Switched on to value report cover graphic

Switched on to value: Powering business change

18th July 2017

This report demonstrates our latest research on the opportunities for businesses in the Electrical and Electronic Equipment sector in using resources more sustainably.

The headlines
£1.5 - £3 billion worth of electrical products are returned to retailers each year.
90% of electrical products sold are new despite half of UK households owning at least one unused product.
14Mt CO2e savings could be achieved through using resources more sustainably.
£4.4bn of financial benefit could be achieved through using resources more sustainably.

Overview

Introduction

Over the past 5 years WRAP has been working with the Electrical and Electronic Equipment (EEE) industry through our voluntary agreement, the electrical and electronic equipment sustainability action plan (esap) to pioneer innovative business practices that promote a more circular economy.

Since the first Switched on to Value report was published in 2014 we have undertaken rigorous research and worked with businesses up and down the EEE supply chain delivering projects that have generated commercial and environmental value.

Switched on to value: Powering business change draws on our collective research in the intervening period, presenting real solutions that can help business make the step change towards a circular economy.

Why do we need to make that step change?   

In the UK around 2 million tonnes of electrical and electronic equipment (EEE) is placed on the market each year. This is having a growing and significant impact:


1.53 million tonnes of waste EEE was generated in 2015 and is set to increase over the next 5 years.

 

The total lifecycle impacts of the products purchased each year are equivalent to 196 million tonnes CO2e in greenhouse gas emissions.

 

The total lifecycle energy impacts of EEE purchased in the UK each year is 1.3 million terajoules.



The need for change is clear

The EEE supply chain faces new economic, environmental and social sustainability challenges and must meet these challenges whilst growing revenue, brand image and customer loyalty.  

Challenges such as global population growth, expected to reach 9.7 billion by 2050 and rapidly increasing middle class market segments will put further strain on already stretched natural resources.

Although the sector faces challenges there are huge opportunities for growth, prosperity and business resilience across the whole supply chain.

The key to meeting this challenge head on is understanding the customer, their behaviour and the individual decisions they make throughout the lifecycle of the products they purchase.

The Solution

To tackle the issues WRAP are bringing together business leaders from across the EEE supply chain under the Electrical and Electronic Equipment Sustainability Action Plan 2025 (esap 2025).

Download the full report

Find out more about esap 2025  

Report key themes

The next steps

Join us on the journey

Embrace the opportunities presented in this report by signing up to WRAP’s voluntary agreement, esap 2025.

esap 2025 delivers benefits to business and the environment in five ways: improving durability, minimising returns, increasing re-use and recycling, resource efficient business models and supply chain resilience.

Read More

Through esap 2025, WRAP partners with leading retailers, brands, re-use and recycling organisations, charities and NGO’s, enabling collaboration around common challenges at scale, to deliver commercial and economic benefits, whilst also delivering environmental, social and resource impacts which benefit the entire EEE supply chain.

esap 2025 will use its convening power to drive change up and down the supply chain and is THE platform for developing a circular economy.

To find out more contact our industry experts to discuss the ways in which your organisation can benefit from signing up to esap 2025.

How to sign up

Download the report

The real value from circular business models

£4.4 billion of financial benefit

WRAP’s work to date with esap signatories is showing that through businesses using resources more sustainably the sector could realise £4.4 billion in financial benefit.  

Through our work with global brands and retailers we have created new value and developed innovative new business models which have generated new income streams, improved profitability and increased re-use of products.

The customer is key

Central to our work in this area is the customer and our collective understanding of their behaviours and the individual decisions they make throughout the lifecycle of the products they purchase.  

Developing business models that have customers at the heart is the essential cog in the circular business model, which not only generates significant financial returns for businesses but helps them realise their environmental and sustainability goals


Read - Value from Circular Business 

Take a look – Business model case studies

 

 

Meeting the challenge of product returns

£1.5 to £3 billion worth of products are returned each year

Our work with esap members has shown typical product return rates in the range of 5-10%. With an electrical and electronic sector in the UK worth £30 billion that amounts to £1.5 - £3 billion worth of electrical products being returned in the UK each year.

