Sufficiency-based Circular Business Models

Rémi Beulque^1,4,*, Helen Micheaux², Joël Ntsondé^3,4, Franck Aggeri⁴,
Chloé Steux^{5, 4}

¹ISC Paris; ²AgroParisTech; ³ISTEC; ⁴ Mines ParisTech ; ⁵ EPF

^*[email protected]

⁺Data collection and analysis processes are still ongoing so that at current stage, this version is only a temporary version.

Abstract

Taking on the much-criticized concepts of green growth, bioeconomy, or efficiency, both sufficiency and, in certain circumstances, the circular economy, are presented as potential new paradigms that can play a central role in a transition towards a stronger sustainability and enable humanity to stay within planetary boundaries (Alexander, 2012; Bocken and Short, 2020; Jackson, 2005; Raworth, 2017).

While businesses have a role to play in the transition, scholars point to the need for more disruptive, sufficiency-based circular business models that focus on slowing material and value loops, but are traditionally less understood practitioners and more difficult to implement in practice (Bocken and Short, 2016; Walker et al., 2021).

In this context, this ongoing work focuses on the following research question: how and to which extent can sufficiency-based circular strategies transform established retailers business models? Through a combination of action research and case studies, we aim at providing useful insights to practitioners and the nascent academic literature on the topic (Jungell-Michelsson and Heikkurinen, 2022).

Following the foundational article by Niessen and Bocken (2021), we identify new sufficiency-based circular practices that contribute to enrich the business for sufficiency framework. Through concrete examples, we also show that sufficiency-based business models can scale up, and describe some of the associated processes. On a less optimistic note, we highlight some limitations of the observed ongoing upscaling processes, amongst which stand the limited number of retailers that started such a process, the limited contributions of these new practices to overall value creation and capture at the firm level, and clear evidence of rebound effects.

Keywords

Sufficiency, Strong Circular Economy, Circular Business Models, sufficiency-based Circular Business Models

Introduction

Within the context of the war in Ukraine and related energy supply challenges in the European continent, the concept of sufficiency, which was not fully understood amongst policy makers and business organizations since it was associated often to degrowth (Walker et al., 2021), suddenly gained momentum amongst those actors.

This recent trend echoes academic debates, in which both sufficiency and, in some circumstances, the circular economy, are presented as potential new paradigms that can play a central role in the transition towards a stronger sustainability and enable humanity to stay within planetary boundaries (Alexander, 2012; Bocken and Short, 2020; Raworth, 2017). While there are diverse definitions of the concept, sufficiency is traditionally understood as an organizing principle aimed at bringing both production and consumption within natural limits, through a new paradigm, in which enough would be desirable (e.g. (Princen, 2003; Spangenberg and Lorek, 2019; Young and Tilley, 2006).

Firms have a role to play in fostering a transition at macro level, by adopting more at micro level disruptive business models, which can focus on regeneration of nature or society, or slowing material and value loops through sufficiency-based circular business models (Bocken and Short, 2016). Nonetheless, this issue remains an emerging topic within academic spheres (Jungell-Michelsson and Heikkurinen, 2022; Niessen and Bocken, 2021). It also still constitutes an emerging trend, especially in established firms with traditionally linear business models. In such organizations, these newly launched circular business models, in which recycling activities are overrepresented, represent in many cases mere additions to the company’s business model portfolio. On the contrary, their traditionally linear business models, which is based on ever increasing volumes and resource consumption, is not or marginally affected. Therefore, those changes in practices stay limited to what the authors call a weak circularity approach (Aggeri et al., 2023).

