The Circular Economy Nightmare: Is there a better alternative? (Yes there is)

 

The Circular Economy Nightmare: Is there a better alternative? (Yes there is)

 

Focus: Europe’s EPR (Extended Producer Responsibility) Law

Recently, Europe passed a statute which holds producers responsible for the recycling of their clothes, known as the EPR (Extended Producer Responsibility) law.

What is EPR? “Extended Producer Responsibility (EPR) is an environmental policy approach that shifts the responsibility of a product’s lifecycle to the producer, including design, take-back, recycling, and final disposal. While variations of EPR now have a worldwide presence, the European Union (EU) was the first to introduce and implement the legislative tool for EPR in Europe.   

And “the EU requires producers to undergo a compliance process. This process includes registering as a producer, following product or packaging design and labeling requirements, reporting on the amount of product or packaging placed on the market, achieving recycling targets, and funding the recycling and/or recovery at end of life.   

Here’s how it looks:

 

So part of your cost as a manufacturer will include a process for collecting and processing goods you already sold. Clearly, these costs will be reflected in the initial pricing of the item, and will go up further if costs increase. 

Once this law goes into effect (as with most laws, it is confusing, but it has been approved and will require compliance: “In September 2025, the European Parliament approved new rules under which EU countries should set up schemes that would make sure producers of clothing, accessories, hats, footwear, blankets, linens, curtains, and optionally mattresses, cover the costs for collecting, sorting, and recycling their products” ) , there probably will be a huge increase in the amount of goods that are turned in. And then what? Then what is not-- bingo! They are recycled.

What is the truth about recycled garments? 

Here’s some real news:

“Textiles collected via clothing containers consist of 55% reusable textiles and an average of 37% suitable for recycling (Boer Group figures). But how much of this is actually recycled? In reality, only 1% of all post-consumer textiles are recycled into new clothing. 12% is downcycled into something of lesser value and 87% of textile waste is pure loss. The amount of clothes that is recycled is thus much lower than the marketing campaigns of the big fast fashion chains would suggest.” 

And, what is never mentioned in all the hoopla about recycling and circularity, salvaging that small percentage that will actually become clothing takes a lot of energy and water; this is never reported.

Also, the fact that gets quietly ignored is that recycling synthetics that will take 200 years to decompose is what? A stay of execution? Recycled polyester is still—polyester. I know there are efforts to “sustainableize” synthetic fibers but we can agree, especially given the huge percentage and tonnage of production that these fibers comprise, it is not something we can depend on, or even consider, in the near future.

But the problem remains the problem.

I had a nightmare about this: I dreamt a person (or a million people) in Europe bought a polyester blouse from some cheap web site. A month later, the seams rip and she dutifully returns it for recycling following the instructions. Then, it goes through the recycling process and out comes the same blouse. Same thing happens again; it is recycled again by the next consumer. And on and on and on a thousand (million) times just like in the movie Groundhog Day; energy is used to make and recycle the blouse, microparticles are leached into the water, and the price, if we calculate all the factors, is in the tens of millions. 

Scared me—does it scare you? 

What are Lotus & Michael’s vision of the textile and clothing world we want? For us, the vision of a world where nature is worshipped in all our pursuits—manufacturing, gardening, cooking, and we don’t create schmutz .

 Natural fibers like cotton and linen as our materials, mother of pearl or stone in our buttons, no plastic in our packaging or shipping. Most important, plant-dyed fabrics that represent real sustainability in that even the dyestuffs are not chemical imitations.

And the garments are built to be multifunctional. One style can be worn on multiple occasions—to work, to garden, to dine out, to hang out at the beach, etc. Classic styling prevents “I’m tired of this,” beautiful, natural colorways are always in style. Last but not least, our embroidery makes for an individual experience. Built to last. And wear—everywhere.

Here's our Snake on a Lake dress at the beach in Sanya, Hainan Island;

 

What does all this have to do with the world of recycling as forced on makers with legislation such as the EPR? Here’s my logic:

Brands, knowing that they will have to pay coming and going for each style they produce, will produce less. What they DON’T produce will be profitable in that it will save them from the reckoning of what goes out must come back.

What will their thought process be (or what should it be)? “We need to produce less, and produce stuff that won’t come back fast, or at all.”

Sound familiar? It should. Sounds like us.

So, in conclusion, the best possible consequence of the EPR will not be its legislated compliance (if it works because it is mandatory, at what cost?), as most think, but in the reimagining of the clothing effort from produce more so customers buy more and sell more, to producing what won’t be back in the company’s hands next month—or even next year.

Just like Lotus & Michael.

Links to see product for yourself: www.lotusandmichael.com  and our lifestyle story on Youtube: www.youtube.com@lotusandmichael 

 

 Sourceintelligence.com, 4/7/2025, “What are the EPR regulations in the EU?” https://blog.sourceintelligence.com/what-are-the-epr-directives-in-the-eu

  Ibid.

  European Parliament, https://www.europarl.europa.eu/topics/en/article/20201208STO93327/fast-fashion-eu-laws-for-sustainable-textile-consumption#:~:text=In%20September%202025%2C%20the%20European,sorting%2C%20and%20recycling%20their%20products.

  Cosh.eco, 8/27/2021, “How does textile recycling work?” https://cosh.eco/en/articles/how-to-recycle-second-hand-clothing#:~:text=But%20how%20much%20of%20this%20is%20actually,87%25%20of%20textile%20waste%20is%20pure%20loss.