Why are consumers returning items

WRAP's consumer research confirms that 57% of households say that they return products due to fault, with a further 39% returning products because they don’t meet expectations. Our research with retailers through esap indicates much lower product fault rates and we estimate that electrical products worth in total £½ billion to £1 billion are returned each year with no fault found. 

Support for retailers to reduce product returns

We understand the strain returns have on businesses. That’s why, in partnership with esap members, we are leading ground-breaking work on reducing product damage and returns. Through our collaborative work streams we are reducing the costs of refurbishing and re-selling returned products through innovative circular business models and online outlet channels. 

 
Read - Meeting the challenge of product returns 

Evolving customer needs and behaviours

Household consumption on the increase

We predict that sales of Electrical products will increase by 19% up to 2020, with UK households already purchasing four products for every three that are discarded.

Technological evolution of products including SMART devices and a trend in upgrades by replacement, especially in mobiles and TVs, combined with annual upgrade schedules is driving this increase in consumption.

How large is the untapped market for used electrical and electronic products?

Alongside this increased consumption our research also found that there is desire for quality used products, with 50% of customers saying they would be willing to purchase such items.

With increased amounts of 12-18 month old products side lined for the latest upgraded models, retailers and brands can capitalise creating a market for second and third users, continuing to make money from their products after its first use.  

Reinventing the business model

Our research also highlighted that there is evidence of market demand for a shift towards service style business models. This is particularly attractive on appliances where retailers can sell a bundle of products for a monthly fee over a 2 year contract period. Built into these contracts are upgrades after the contract period and call out servicing. These types of models mean that retailers can attract premium markets effectively but also use the products that come to the end of their contracts by redeploying them to second and third stage users or selling them on.


The environmental case  

As well as the significant financial gains for businesses there are also significant environmental impacts that can be achieved. If the functional products we are replacing were effectively re-used, it would save over 2,700 tonnes of embodied CO2e impacts each year.

 
Read - The evolving needs of customers

The barriers to re-use and recycling

Data it’s a trust issue

WRAP predicts that over 80 million ‘SMART’ devices containing customer personal information will arise in the waste stream in 2020.

Our research suggests that two thirds of customers are concerned about personal data on the devices they have used. Over half of these would be discouraged from disposing of these items.

This is where brands, with their influence on product design, and retailers with their customer facing position, are uniquely placed to lead on the issue of data eradication and data security, adding real value to their offering to customers. If brands and retailers can present a solution to the challenges consumers face around data security and eradication it will help them build trust and increase brand loyalty amongst their customers. 

New product trends = Big recycling challenges

For the sector to make the transition from linear to circular business models it is critical for recyclers to prepare for integration. Trends for electrical products to become smaller, lighter and contain fewer precious and critical raw materials is great for resource efficiency in production but this is offset by the proliferation of new products such as; wearable tech, digital assistant devices, smart home products and drones. This coupled with increasing complexity of products, such as large home appliances with built in smart technology make the environment for recyclers a difficult one to navigate.

We believe a framework for improving recyclate is emerging. The markets for collecting and recycling WEEE is evolving leading to better material quality that enables businesses to close their material loop, leading to greater potential for the re-use of these materials in new electronic products.

A new lease of life  

There are significant barriers to the re-use of electrical products ranging from a ‘desire to buy new’, concerns around data privacy and the perceived quality of buying a used product.   

Our research suggests that 90% of electrical products sold in the UK are brand new despite more than half of UK households owning at least one unused product.

These unused products can be given a new lease of life. Our research has suggested that one way to encourage re-use is through innovative business models that promote product take back, like the Argos Gadget trade in Scheme. Based on WRAP research, 83% of households would be very or fairly interested In this type of arrangement.

Read - The barriers to re-use and recycling