Amongst firms, retailers could play a significant role in fostering sufficiency at macro level. Indeed, the fact that their traditional business model is centered on a purely volume-based approach offers them a strong leverage in case of a transition towards more sufficiency-based strategies. In parallel, this traditional volume-based approach constitutes a strong challenge to any transition, as it is the core of value creation and capture at the firm level. Nonetheless, some retailers recently began to investigate sufficiency strategies in France (Aggeri et al., 2023). Indeed, in addition to consumers increasing demanding for sustainable products and sometimes even wish to lower their level of consumption, recent regulations and lawsuits are driving a growing interest in these models. Indeed, after some first laws that extended legal warranties (Law n°2014-344) or forbid planned obsolescence (Law n°2015-992) in the past decade, the AGEC Law1 passed in 2020 introduced several measures such as a repairability and durability indexes concerning specific categories of products, financial mechanisms to support product repair and reuse, minimum availability periods for spare parts of certain industries, bans on the destruction of unsold products, reuse targets in Extended Producer’s Responsibility schemes, as well as provisions that make it illegal to interfere with repair and reconditioning activities. In addition, several lawsuits have been launched by the NGO HOP (Halt to Planned Obsolescence) against firms such as Apple on the grounds that they encouraged planned obsolescence, or voluntarily limited repairability of their products through mechanisms such as serialization, which limits the possibility of installing new spare parts on repaired products.

In this context, this ongoing work focuses on the following research question: how and to which extent can sufficiency-based circular strategies transform established retailers business models? Through a combination of action research and case studies, we aim at providing useful insights to practitioners and at contributing to the nascent academic literature on the topic.

Following the foundational article by Niessen and Bocken (2021), we identify new insightful sufficiency-based circular practices that usefully complement the ones that have already been identified by the business for sufficiency framework. In a complementary manner to the static approach of their Business for Sufficiency framework, we adopt a dynamic approach which enables us to show, through concrete examples, that sufficiency-based business models can scale up, and describe some of the associated processes. On a less optimistic note, we contribute to the nascent literature on this topic by highlighting some limitations of the observed ongoing upscaling processes, amongst which stand the limited number of retailers that started such a process, the limited contributions of these new practices to overall value creation and capture at the firm level, and clear evidence of rebound effects (Levänen et al., 2021; Niessen and Bocken, 2021; Zamani et al., 2017)

Literature review

Researchers agree that we are living in an era called Anthropocene, characterized by the fact that humans are the driving force shaping the planet and having a major impact on nature (Reichel and Perey, 2018). By 2022, the impacts of human activities on natural ecosystems led to six of the nine planetary boundaries being breached, the latter being “novel entities” emitted into the biosphere, such as synthetic chemicals, and the cycle of green water (Rockström et al., 2009; Wang-Erlandsson et al., 2022).

In this context, a growing number of researchers came to criticize traditional paradigms as green growth, bioeconomy, efficiency or belief in purely technological solutions, and advocate for stronger sustainability paradigms (Alexander, 2012; Kurz, 2019; Parrique, 2020). Indeed, rebound effects and ever-increasing resource consumption condemn them to promote weak sustainability patterns at the best (Wiedmann et al., 2020).

Both sufficiency and, in certain circumstances, the circular economy, are presented as potential new paradigms that can play a central role in a transition towards such a stronger sustainability and enable humanity to stay within planetary boundaries (Alexander, 2012; Bocken and Short, 2020; Jackson, 2005; Raworth, 2017; Velenturf and Purnell, 2021).

While there are diverse definitions of the concept, sufficiency is traditionally understood as an organizing principle aimed at bringing both production and consumption within natural limits (Princen, 2003; Berg, 2011). Its core assumption lies on the idea that current search of constant more and faster need to be challenged and replaced by a new paradigm, in which enough would be desirable (e.g. Young and Tilley, 2006; Spangenberg and Lorek, 2019). As evoked by Jungell-Michelsson and Heikkurinen (2022), sufficiency is understood as both in a normative approach, as an end in itself and, in a more descriptive approach, as a means for bringing consumption and production within ecological limits. In the literature, sufficiency is currently mostly seen through the lens of consumption and customer behavior, towards consuming better and less due to self-imposed restriction based on conscious values and norms (Allievi et al., 2015; Guillard, 2019; Niessen and Bocken, 2021; Sandberg, 2018; Tröger et al., 2021).

