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From refurbished furniture to loudspeakers, more companies get serious about circular business models

Customers, including in Asia, are asking for more sustainable options. IKEA’s new furniture buy-back scheme will be available in Japan and South Korea, and is expected to launch in Bangkok next year.

November is a manic month for retailers as tens of millions of shoppers go on a buying spree on Singles Day and Black Friday.

This year, furniture giant IKEA is trying something different for Black Friday, which falls on 27 November. While not going so far as to discourage consumption, the Swedish company is offering to buy back unwanted furniture for resale as part of its #BuyBackFriday campaign.

Customers in 27 countries may sell their unwanted IKEA items back to the company for up to half their original price, and will receive IKEA vouchers in return. By next year, there will be dedicated zones in every store in the 27 countries, including Australia and the United Kingdom, where people can sell back their old furniture and find repaired or refurbished furniture at cheaper prices.

Announcing the campaign last month, IKEA franchisee Ingka Group—which operates 380 IKEA stores in 31 countries—said buying back furniture is one way it is “transforming to promote and develop circular services and sustainable consumption for customers”.

Only two of the 27 participating countries, Japan and South Korea, are in Asia.

But there are plans to launch a buy-back programme at IKEA’s Bang Yai store in Bangkok by August 2021, said IKEA Southeast Asia’s head of communications Corinna Schuler. Ikano, which owns and operates IKEA stores in Singapore, Malaysia and Thailand, will learn from the Bang Yai experience and “assess possibilities for our other markets moving forward”, Schuler told Eco-Business.

Other companies that recently launched initiatives to promote the circular economy are German loudspeaker systems manufacturer d&b audiotechnik and Dutch brand Philips Professional Display Solutions.

In August, d&b launched its first certified pre-owned speakers. Last month, Philips Professional Display Solutions said it would offer a free Android software upgrade across two ranges of televisions used by business clients such as hotels and hospitals. This will allow older models to be upgraded instead of replaced, extending their lifetime and reducing e-waste.

Recycling is one of various solutions but it’s not the best one. Being able to leave something as is, reuse, remanufacture or repair it… is better.

Martin Stavenhagen, co-founder and director, Get Circular with SD Consulting

The circular economy is one that does not depend on more extraction of finite resources to grow. According to the Ellen MacArthur Foundation, it is one that designs out waste and pollution, keeps products and materials in constant use, and regenerates natural systems like soil.

In a 2019 report titled Completing the Picture: How the Circular Economy Tackles Climate Change, the foundation noted that a shift to renewable energy can tackle 55 per cent of global greenhouse gas emissions. The other 45 per cent of emissions arise from the management of land and the production of buildings, vehicles, electronics, clothes, food and other everyday goods, and these emissions must also be addressed if the world is to meet its climate targets.

The re-circulation of products and services keeps their value “as high as possible for as long as possible”, said Martin Stavenhagen, co-founder and director of Get Circular with SD Consulting. “Recycling is one of various solutions but it’s not the best one,” he said. This is because of the energy and other chemical processes needed to reduce a product into a raw material, before recreating something valuable out of it again.

“Being able to leave something as is, reuse, remanufacture or repair it to give it a third, fourth or fifth life cycle or more without taking it (back) to the materials stage, is better,” said Stavenhagen. “Also, it’s important to not forget to give back to nature and regenerate the ecosystems and their services that all of our lives depend on, in the end.” 

Demand for more sustainable options

Both d&b and Philips Professional Display Solutions cited greater demand for more sustainable options from their clients and respective industries.

“We have seen over the last few years many artists voicing their concern for the environment and their desire to lighten the environmental footprint of their own tours, so some of our partners are opting for these remanufactured systems as a way to address this,” said Anand Narayanan, territory manager and president of d&b audiotechnik Asia Pacific.

The company’s sound systems can be found in nightclubs, stadiums, places of worship and performing arts venues like Singapore’s Esplanade Theatre.

Remanufacturing not only reduces environmental impact, it also makes cost-effective products and solutions available for those needing to innovate and sail through the current economic climate.

Anand Narayanan, territory manager and president, d&b audiotechnik Asia Pacific

Each d&b certified pre-owned sound system goes through an exterior, mechanical and acoustic check. All foam and seals are replaced, and the exterior is repainted with a top coat. Pins, rigging, links, wheels, latches and frames are tested and replaced if necessary.

The certified pre-owned systems come with a two-year warranty, and new parts come with a five-year factory warranty. The systems also feature new energy-saving components such as amplifiers that consume 40 per cent less energy and have 40 per cent less heat build-up.

According to Anand, studies show that d&b’s remanufactured systems result in up to 90 per cent less emissions and materials used. The remanufacturing process consumes up to 56 per cent less energy.

As for prices, Anand would only say its certified pre-owned range is “economically attractive”. Response from clients, including in Asia, has been “extremely positive”—in fact, the first order was from Vietnam, he said.

“This year the entire entertainment industry has been challenged like never before. Remanufacturing not only reduces environmental impact, it also makes cost-effective products and solutions available for those needing to innovate and sail through the current economic climate,” Anand said, alluding to the Covid-19 pandemic’s impact.

Philips Professional Display Solutions did not respond to queries but, in a media statement last month, said that the software update would improve its green credentials as well as its clients’.

Variety of circular business models

Associate Professor Adrian Kuah, circular economy and sustainability programme leader at the Cairns Institute of James Cook University, said there is a variety of business practices that support a circular economy. They include the sharing economy, extending the life cycle of products, the recovery of resources from used items and the concept of product-as-a-service.

An example of product-as-a-service is Philips’ contract in 2015 to provide light at Amsterdam’s Schiphol Airport. Philips owns and maintains the lights at the airport for a service fee. At the end of the contract, light fixtures will be upgraded and reused elsewhere, the company said at the time.

Products ideal for circular economy business models are those that can be repeatedly used, have relatively high value, and are not toxic. They can also be dissembled and reorganised, and contain inherent resources that are valued, said Kuah.

In Asia, urbanisation and the increase in single-person households will drive such business models, Kuah said.

Single-person households have a greater tendency to rent rather than purchase items, and the proportion of one-person households is rising in South Korea, Taiwan and Japan, he said. Young people in cities who cannot afford to buy homes will rent, which increases the possibility they will also rent furniture. They may also opt to rent expensive products that they will use only once, he added.

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