A woman chooses to practice zero-waste shopping through stores that leverage a circular supply chain, like Loop, a new shopping platform that helps reduce waste.

August 19, 2019

A Shift to Circular: How Loop is Leading Supply Chains to a More Sustainable Future

Imagine using your favorite shampoo and, instead of throwing the bottle into the trash or recycling it when you're done, you place it in a no-hassle package to return to the store for free — along with containers and any piece of packaging that arrived with your ice cream, dishwasher detergent and pasta.

That's the idea behind the new Loop shopping platform, which has harnessed the internet to bring the old milkman concept to a variety of consumer products and advance the idea of an environmentally friendly, "circular" supply chain.

Just as the milkman delivered his product directly to customers' doorsteps, then picked up the glass bottles to refill again, Loop allows customers to buy groceries, household goods and personal care products, then return the items' durable containers for cleaning, sanitizing and reuse.

The "circular shopping platform," which emerged from Trenton, N.J.-based waste recycling and reuse firm TerraCycle, has joined with several popular consumer brands — Crest, Colgate, Tropicana, Seventh Generation, The Body Shop, Tide, Cascade, Häagen-Dazs and Gillette, among others — to bring the practice mainstream.

Rather than the typical one-way "linear" supply route, with products in single-use containers flowing from manufacturer to store to consumer to landfill or recycling facility, the circular model aims to save energy and other resources by reusing durable packaging.

Loop customers receive their orders in a tote, which they can use to return the containers by requesting free pickup. They pay small refundable deposits for the tote and containers.

While consumers can sign up and order through Loop's own store, the company's retail partners will play an integral role in expanding the model. Ice cream, pasta, body lotion, detergent and other products arrive in branded containers that Loop later cleans and sanitizes for reuse for each specified product.

"Loop is the first-ever global platform to partner with major brands and retailers" with the objective of shifting from a "disposable" to a "durable" supply chain, where manufacturers own their packaging in the long term. The consumers don't own the package — instead just the product," said TerraCycle founder and CEO Tom Szaky, who announced Loop early this year at the World Economic Forum in Davos, Switzerland.

"For years, TerraCycle has been focused on eliminating the idea of waste and Loop is the next iteration of that concept," he said. TerraCycle had worked with many of its Loop partners through the company's other recycling programs.

Szaky, whose company made its mark more than a decade ago by getting its "worm poop" plant food into big-box retailers, started developing the Loop idea at the 2017 Davos forum, where various leaders focused on the global waste crisis. At that same event, consumer products giant Procter & Gamble, which became a Loop founding partner, announced the first entirely recyclable shampoo bottle made with 25 percent of plastic collected from the beach.

It took "quite a bit of effort" to sign on Loop's founding partners — P&G, Unilever, Nestlé, Mars and PepsiCo. — "as the model requires a major investment of money, time and other resources," Szaky said. (Those five companies landed on Greenpeace's list of the world's 10 largest plastic polluters last year, which might have motivated them to improve their current practices.)

"Once these companies joined, they set the stage, and since then it has been surprisingly easy to bring partners on board. The same happened with retail partners; it was quite a process to get our first founding retailer partner: Carrefour," the global retailer based in France," Szaky said.

Since then, Loop has recruited British multinational retailer Tesco, Canadian supermarket chain Loblaws, U.S. grocer Kroger and Walgreens drugstore chain. The company, which initially launched its service in Paris and the U.S. Mid-Atlantic states, has expanded into New England and plans to reach the western United States and launch in Canada, Germany, Japan and the United Kingdom in 2020.

"The key reasons for joining are the ability to innovate for consumers, enabled by shifting ownership of the package from the consumer to the manufacturer, and the benefit of solving for the waste that disposability creates," said Szaky, who runs TerraCycle as a "triple bottom line business" focused on people, planet and profit.

Loop's retail partners are integrating Loop into their e-commerce sites, and later will work the concept into their physical retail environments, he explained. "In these models, the Loop retailer purchases products from the manufacturers and sells them to the consumer. Partners also support recollecting the used packaging through a variety of methods, from direct pickup from consumers to store drop off."

Digitization is key for implementing circular solutions such as Loop, because it provides convenience for customers with easy access from anywhere, he said.

Procter & Gamble's chief sustainability officer, Virginie Helias, wrote in a 2018 World Economic Forum article that the environment "will soon be stressed beyond capacity," and tied "excessive consumption" to a surge in economic losses tied to extreme weather over the previous decade.

"We urgently need business models that support resource-efficient solutions. To make this happen, we need to partner across industries," she wrote. "Business-as-usual is no longer enough. Being a force for change and part of the solution is imperative for business survival."

Loop and its partners may be blazing a circular trail of sorts. But they aren't alone in promoting and trying this supply chain model.

Levi Strauss, for example, which last year announced an expansive climate action strategy to cut carbon emissions in its facilities, allows consumers to take any brand of used jeans to its stores for recycling into building insulation.

A study from McKinsey and the Ellen MacArthur Foundation found that circular economic approaches, including recycling materials in closed loops, could boost European resource productivity by 3 percent, save 600 billion euros a year and generate 1.8 trillion euros in other economic benefits.

Most of the 28 industries examined could improve performance and lower costs by adopting three or four of six different types of circular activities, the study found: keeping materials in closed loops; removing supply chain waste; sharing products; switching to renewable energy; delivering goods or services virtually; and replacing old materials with advanced, renewable substances or technology.

Fifteen industries, including construction, transportation, mining and numerous types of manufacturing — food, beverage and tobacco products, plastics, machinery and electronics among them — could keep components and materials in closed loops through activities like recycling, remanufacturing and green organic waste handling, according to the study, which focused on Europe.

When the reported was published in 2015, for instance, 66% of UK sewage sludge was being treated in nearly 150 anaerobic digestion facilities, and another 175 plants were producing bioenergy from solid waste. The paper also noted several major companies, including Dell, Caterpillar and Veolia, that had embraced loops of some sort.

Circular-economy proponents prioritize "inner" loops, like remanufacturing and reuse, while considering recycling a loop of "last resort." As the Sense & Sustainability blog notes, inner loops include refurbishing a product so it's like new, reusing goods from a thrift store and — a particularly efficient model that car-sharing services use — maintenance and heavy use of a product to reduce the overall numbers needed.

With e-commerce, robotics and related advanced technologies reinventing supply chains and retail, circular models like the Loop platform could add extra appeal for brands and retailers aiming to win consumers worried about the environment and climate change.

TerraCycle's Szaky sees Loop playing a significant role in developing the circular economy. He expects the venture, a TerraCycle subsidiary, to profit as it scales up.

"I hope that Loop paves the way for the future of consumer product supply chains and that durable packaging becomes the new normal. I do not think this is a novelty. It is a necessity, as we are in the midst of a global waste crisis," he said.

"We've had a very positive response from the public. I think the world is ready for Loop because consumers and manufacturers have come to realize that recycling is critically important to help a symptom, but it is not going to solve waste at the root cause."

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