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The fashion industry is renowned for its negative impact on the environment. To mitigate the adverse effect, some companies have recently adopted the circular economy model, which introduces used clothes in good condition back into the cycle through trade-in programs. Giving used garments a second life helps reduce the company's carbon footprint and waste. It also provides consumers with an of ordable and sustainable option, which is consistent with the growing trend of eco-conscious consumerism. In this study, we aim to explore consumers' perceptions of trade-in programs in the fashion industry. We also examine how companies can leverage these programs as a powerful strategic tool to build brand trust and brand eject among younger generations (such as Gen Z and Millennials). This research draws upon different literature streams on signaling theory, brand trust, and brand effect. Our findings hold significant value for managers who wish to create strategically effective trade-in programs as part of their Corporate Social Responsibility initiatives.
Keywords: trade-in programs, signaling theory, circular economy model, brand trust, brand effect, Generation Z, Millennials
INTRODUCTION
The textile industry is notorious for its significant negative impact on the environment. The production of textile products involves consuming vast amounts of water, energy, and chemicals, making it one of the most polluting industries globally (Niinimäki et al., 2020). In particular, the fashion industry's energy-intensive production methods generate 10% of global carbon emissions and 20% of water waste, making it an important contributor to climate change. The carbon emissions from fashion are even higher than those from air transportation and maritime shipping combined (European Parliament, 2020). Therefore, it is essential for fashion companies to consider the environmental impacts of their operations and take action to mitigate the adverse effects, creating a more socially responsible industry.
The United Nations Industrial Development Organization defines Corporate Social Responsibility (CSR) as "a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders" (United Nations Industrial Development Organization). Many companies have increasingly adopted CSR as a core business practice. In 2022, according to Governance & Accountability Institute, Inc. (G&A), a well-known consulting firm focusing on corporate sustainability and ESG, 98% of the S&P 500 companies published a sustainability report, compared to 92% in 2020 (G&A,...