Supply Chain Shakeup   //   June 4, 2024

Why Parachute is paying to recycle its customers used linens

Parachute is launching a textiles take-back program as it aims to ensure its products don’t wind up in landfills. And even though it will come at a cost to the company, the 10-year-old home goods brand sees greater value in helping customers declutter responsibly.

Parachute has teamed up with SuperCircle, a recycling technology and processing company, to launch a take-back service that will give customers 15% off for bringing in old sheets, blankets and towels. The concept is already popular with apparel companies, where customers can drop off old clothes for a discount. But fewer services exist for linens, which are bulkier to ship and process.

Founder Ariel Kaye told Modern Retail that Parachute wanted to work with a partner to help find a way to reduce the number of products being discarded into the waste stream. Customers can bring in any linens — Parachute or otherwise — to its 26 locations around the country.

“We know that there’s a serious problem with textiles winding up in landfills,” Kaye said. ”There has been more difficulty with the way [home] products are manufactured and giving them a second life, and so the textile industry has been late to the game.”

The effort lands as many more brands are thinking about the end life of their products, whether by their own company policy or by regulation. Some are offering resale services in an effort to pull in revenue, usually in exchange for a discount or coupon. But there are also Extended Producer Responsibility laws that are becoming increasingly common in Europe and the United States, which require companies to take responsibility for the end of the life of their products. The European Unions’ EPR rule requires companies that sell products in Europe to ensure that their products can be properly collected, recycled and disposed. Affected sectors include textile manufacturers, as well as companies that sell electronics, packaged goods and pharmaceuticals. Pending rules will also require member countries to have a separate collection system for used textiles. Meanwhile, in the United States, multiple states have passed EPR rules around certain products like electronics, paint and batteries.

For Parachute, a company that hit more than $150 million in revenue in 2021, the process to launch a take-back program started about two years ago. Following conversations with potential vendors and settling on Supercircle, the two companies started testing the linens take-back service using the Parachute’s own excess, which included damaged items or unsellable returns. Within one year, it generated nearly 27,000 pounds.

But despite the yield, the economics of textile recycling don’t yet work in a brand’s favor. Parachute wouldn’t share how much it is paying Supercircle, but there’s a monthly fee plus a per-unit cost based on how much it has recycled. This adds up to a new line item. Kaye, however, said the extra costs are worth it — not only as a potential re-acquisition tool but also to become an example of a company that takes responsibility for the end-of-life of its products.

“No sustainability initiatives are free, and it’s a choice that you make as an organization to do what’s right because of the world that we live in, and the implications of running a business,” she said.

A new approach

Chloe Songer, CEO and co-founder of SuperCircle, said the company has been working since 2018 to find a way to give old products new life. It already works with brands like Reformation and J.Crew and pioneered its technology using take-backs from Songer’s footwear brand, Thousand Fell. But netting a linens client is a major get because of the sheer volume of fabric involved with the operations.

“You generally have 100% cotton sheets, 100% cotton towels, 100% linen,” Songs said. “There’s a lot of fabric, right? This is a product category we really want to recycle.”

Brands send their used materials to SuperCircle’s recycling facility in Las Vegas. From there, items are dismantled into as pure of a textile as they can get, like removing any buttons, ties or layers. The facility has about 40 different feeds for materials, some of which get processed faster than others based on what’s coming back in. Then, the material is mechanically broken down into fiber-specific feeds, like cotton, silk or polyester. Output from the feeds is turned into compressed bales sent to materials factories in the U.S. Latin America or Western Europe, which in turn make recycled fibers to sell. Items that cannot be put into feeds — because they have chemical coating or too many material blends — are shredded up and down cycled into something like insulation or carpeting.

But one of the challenges for this process is the scale, Songer said. The materials factories tend to want to buy about 40,000 pounds or more of material at a time — and a single brand is unlikely to generate that much waste on its own, she said. But operating take-backs from multiple companies means that Supercircle is able to recycle more material more often.

“That’s been really important — for these kind of brands like Parachute to buy in and contribute to the system,” Songer said. “We need this cross-industry buy-in to actually reach scale.” Supercircle, which raised a $7 million pre-series A in November, facilitated the recycling of more than 1 million items in its first year of operations — but it’s goal is to process 1 million items a month.

Stuart Ahlum, co-founder and coo at Supercircle, said integrating linens into the operation meant having to figure out how to dismantle different items. But overall it’s a net benefit given how much more material can be generated. “We had to just accommodate for the larger size and heavier weights and bigger volumes,” he said. “But the upside is that like the fiber reclamation was so much bigger, which is great.”

The bigger hauls are also helpful in recouping some costs. Textile recycling is currently not a profitable endeavor. SuperCircle estimates that it currently costs anywhere from $0.60 to $1.20 a pound to process material. But it only gets $0.15 to $0.40 a pound to sell the bales, depending on what they’re made of.

“That gap between what we can get paid and the processing is what brands like Parachute, like J. Crew, like Reformation [are] paying for,” Songer said. “So this is a cost to these brands. And it’s a trade off that that they’re investing in this because they believe it’s the future.”

Why it matters

The Environmental Protection Agency estimates just about 15.8% of linens are recycled. Brian Ehrig, partner in the Consumer practice of global strategy and management consulting firm Kearney, said one of the biggest hurdles is simply getting the items in the right place to be recycled. “There are very few options for consumers that don’t involve having to do a lot of work,” he said.

Nancy Rhodes, CEO of the alterations service Alternew and circularity expert, said many customers may feel that recycling programs are little more than greenwashing. “There are absolutely take-back programs that become marketing, and nothing happens,” she said. Some programs may be unclear about where products go. Other companies may be looking for a “silver bullet” at a time when tech-heavy systems are still evolving.

But the antidote to that, Rhodes said, is transparency and education — like letting people know exactly what happens to the items being sent in. She also said companies that are transparent about what they are trying to achieve in terms of sustainability can see more results, like Neiman Marcus advertising its tailoring services.

“The consumers have demanded more from brands, and brands are really starting to focus on solutions,” she said.

Kaye said that getting the recycling effort underway requires participation from all areas of the company, from design to production. There’s also a big marketing component to help get customers aware and participating. Parachute will plug the take-back program with explanations online and in-store. It also plans social announcements and a cafe takeover in New York City’s West Village.

Songer from SuperCircle added that brands that actively educate customers about the recycling take-back programs tend to see more participation. “Consumers will create loyalty to a brand if you know that they’re recycling and they’re taking back your products when you come back,” she said. “It’s like the economy piece of the circular economy.”