On the contrary, scholars stress that a paradigm switch is needed for the circular economy to reach its full potential. Indeed, current policies, business organizations’ practices, and discourses mainly belong to what the authors call a weak circularity paradigm, which entails no real hierarchy between circular strategies, and most of the time a focus on recycling activities, at the margin of a productivist and growth-oriented paradigm that is neither questioned nor modified (Aggeri et al., 2023). Opposed to this, a growing number of voices advocate for what the authors call stronger circularity approaches, which would be sufficiency-based (Aggeri et al., 2023; Arnsperger and Bourg, 2017; Bocken and Short, 2020; Grosse, 2010). Indeed, up-to date, no current sustainability paradigm enabled to decouple GDP from human activities material footprint, while the extraction and processing of materials, fuels and food contribute to half of total global greenhouse gas emissions and more than 90 per cent of biodiversity loss and water stress (EEA, 2021; UNEP, 2019).

At a micro level, previous research showed that experimentation of new business models is a key pathway to accelerate the circular economy transition in established organisations and in emerging startups (e.g. Adoue et al., 2014; Aggeri et al., 2019; Jørgensen & Pedersen, 2018).

Some companies have been successful at creating business models focused on resource efficiencies and ’narrowing’ (e.g. Bocken et al., 2016) or ‘intensifying’ and closing resource loops through ‘cycling’ (e.g. Geissdoerfer et al., 2020). Furthermore, in many cases, and especially in established firms with traditional linear business models, the circular business models that are being experimented are in many cases based on recycling activities and just another activity in the company’s business model portfolio. On the contrary, their traditional linear business models, which is based on ever increasing volumes and resource consumption, is not or marginally affected. Those changes in practices therefore stay limited to a weak circularity approach (Aggeri et al., 2023).

The more challenging circular business models with businesses cases that require rethinking and disrupting the linear economy business status quo are, however, much less commonplace and less understood by practitioners (Blomsma et al., 2022; Walker et al., 2021). In particular, Niessen & Bocken (2021) have identified 12 different strategies that companies can leverage to drive sufficiency, such as reuse (consume slower and differently), life extension and demand reduction services (consume more reliable and less) or moderating sales (consume less), exchange platforms, support for repair, short distance promotion, design, or awareness raising. These strategies have been integrated into a single called business for sufficiency framework. Such more disruptive business models, which can focus on regeneration of nature or society, or slowing material, energy and value loops through sufficiency-based circular business models, nonetheless only constitute a nascent topic in the literature (Jungell-Michelsson and Heikkurinen, 2022; Niessen and Bocken, 2021).

In this ongoing study, we focus on the following research question: how and to which extend sufficiency-based circular business models transform established retailers? More precisely, we analyze how these new models can transform the latter’s traditional business models, and which new business models or value propositions have been developed, as an addition to existing portfolio.

To do so, we refer to the business for sufficiency framework developed by Niessen and Bocken (2021) and the different sufficiency practices the authors identified. Rather than focusing on a specific sector, we study a given type of business organization, namely established retailers. Indeed, contrary to newcomers as for instance Vinted, Le boncoin.fr or Backmarket, which based their activity on reused or remanufactured products, established retailers constitute core actors of the linear economy at a global scale, with traditional business models based on ever-increasing volume of new products and resource consumption. Together with more disruptive circular entrepreneurs, platforms, EPR schemes, established firms from the linear economy can play a key role in a transition toward a greater circularity (Beulque et al., 2018). Following the foundational article by Niessen and Bocken (2021), the authors aim to identify new insightful sufficiency-based circular practices, which will usefully complement the ones that have already been identified by the business for sufficiency framework.

The upscale of business models based on a strong circularity approach also constitutes a key research gap in the literature, since it can play a role in a transition to circular economy at macroeconomic level (Aggeri et al., 2023; Hultberg and Pal, 2021). Therefore, in a complementary manner to the static approach of their Business for Sufficiency framework, we adopt a dynamic approach with the aim to assess to which degree these new practices change the overall organization and value creation of the retailers that are analyzed, associated processes, and the limitations to those trends.

Methodology

As stated, the authors’ aims were to enrich Niessen and Bocken (2021) business of sufficienciy framework, by identifying other sufficiency strategies that could be implemented by established retailers, and to understand whether and to which extent related practices could upscale. In order to do so, we carry our research in two steps.

Phase 1: exploratory search of potentially relevant firms

During a first exploratory phase, the authors aimed at identifying potential innovative firms who would experiment other sufficiency practices than the ones identified by Niessen and Bocken (2021), and try to upscale those business models, value propositions and practices.

