perfectly good couches like this have been discarded, replaced with new ones that required significant amounts of energy and raw materials to produce?

ugly 70s couch

Of course, that’s true any time you buy a new product, whether it’s for style reasons or not.

Many environmentalists see leasing and rental models as part of the solution. What if, instead of buying new flooring, you leased it? The flooring company could then reclaim it when you want a new floor, reusing it or recycling it depending on its state.

A Dutch company called Mud Jeans is attempting to use the same model for denim. The company is letting customers rent jeans for 20 euros up front plus 5 euros a month (a total of $107 to own a pair of jeans for a year). After a year, customers can send the jeans back or keep them (for an additional 20 euros). Mud will then either recycle the jeans or lease them to another customer.

Mud Jeans

There’s one problem, from an environmental standpoint. Levi’s conducted extensive research and found that a pair of jeans is most damaging to the environment not when it’s made but when it’s used, because of all the energy and resources required to wash and dry clothes. Cotton production accounted for only 5% of the climate-change impact of a pair of jeans and 4% of its energy use.

Water use was a different story. Cotton production accounted for 49% of the water use associated with a pair of Levi’s. But washing nearly matched it, at 46%.

Overall, I like Mud’s idea, mainly because it will get consumers thinking about the potential embedded in a leasing economy. Ultimately, however, it would probably be better for the environment to take my father’s approach: buy a pair of pants at LL Bean, and wear it for the next 20 years. I wonder if that will ever be in style.

How can traditional retailers compete with same-day delivery?

These days, I buy so many products online that I’ve actually memorized my credit card number — something that hasn’t happened since I was planning my wedding. But there is one market that online retailers have yet to penetrate: the market for emergency purchases. If I run out of toothpaste, I’m still going to walk around the corner to Rite Aid.

That’s starting to change. Amazon is offering same-day delivery in 10 cities. Currently, prices are steep, and you have to order early in the day, but the service will likely get cheaper and better over time. Wal-Mart is testing the service as well. So is Google, which could leverage its network of Google Street View drivers to deliver products. eBay Now, which launched last year in NYC and San Francisco, uses couriers to deliver thousands of products to your door in less than an hour, for $5 per delivery. Startups like Shutl and Postmates are using similar courier-based models, while Uber might leverage its network of drivers to deliver packages as well as people.

For now, most consumers will use these services only for bigger-ticket items, when it’s worth paying an extra $5 or even $15 for same-day delivery. I’ll probably still rely on Rite Aid for my toothpaste. But that may not last. Brick-and-mortar retailers need to consider how to react, and they should be particularly worried about Amazon. Shutl and eBay deliver products from traditional stores — as of now, they’re potential partners for retailers, not competitors. Amazon, however, bypasses retailers altogether.

So how can retailers compete? They need to consider what “jobs” they can do better than online retail, as Clayton Christensen and Max Wessel outline in their recent HBR cover story, “Surviving Disruption.” Here are a few ideas:

  • Entertainment. Trader Joe’s, Whole Foods, and even Costco have created an entirely new reason to go grocery shopping: because it’s fun. I get the same pleasure from going to Whole Foods as I do from going clothes shopping. I get to browse and discover new things in a warm and inviting environment. New and interesting products stimulate my creativity, as I think about how I could use them. I also get to spend quality time with my husband. Amazon offers incredible convenience, but it doesn’t offer fun — at least, not yet.
  • Destination products. One secret of the success of Trader Joe’s is its focus on products that you can’t get anywhere else. The only way to get same-day delivery of TJ’s amazing Vegetable Panang Curry is to get it from Trader Joe’s.
  • Community connection. A recent article by UPS suggested that small businesses can compete by offering consumers a feeling of “real.” The article suggested “re-conceptualizing limited selection as personal curation of products … or even taking customers on ‘consumer safaris’ to see where products are made.” I would also suggest using check-in services like Foursquare to get to know  customers, reach out to them, and build relationships. This is, of course, more relevant for small businesses than large retailers like Best Buy.

And if you can’t beat them, join them. One same-day delivery service is trying to capitalize on the consumer desire for “real.” In the UK, Hubbub offers same day delivery of goods from local, independent stores.