Consumer appetite for repair means businesses are 'leaving money on the table'

Research by the Waste and Resources Action Programme (WRAP) indicates that businesses are failing to realise the full potential of adopting circularity principles, and are consequently ‘leaving money on the table’.

In a new report, ‘Are Businesses Leaving Money on the Table?’ WRAP finds that organisations set up with circular economy processes at their core generate twice the revenue of companies that have a more conventional ‘take-make-dispose’ model for resource use.

Furthermore, WRAP suggests that more can be done to profit from adopting resource efficiency, stating that companies ‘who fail to embrace the opportunities that circularity offers risk being left behind’.

Commenting on the report Catherine David, Chief Executive Officer of WRAP: “Circular Living strategies are now firmly established in many businesses – large and small - but many more are missing out on the benefits they offer. [In this report] we show how Circular Business Models can build resilience, unlock growth and help secure customer retention by staying relevant in an ever-changing marketplace.”

She added: “Our report highlights the key strategies and rewards they’re delivering and is essential reading for any business wishing to future-proof itself.”

Unlocking the potential of the repair market

The report identifies repair as an emerging opportunity, benefitting both consumers and businesses. According to the report, the principal motivation for consumers to repair items is cost-effectiveness - cited by 77 per cent of respondents to a WRAP survey. For businesses, repair offers opportunities for revenue generation, increased customer loyalty, and competitive differentiation.

The repair market is currently well-established in cars, bikes, and luxury jewellery, and is gaining traction in electronics and white goods. For instance, WRAP points to Apple’s progress in this space, refurbishing 12.8 million devices in 2023, contributing three per cent of its sales volume.

WRAP found that 52 per cent of consumers have had an item repaired within the last 12 months. The key barriers to repair are insufficient access to repair services and a perceived lack of skills, which prevent 55 per cent of consumers from repairing items. This is where WRAP sees businesses to be ‘leaving money on the table’.

The authors note that some sectors, such as clothing and furniture, remain in a ‘trial’ phase, with the repair market for these product categories not yet as developed with a significant opportunity for repair service to markedly grow in these areas.

The viability of repair services

On average, consumers are willing to pay approximately 19 per cent of a product's original price for a repair - a price point significantly lower than the cost of buying new.

Cars have the highest consumer willingness to pay for repairs among all categories surveyed, with owners prepared to pay 24 per cent of the original value to fix it rather than replace it with another vehicle.

The lowest premium cited in the survey was children’s clothing, with consumers willing to pay 14 per cent for these to be mended.

Businesses can also improve the viability of repair services by designing products with a low ‘residual value decay curve’, and with standardised, replaceable parts, which can result in fewer returns and lower warranty claims. For example, IKEA dispatched 532,000 spare parts to customers in the UK during FY23/24.

The electronics retailer Currys carried out 1.4 million repairs in the same year, which accounted for 15 per cent of its revenue. This in-house service now forms a key part of its strategy to compete with online-only players, and demonstrates the financial potential of repair services.

‘For most manufacturers and retailers, value is traditionally transferred at the point of sale. Circularity provides a way to retain value beyond this transaction.’

Beyond boosting revenue, WRAP suggests that investing in repair offers long-term strategic advantage, increasing customer engagement, providing new communication touchpoints, and strengthening brand loyalty.

Improvements in repair services could be implemented alongside end-of-life take-back schemes. According to the report, these schemes help businesses get back valuable materials, make their supply chains more resilient, and build better relationships with customers. Patagonia, for example, gets 92 per cent of its polyester and 94 per cent of its wool from recycled fibres, mostly through its take-back scheme.

However, a key barrier for businesses developing circular services, such as repair, is scaling operations to efficiently manage the processes.

The report observes that ‘cross-industry partnerships and collaboration are key levers in overcoming shared barriers and accelerating towards a circular economy.’

Ewan Parry, Partner at OC&C Strategy Consultants, which undertook the research said: "Adopting Circularity can unlock real commercial value across a wide range of businesses, from driving new revenue streams, to boosting customer retention and loyalty, whilst also providing supply chain efficiencies.

While circular initiatives are not one-size-fits-all, we’ve seen that when circular strategies are carefully designed and targeted, they can deliver tangible commercial benefits to businesses. For many companies, the next step is moving from awareness to action: embedding circularity in ways that support long-term growth and competitive advantage."