The retailers that were included in this first exploratory phase have selected based on two main criteria. Provided that our project being was to study established retailers, we first selected actors at first according to their importance in on the French market. Amongst this first selection, we focused on firms known for experimenting with sufficiency-based circular business models. In addition to the knowledge of the authors, several types of data was used, amongst which available firms’ communication documents through online research, grey literature about sufficiency strategies, social network feed as LinkedIn, and discussions with experts and civil society organization who work on sufficiency, as HOP (Halt to Planned Obsolescence).

This first phase enabled the authors to identify two innovative firms, which were chosen as case studies for the second part of the research (see table 1).

Table 1: retailers selected for phase 2

Phase 2: action-research and in-depth analysis of two innovative case studies

Data collection

In this second phase, primary and secondary data is being collected on the two firms. Primary data is collected through semi-directive 24 interviews to date (see table 2), communication documents available from companies through online research, visits in shops and financial communication documents.

Table 2: interviews

Eventually, interviews with Decathlon enabled one of the authors to propose an action research to the company, as part of the strategy of the firm to develop sufficiency-based circular business models.

Action research aims to create new models, based on concrete projects within organizations, and to implement them in order to participate in the transformation of a company. It is particularly adapted to create knowledge that is relevant to both practitioners and academics (Aggeri, 2016; David, 2000; Hatchuel and Mollet, 1986). Action research is useful to accelerate research in pressing issues such as sustainability challenges (McManners, 2015). It can be fruitfully combined with case studies (Prendeville et al., 2017).

During several months in the first semester of 2023, this research-action concentrated on two goals. At first, it intended to test no ownership business models for two brands of Decathlon. Second, the author sought to develop “eligibility tools” that could screen the products of its different brands and link them to suited circular sufficiency-based business models. This process enabled to collect additional primary data.

Secondary data is being collected to complement primary data, through video and written interviews available online, articles in general and specialized newspapers, French language grey literature about sufficiency strategies and interviews with experts from civil society organization HOP. This data concerns the practices of Decathlon and Fnac-Darty but also, when available, the practices of other France-based retailers.

Data analysis

Data analysis follows a two-step process. At first, data are analyzed based on Business for Sufficiency framework (Niessen and Bocken (2021), which is used identify and classify new sufficiency practices based on Decathlon and Fnac-Darty case studies (1). When possible, the practices of Decathlon and Fnac Darty are compared to the practices of other France-based retailers. Second, the authors analyze to which extent these practices transform the traditional business model of the actors (2). To analyze this upscaling process and its limitations, we used data as turnover (growth, percentage, targets), impact on the material footprint of companies, the number of clients or services in a year, or evolution of the activity compared to previous years.

Results

This results section is divided into three parts. At first, the authors showcase the innovative sufficiency strategies that have been identified and the processes through which Fnac-Darty (4.1.) and Decathlon (4.2.) try to upscale them. When possible, the practices of Decathlon and Fnac Darty are compared to the practices of other France-based retailers. In a third subsection, evidence of such upscaling processes and their limits are provided (4.3.).

Sufficiency practices and upscaling processes in Fnac Darty

The different practices that are identified are classified depending on their impact of the overall business model of the firm. The section therefore starts with less impactful practices, and finishes with processes that have a more substantial one.

Product’s repairability assessment and customer information

In France, products’ repairability underwent a swelling over the last years, as several France-based retailers are beginning to assess the repairability of some of their products and to improve customer information.

Indeed, the AGEC law introduced in France a repairability index, which started to be mandatory on first products (television, laptop, smartphones, certain washing machines and lawnmowers) from January 1^st 2021, and has already been enlarged to other electric equipment. It aims to better inform customers about the repairability of products. It consists of a score from 0 to 10 according to the characteristics of the product, based on criteria also defined by law. In 2021, a few months after its entry into force, the French Ministry of Economy launched a campaign on its implementation, which highlighted that 42% of retailers’ physical stores still did not correctly display this repairability index, as well as 52% corresponding websites (DGCCRF, 2021). Nonetheless, these figures confirm that assessing product repairability and improving customer information is becoming a dominant practice among French retailers, which can be observed in numerous actors such as Ikea, Decathlon, Fnac Darty or Leroy Merlin. On a less optimistic note, in most cases, these practices remain limited to the small number of mandatory product categories covered by the regulations.