  Oxford Languages Dictionary, “Schmutz,” https://www.google.com/search?q=schmutz+definition&rlz=1C5CHFA_enUS1032US1032&oq=schmutz+definition&gs_lcrp=EgZjaHJvbWUyBggAEEUYOdIBCDU5MjFqMGo3qAIIsAIB&sourceid=chrome&ie=UTF-8

Target vs. Walmart (and everybody else): Is mass market retailing a zero-sum game?

 

Target vs. Walmart (and everybody else): Is mass market retailing a zero-sum game?

There have been more than enough experts who have analyzed the reason for Target’s fall from consumer grace, so let’s let that be. What do I have to add to the conversation?

 It is this: The most important issue for Target now is quo vadis—where are you going?

Why is this question more critical than the specifics of the turnaround the board and shareholders are expecting? 

The numbers show that there has been a gaping hole created between Target and Walmart; in addition, its performance has gone in the opposite direction of mass market retailers Costco and Amazon. Let’s take a quick look at the numbers:

First, Target sales growth:

 

Next, Walmart sales growth:

 

Let’s add a look at Amazon:

 

And Costco:

 

So you can see that all performance and projections are positive, except for Target. 

The percentages also belie the magnitude of the gap because Target is smaller than the other three, especially Walmart. Comparable sales outlooks for 2025 are Walmart's revenue around $681 billion compared to Target's approximately $106.38 billion (based on projections from early 2025. ) Since the customer is spending 6x the money at Walmart, every dollar of lost sales for Target is potentially six times as devastating.

There’s more bad news for Target. What is the customer mainly purchasing at Walmart vs. at Target? Here’s some category segment charts to show us:

 

Note above that the number one category for sales at Walmart is Grocery at 59.7% of total. Which means that the customer is spending $406 billion on Grocery at Walmart, which is 4 times Target’s total volume, and much more than the $24 billion spent at Target. So, since we know that consumers make purchase decisions to solve problems, and that the biggest problem is eating, Walmart is attracting many more customers on essential shopping trips. To what degree are those Target customers freely switching?

The mix of categories looks like Target is offering much more variety than Walmart. Maybe. But is that reason enough to make a separate visit to Target? And Walmart’s “General Merchandise” category is worth $168 billion, again more than Target’s entire revenue. And the apparel business , much of which is private brands, that earned Target the nickname “Tarzhay” generate only $16.7 billion. Worth a trip to Target?

Which brings us to the main question: To what degree is the consumer’s choice of mass merchants a zero-sum game? 

This question is even more relevant considering the fact that Walmart has paid maximum attention to its online D2C business and introduced Walmart+ to compete with Prime? The numbers show that the consumer has responded to Walmart’s online presence in a big way: “Walmart's global e-commerce grew by 25% in Q2 2025, while Target's digital sales grew by 4.3%.”  So the consumer is telling us that they have even less reason to go to a Target, which has been much less aggressive developing its online business.

Speaking of online, there is Amazon. Oops. Amazon knows that their Achilles Heel now is physical shopping, which they are working to solve to an extent more than we know. Nonetheless, what will that do to visits to Target?

And let us not forget Costco. 36 week 2025 revenues were $185.48 billion, up 8.2% YOY. Online sales were 17.2% of that total, or $32 billion. 

Speaking of private label, Costco has made its Kirkland brand, available since 2009, annual sales 30% of their total, which in 2024 amounted to $74.6 billion . As a separate brand, Kirkland is bigger than most retailers and many brands. This signifies a serious vote of confidence and trust on the part of consumers. Now, try to remember a Target private brand that rings a bell. Find any?

Back to my original question—to what degree is mass retail a zero-sum game? IF the customer is satisfied with the quality and price of what she purchases at Walmart-or Amazon-or Costco, what will attract her to spend extra time shopping at Target? If she is happy with her purchases, and with the selection she finds when she shops, why spend the time to go anywhere else? With the three mega-retailers cited here to compete with, how much chance does Target have to get her to spend time at their store instead of the others?

So the big question for me, and for new CEO Michael Fiddelke, comes to more than store appearance and stocking or DEI policy. Of course, those are prerequisites for successful retailing, but they will not be enough to get the customer to spend their time at Target instead of Walmart, Costco or Amazon.

I agree with Steve Dennis’ statement in a recent article, “Can Target Regain Its Mojo?” that “In this situation, better execution and fixing the leaky bucket of customer defection is absolutely necessary, but far from sufficient. Target needs big change--a fairly radical rethink--not what I refer to in Leaders Leap as ‘infinite incrementalism.’” 

Target has lost the customer’s attention to a significant degree. If you agree with me that mega-mass market retailing is to a great degree a zero-sum game, then Target needs to, after it has solved its internal problems, bid for the attention of the millions of customers it clearly has lost—that means the goal should be stopping at Target instead of the others. The competition is tough and getting tougher every day. What efforts do you think Target has to make to take customers away from the three retailers mentioned here as well as up-and-comers like Aldi and its Trader Joe’s?

What should be the plan, Target? Do you keep what’s best, your brand equity, and reinvent yourself, so consumers have a reason to shop? Straightening the tables and filling shelves won’t be enough. Check your ego at the door and do some real critical reflection on quo vadis.

A logical afterthought- could there be an upcoming marriage between Amazon and Target?