Circular Economy in the Small Domestic Appliances Market: Assessing Maturity and Driving Progress
The circular economy embodies a paradigm shift in resource management, particularly relevant to the small domestic appliances (SDA) market, including air fryers, coffee makers, vacuum cleaners, and other high-end tech devices. The transition from a linear economy—characterised by infinite consumption and finite resources—to a circular economy aims to eliminate waste and promote the continual use of resources, sharply contrasting with the traditional 'take, make, dispose' approach.
The Circular Economy Maturity Model (CEMM), developed by Ingram Micro Lifecycle (IML) and Research HQ, offers a comprehensive framework to help organisations measure and improve their circular economy efforts. The CEMM is built on five critical dimensions: Strategy and Governance, Resource Efficiency, Product Lifecycle (including returns, recovery, and recommerce), Stakeholder Collaboration, and Measurement and Reporting.
The model allows companies to assess their current level of circular economy maturity and identify the steps needed to progress toward greater sustainability. This maturity is measured across several stages, from Provisional to Optimised. Each stage highlights how returns, recovery, and recommerce processes evolve from basic to fully integrated and optimised.
A critical component of the circular economy is the integration of returns, recovery, and recommerce into product lifecycles. These processes ensure that returned or end-of-life products are repaired, refurbished, or recycled rather than discarded, maximising their value and reducing waste. In particular, recommerce, the resale of refurbished products, is a critical business strategy enabling companies to capture value from previously untapped sources.
At the Provisional level, organisations typically need more formal circular economy strategies and more awareness of circular principles. Resource use is high, product lifecycles are linear, and returns, recovery, and recommerce activities are minimal. Emerging technologies like AI, IoT, and blockchain may be present but must be more utilised. Stakeholder engagement is limited, and circular economy metrics are seldom tracked.
As organisations move to the Reactive level, they begin responding to external pressures by implementing ad-hoc initiatives to reduce resource use and extend product lifecycles. Returns and recovery activities emerge, often in response to customer demands or regulatory compliance. Recommerce activities, such as refurbishing and reselling returned products, start to take shape but remain underdeveloped.
The Structured level sees organisations developing formal strategies and governance frameworks for circular economy initiatives. Returns, recovery, and recommerce become core to business operations, with structured processes in place for repairing and reselling returned products. At this stage, systematic efforts to reduce waste and optimise resource use are supported by regularly tracking key metrics.
At the Integrated level, circular economy principles are deeply embedded in business operations. Returns and recovery processes are fully integrated into product lifecycle management, with advanced technologies such as AI and blockchain optimising the flow of returned goods and ensuring transparency throughout the supply chain. Recommerce becomes a key revenue stream, supported by established channels for reselling refurbished products.
Finally, at the Optimised level, circular economy principles drive innovation across the organisation. Products are designed for reuse and recycling from the outset, and returns, recovery, and recommerce processes are seamlessly integrated into all operations. Predictive analytics help companies anticipate market demands, optimise operations, and measure circular economy initiatives' financial and environmental impact.
Companies can employ various metrics and strategies to measure success in their circular economy efforts. Life Cycle Assessments (LCA) and Material Flow Analysis (MFA) help businesses understand their products' environmental impact and identify areas for improvement.
Key performance indicators (KPIs) at the Structured level include recommerce rates (the percentage of returned products resold), recovery efficiency, and return processing times, which measure how quickly products are reintroduced into the supply chain.
The SDA market presents significant opportunities for circular economy practices. According to Fortune Business Insights, the market is projected to grow from $193.83 billion in 2023 to $301.24 billion by 2032. Leading brands like Electrolux and Philips are already leveraging circular economy models. Electrolux’s Appliance-as-a-Service program, for instance, offers a subscription model for appliances that include maintenance, repair, and recycling, reducing waste and extending product lifespans. Similarly, Philips’ "Light as a Service" model allows businesses to lease lighting, ensuring that products are recycled or refurbished at the end of their life.
The UN 2020 Global E-waste Monitor Report underscores the urgency of these initiatives, revealing that 53.6 million metric tonnes of e-waste were generated globally in 2019—a 21% increase in just five years. With increasing waste, tighter government regulations are likely. Companies that embrace circular economy practices will meet these regulatory requirements and gain a competitive edge.
The Circular Economy Maturity Model (CEMM) provides a clear roadmap for businesses aiming to integrate circular economy principles into their operations. By advancing through the maturity levels, organisations can unlock new opportunities for innovation and sustainable growth while contributing to a more circular and resilient global economy.
Explore the CEMM in more detail to understand how it can support your sustainability goals and drive innovation in your operations. Contact us to learn how the CEMM can be tailored to your industry and business needs.