Fnac Darty stands out among those actors because repair is an older, more widespread and traditional practice to differentiate itself from its retail competitors. Since 2018, it launched a more comprehensive tool called “Baromètre du SAV”, which stands for “After sales service barometer”. Its scope is more ambitious, since it already encompassed 15 families of products at the beginning, a number that has swelled to 77 categories by 2021. This unique in-house tool has made it possible to evaluate not only the reparability of products, but also their durability, thanks to feedback from its after-sales service and customer surveys on products’ reliability. In 2021, this barometer used as input the data of 41 000 customers based in France and 721 000 repair interventions of this service, which gives the company a unique competence. Specific efforts can also be highlighted in order to promote the visibility of this tool in the shops and vendors’ training. Quite naturally, this actor has been among the most decisive business organizations in promoting the repairability index of the AGEC law and the future durability index that will replace it in 2024.

Overall assessment of the repairability and durability of the value proposition at the firm level

Fnac Darty goes further in its pioneering practices in terms of reparability. The firm developed a global index at company level. It combines the repairability and durability scores of a large number of products families, including small and large electronic equipment, as well as IT products. This tool, based on data from the firm’s “after-sales service barometer”, provides the company with a broader and more comprehensive assessment of the evolution of its value proposition in terms of repairability and durability.

The tool allows the company to measure its overall progress as well as the different criteria that compose the score. It also enables the company to evaluate the performance levels of different brands within the same product family, as well as for the low-repairability and low-durable categories. For instance, Fnac Darty shows that its index increased from 100 in 2018 to 105 in 2019, mainly due to longer availability of spare parts, which passed from 7 to 10 years, and therefore impacted the repairability of older products. This same year, it also stressed that the main improvement concerned large and small appliances, whereas major improvements were still needed for TVs, connected watches, American fridges and electric scooters. Thanks to its aftersales service, the company can also know the average replacement age of the products, or inform about the average price of spare parts, which represents 7 to 8% of the price of the new product (but 25% to 57% for TV for example).

Eco-design prescriptions and support to suppliers

Several France-based retailers also begin to voluntarily use the repairability index as an eco-design tool and integrate its various criteria (availability of technical documents, disassembly, availability of spare parts, price of the spare parts, etc.) into the specifications they impose on their suppliers. This practice is often applied to more product categories covered by the law, in anticipation of future extensions of its scope. In addition to Fnac Darty, it can for example be seen at Decathlon. In anticipation of the future durability index imposed by AGEC law, which is currently under development, actors like Fnac Darty also introduced related criteria (repairability, reliability, upgradeability) are also beginning to be introduced into these specifications to suppliers. Interestingly, suppliers report that they are beginning to take these new eco-design criteria into account. If this trend is more widespread, it appears to be stronger for the manufacturing suppliers of the 77 product familiesmonitored by Fnac Darty’s “After Sales Service Barometer”, who testify to expect its yearly results. At Fnac Darty, these eco-design specifications are complemented by another tool, namely improvement plans (“plans d’amélioration”) for the suppliers who obtain the worst results.

Selection of manufacturing suppliers, product purchasing and evolution of retailers’ value proposition

Fnac Darty also uses its barometer as part of its product listing policy. Products whose score is below a certain threshold, and in the absence of improvements on the part of the supplier, are delisted from Fnac Darty suppliers. By contrast, the best-rated products are promoted through an internal label called “les produits durables” (Durable products). Interestingly, Fnac Darty claims that being classified in this product category can have a dramatic effect on sales, which could be “multiplied by 4 to 10” after the logo is implemented.

Diversification and upscale of maintenance and repair services

Several retailers based in France are also beginning to develop a diversity of repair services, designed to meet retailers’ choices, product specifics and customer choices. Along with the repair coffees that have flourished, support for repair practices includes access to technical documentation, online videos and tutorials, and 3D printing of spare parts. Online or on-site interventions by technicians are also developing, as well as repair activities in stores or in dedicated centers. Depending on the retailer, these activities are internalized or offered to customers through partnerships. For instance, Decathlon offers such repair services for several product categories such as tents, bikes, fitness equipment, scooters, kayaks, plus some climbing, snorkeling, or riding equipment. While they currently remain limited compared to the company’s overall product portfolio, they are expanding rapidly. On a similar way, Leroy Merlin organizes repair coffees, and partnered with Spareka to promote auto-repair through 3D printing of spare parts and online tutorials.

Nonetheless, the most noteworthy and ambitious transformation can be attributed to Fnac Darty. In addition to a diversification of its repair services in line with previously mentioned actors, the firm significantly upscaled repair and maintenance services through a monthly subscription revenue model. Indeed, the actor launched the offer “Vanden Borre Life” in Belgium early 2021, and partnered with Wefix to offer fast smartphone repair services to its clients. Most importantly, it launched three offers called “Darty Max” from 2019 to 2021. It includes unlimited and priority access to repair interventions by a technician. The subscription comprises a technical diagnosis, the cost of labor and the purchase of spare parts. This applies to products sold by Fnac Darty but not only. In case the product can’t be repaired, a voucher is offered. Maintenance services are also included, with an annual video call with a service expert and access to online advice and tutorials. The difference between the three offers concerns the number of categories of products that they respectively cover. 9,99€/month enables a customer to protect its large electric appliances. 14,99€/month provide clients with additional repair and maintenance services on small appliances, television, and sound equipment. 19,99€/month will extend the coverage to cameras and multimedia such as computers and printers. Based on the company’s communication, this offer seems to make an interesting contribution to the company’s gross margin and, as we will explain in a dedicated section, has already grown to the point where it could make this service a key factor in value creation.

Sufficiency practices and upscaling processes in Decathlon

In Decathlon, sufficiency-based circular business models appear to upscale through two main processes.

Experimentations to upscale a diversity of rental services

As a major French sport equipment and clothing retailer, Decathlon is currently carrying out experimentations to scale up rental services, which were launched in the mid-2010s through several Proofs of Concept (PoC). This upscale of its concept of “sport as a use” or “sport as a service” involves various processes. A growing number of the company’s sport-specific brands are testing this model on various product categories, to go further than the ones that were originally rented, such as bikes, fitness, camping, skiing and surfing equipment. Once successfully tested, mostly in France and Belgium, these renting services slowly begin to be deployed in other countries, such as Spain or other European countries.

In parallel to this brand approach, the extension of the number of products for rent is reinforced by an experiment called “we play circular”, which is often referred to as a Sport’s Netflix or Spotify. During its first test phase, 70 Belgium families were allowed to access all the products of two Belgium shops, based on three subscription formulas. For 20€ per month, they could use as many products as they wanted from those shops, within the limit of 400€ worth of materials. If the clients agreed to pay 40€ per month, they could use any material worth up to 1 000 €. At last, 80€ per month enabled them to use 2 000 € worth of material. Considered successful enough, “we play circular” entered a second phase of test in January 2023, which will rely on 2 000 families from shops located in Belgium, Bordeaux, Paris, Nantes and Marseille. Among other learnings, it will enable Decathlon to better understand the products for which rental is desirable for customers, and for which traditional stores are a suitable distribution channel.

In addition to traditional shops, which are being tested through “we play circular” and brand-based experimentations, this upscaling process relies on testing online distribution through commercial websites, and in some cases distribution through networks of partners. For instance, managers are faced with similar questions: is it more appropriate to rent kimonos in shops, or directly in the sports clubs where customers will use them?

This upscaling process also results from the multiplication of rental service durations. Short-term rentals, by the day or week, have already been tested since 2018 for several equipment such as skiing and surfing gear, or paddle board, and seem to correspond to seasonal use of specific products, in specific geographical situations. For example, short-term rentals of surfing equipment have potential in summer for some oceanfront stores, while ski equipment fits other periods and locations. Even if this type of rental is judged to be able to participate in the upscaling of sufficiency-based business models, through its deployment in a growing number of products, stores and countries, managers naturally consider it limited to certain products, seasons and locations.

The promotion of experiments of medium-term, month-long rentals for new brands and products is also considered to support rental upscaling process. Such a model is already implemented for some products as bikes, golf product or fitness gear, in more than 300 French stores and other countries like Belgium or Spain. This medium-term rental model is also the one that is followed by “we play circular”. In its second testing phase, all the products of certain stores will be eligible for renting, with a 3-month minimum duration. Following on from products such as electric bikes, new tests are at last being launched for long-term rental, over periods of one year, for equipment that requires a significant financial investment for customers.

Finally, this process of diversification of rental services at Decathlon prompts it to go beyond its traditional business-to-customer position, and to consider different new customers such as sports clubs, in a business-to-business approach.

Systematic assessment of products eligibility to sufficiency-based circular business models

The development of diversified rental services appears to be part of a more global strategy. Indeed, Decathlon is beginning to systematically assess the eligibility of products for various sufficiency-based circular business models. Several experiments have shown that certain products do not seem to be suitable for rental services, as customers have expressed little or no interest in such a formula. Instead, they showed a preference to repair and reuse certain products. For instance, Decathlon concludes that in some cases, rental is not adapted for sports shoes, or fleece jackets, which the customer prefers to buy and then sell second-hand. In this context, different brands of the group are currently conducting a systematic review of their diverse product categories to determine which sufficiency-based business model they would be best suited to.

Sufficiency-practice upscaling processes

In this subsection, we provide further evidence that in these two French retailers, sufficiency-based circular business models are undergoing an upscaling process, to the point they could play a significant role in the global value creation and capture processes at firm level. We also stress some of the limits of these upscaling processes.

Ongoing upscaling processes

In Fnac Darty, Darty Max repair and maintenance subscription appears to start to become a key value creation driver. While its contribution to the group’s overall turnover is confidential, the firm claims to have observed an upsurge, already reaching a double-digit contribution to its revenue only four years after its launch. This value proposition also plays a significant role in capturing value, with a much higher than average gross margin. Other figures confirm this trend. At the end of 2021, 500 000 clients had subscribed to Darty Max, whereas they were only 200 000 a year earlier. In order to reach its objective of 2 million subscriptions by 2025, the offer is now available online and in all of the group’s stores, and covers more than 4 million products. In 2019, its after-sales service reported 620, 000 repair-related interventions. By 2022, that number had risen to 1.1 million. The company plans to reach 2.5 million units per year by 2025.

With a few years delay, Decathlon appears to experience a similar upscaling process, through the implementation of sufficiency-based circular business models for a growing number of products. Again, no official communication of a precise revenue target - or contribution to the company’s overall revenue – was reported. Nonetheless, managers testify that a double-digit contribution to the firm’s value creation is expected by 2026, less than a decade after its first experiment. Similarly, managers claim that in-store rental services are nine to thirteen times more profitable than the traditional sales-based model. Other figures testify to this trend, with 20,000 bike rentals in 2022, and 40,000 product references covered by its monthly subscription rental service.

These trends appear to be in line with data from other established or incumbent retailers, as Leroy Merlin reports distributing 150,000 spare parts per year, while newcomers as Spareka registered 10,000 online repair interventions in 2022, when Murphy announced to have doubled its turnover in 2021 and Back Market claims a three-figure annual growth.

The limitations of ongoing upscaling processes

The implementation and willingness to upscale sufficiency-based circular business models remains a relatively new phenomenon, while business transformation processes are by nature long-term processes. Therefore, at this stage, any conclusions can only be temporary. Nonetheless, the ongoing upscaling processes appear to face serious limitations.

First, such strategies have only been adopted by a limited number of France-based retailers when upscaling, at a macro level, would require a wider adoption.

Second, when adopted by established retailers, these practices appear to remain minor value propositions and business models, among an overall portfolio of business models that is still linear and volume-based. Indeed, neither financial communication nor the carbon emission scenarios of actors such as Decathlon or Fnac Darty show that they would represent the majority of the firms’ value creation, or that these actors decided to give up on overall volume-based growth.

Third, the fear to suffer from a cannibalization of their traditional linear value propositions motivated those retailers to establish synergies between sufficiency-based and established volume-based linear model, which in turn can induce rebound effect. As an example, Fnac Darty offers vouchers to its Darty Max subscribers when their products can’t be repaired, as well as free delivery and special offers related to new products. It also concludes that Darty Max subscribers have a purchasing frequency 1.5 times higher than the average of its customers, and an average basket size superior of 25%. We face here a traditional limit of emerging circular business models, whose acceptance by trade departments often requires such synergies with traditional linear business models (Beulque et al., 2018).

Fourth, stronger data is still required to confirm that some business models, as for instance Decathlon rental services, do not actually accelerate material flows. In order to make decisions based on robust data, the firm is currently conducting carbon emissions assessments of different models with the French environmental agency (ADEME) and assures that the results would be a GO/NO GO step for related experiments.

At last, all retailers studied complain that the upscale of their repair services is hampered by the lack of properly trained workforce and the difficulty of training their employees or recruiting new ones. Such a situation seems to originate from the absence of specialized educational programs, which used to exist but slowly disappeared as they were not considered strategic by public authorities, business organizations and higher education institutions. In order to overcome this challenge and be able to recruit 500 additional repair technicians by 2025, Fnac Darty decided to create new specialized trainings and academies all over the country. In 2021, 220 future technicians were benefiting from these programs.

Conclusion and discussion

Through this retailer-focused article, we aim at contributing to the emerging literature on the adoption of sufficiency-related practices by firms and, from an empirical perspective, providing insights to managers who desire to promote sufficiency in their organization (Jungell-Michelsson and Heikkurinen, 2022; Niessen and Bocken, 2021; Walker et al., 2021).

First, following the foundational article by Niessen and Bocken (2021), we identify new insightful sufficiency-based circular practices that usefully complement the ones that have already been identified by the business for sufficiency framework. We show that sufficiency can be promoted by assessing product’s repairability and durability, and by informing the customers through a specific index. Overall repairability and durability of the value proposition can also be assessed at firm level. Furthermore, repairability and durability indexes can be used as eco-design requirements and support services addressed to manufacturing suppliers. Retailers can also usefully integrate such prescriptions in the selection processes of their manufacturing suppliers and product purchasing policy. By favoring the most repairable products or excluding the least durable, they can improve their own value proposition.

Based on the business for sufficiency framework (see table 3), all these strategies participate to transform customers’ behaviors, towards less and different consumption patterns (Rethink and Reduce). As such, they have a potential to lessen the speed of material flows in the economy (Less speed). At firm-level, they enable of the traditional business model of retailers to evolve towards more sufficiency-based circular business models, that focus on slowing material and value loops (Bocken and Short, 2016; Niessen and Bocken, 2021).

Table 3: business for sufficiency framework (adapted from Niessen and Bocken, 2021)

While the implications of sufficiency paradigm on redefining consumption and business models remains an emerging topic, which is not always fully understood by practitioners (Walker et al., 2021), the upscale of business models based on a strong circularity approach also constitutes a key research gap in the literature, since it can play a role in a transition to circular economy at macroeconomic level (Aggeri et al., 2023; Hultberg and Pal, 2021). In this context, we show concrete examples that sufficiency-based business models can be upscaled and describe some of the related processes, such as upscale through the diversification of maintenance, repair or rental services (1), systematic assessment of products eligibility for sufficiency-based circular business models (2), or overall evolution of a firm’s suppliers, purchases and value proposition based on products’ repairability and durability potential.

On a less optimistic note, we show evidence of some limitations of the ongoing upscaling processes that we observed. Indeed, sufficiency-based strategies have only been adopted by a limited number of retailers. When adopted by established retailers, and despite fast and significant upscale processes, they also appear to remain minor value propositions and business models, within an overall portfolio of business models that is still linear and volume-based. Following the early debates on this issue (Bauwens et al., 2020; Niessen and Bocken, 2021), we also confirm that the design of sufficiency-based circular business models can lead to rebound effects, at least when “positive” interactions are designed with the traditional linear business models of established retailers. At last, we concur with previous scholars’ assessment of the need and complexity of assessing the material footprint and environmental impacts of some sufficiency strategies such as renting (Levänen et al., 2021; Zamani et al., 2017).

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