Circular Furniture: How Vitra Circle Scales Refurb via Dealers
How do you scale refurbishment through existing dealer networks?
In this episode, Rolf Keller, Head of Circularity, explains how Vitra built its circular model around buying back, refurbishing, and reselling furniture through its dealers, saving 60 to 90% CO2 compared to new products.
Co-hosted by Heiko Tullney, Executive Director at Indeed Innovation, this conversation focuses on:
- The role of modular design and why backward compatibility across product generations matters
- How Vitra structured dealer access to circular stock, including list pricing, visibility into inventory, and revenue sharing
- The criteria behind Vitra’s buyback decisions, from product age and condition to logistics and location
The episode also covers how replacing seat covers solves stock mismatches in contract orders and how Vitra embeds circularity requirements into new product development.
This is the first episode in the series Irresistible Circular Businesses, sponsored by Indeed Innovation, the global design and innovation firm pioneering the circular economy. The series showcases business practices that deliver irresistible commercial and circular results, with examples from different industries across different R-strategies.
People
Rolf Keller, Head of Circularity at Vitra
https://www.linkedin.com/in/kellerrolf/
Heiko Tullney, Executive Director at Indeed Innovation
https://www.linkedin.com/in/heiko-tullney/
Patrick Hypscher, Circular Business Strategist, PaaS Expert
https://www.linkedin.com/in/hypscher/
Chapters
00:00 Introduction
04:52 Explaining Vitra Circle for Contract
06:23 The Three Pillars of the Business Model
08:39 Commercial Structure: Costs and Revenue Streams
10:03 How Product Design Enables the Business Model
11:51 Modular Design for Repair and Reuse
14:12 Evolution of Circularity: Classics vs. Modern Design
16:44 Embedding Circularity in Development Processes
17:46 The Role of Retailers and Partners in the System
20:50 Addressing Cannibalization and Market Potential
23:46 Service Business and Partner Incentives
25:32 The Logistics of Buy-Back and Take-Back
28:06 Partner Education and Criteria for Success
29:35 Buy-Back Models: 90% are Paid Transactions
32:17 B2B Dynamics vs. B2C (eBay/Resale)
35:36 Solving Stock Mismatches through Re-upholstery
38:00 Environmental Proof and CO2 Savings
39:43 Why Circularity is Irresistible for Vitra
41:22 Expert Reflection: A Blueprint for Success
42:59 Overcoming the Barrier of Modularity
43:51 Commercial Success and De-risking the Future
44:51 Outro
About
Vitra is a Swiss, family-owned furniture and home furnishings company that collaborates with leading designers to create products and concepts for contemporary home, office, and public environments. Its portfolio combines classic designs with new furniture and office solutions that are developed in Switzerland and used worldwide.
Within this broader design-driven profile, Vitra increasingly connects its long-standing focus on durable, high-quality furniture with circular-economy initiatives such as refurbishment and second-life programs like Circle for Contract, which return used furniture to professional use instead of disposing of it. These activities sit alongside the company’s emphasis on long-term relationships, sustainable growth, and products whose longevity supports lower resource use over their life cycle.
Further Links
Vitra Circle for Contract https://contract.vitracircle.com/
ReCommerce Playbook https://www.indeed-innovation.com/the-recommerce-playbook-from-returns-to-revenue/
Transcript
[00:00:00] Introduction
Rolf Keller: There are customers that prefer circlular products. We have large contract customers that want hundreds of task chairs, hundreds of workstations delivered with circular products. It’s conscious decisions that our end customers take and, yeah, we see it more as an addition. If you as a manufacturer don’t pursue the circular economy, someone else will do it and will cannibalize your business and you will not be part of that.
Jingle: My name is Patrick Hypscher and this is Circularity.fm, the podcast about understanding, building and managing circular business models.
Patrick Hypscher: Welcome to Irresistible Circular Businesses, this series that showcases the business practices that deliver irresistible commercial and circular results. We will look at examples from different industries across different R-strategies. Sponsoring partner of the series is Indeed Innovation, the global design and innovation firm pioneering the circular economy. In each episode, a member of the Indeed Innovation team joins me as a co-host. The first episode will zoom in on the importance of product design as the basis for circular businesses, in this specific case for refurbishment and repair. And as always, if you want to get the actionable one-pager about this conversation, sign up for the Circularity.fm newsletter. You can find it at www.circularity.fm.
Patrick Hypscher: He holds a Master’s in Business Management from the University of St. Gallen, with additional studies at Harvard and Sciences Po. His career started at Bain & Company. In 2019, he joined Vitra as a Business Development Manager. Since January 2025, he acts as the Head of Circularity at Vitra. Welcome, Rolf.
Rolf Keller: Thank you very much. Thanks for having me.
Patrick Hypscher: And today does not only mark the start of a new series. It’s also a special episode because it’s the first episode I’ll do together with a co-host. My very first co-host at Circularity.fm is a founding member and Executive Director at Indeed Innovation. He has an academic background in industrial design. His career started in exhibition design. He then worked as an industrial designer at the intersection of product development, UX, and strategy. More than 16 years ago, he co-founded Indeed Innovation with a focus on design, sustainability, and circular innovation. He helps companies on their transformation towards circular ecosystems. Welcome, Heiko.
Heiko Tullney: Hello Patrick. Thanks for having me. I’m looking forward to the discussion.
Patrick Hypscher: Wonderful. We always start with a personal question, a bit related to the subject. Heiko, what’s your favourite piece of furniture?
Heiko Tullney: Actually, I really do not have any favourite furniture. To me it’s more important that it follows the design principle of repetition, so that it matches to the interior design. That’s for me the most important part. So that could be a simple thing or a complex thing, but it should match.
Patrick Hypscher: Okay. That sounds like an episode in itself. Rolf, how is it on your end? Any favourite piece?
Rolf Keller: Yeah, I actually do have a favourite piece. I’m of course a bit biased here. So for me it’s definitely the Vitra Aluminium Chair, by Charles and Ray Eames. So it’s a design straight from the end of the 1950s. Beautiful typology of chairs — office chairs, conference chairs. And actually, it’s the chair that got me hooked to Vitra in the first place. So I even owned one before joining Vitra roughly seven years ago. And I find it still very, very much appealing. So, yeah, so from an emotional perspective, it’s definitely the Aluminum Chair. And also since we’re here now talking about circularity, it’s also a product that is highly suited for remanufacturing. If you are the original manufacturer, if you have the specific tools, if you have the specific machinery, and if you have the specific skill set to do so. So it’s actually one of the best pieces to remanufacture from Vitra. So it’s a double win for me.
[00:04:52] Explaining Vitra Circle for Contract
Patrick Hypscher: That’s a perfect opening because we of course want to talk about Vitra’s circular practices, in particular the Vitra Circle for Contract. Rolf, can you tell us a bit what that is?
Rolf Keller: Yeah, sure. So essentially the Vitra Circle brand has been around since 2017. It started with the opening of a Circle Store in Brussels. Shortly after, we had a second store opened in the Netherlands. And then, a couple of years later, here also on the Vitra Campus where I’m today. And those Circle Stores are actually retail operations, so focused very much on B2C clients. And they have the specific focus of selling circular products and services to private customers. So, essentially pre-used furniture. And, yeah, actually roughly three years ago, we asked ourselves the question: what is our solution for our business customers, so for our contract customers? Because ultimately the furniture is often very much the same for business customers, but the quantities of course are much different and much higher, or had the potential to be much higher. And especially also the ecological footprint of doing so. And that was essentially the birth of Vitra Circle for Contract as it stands today.
[00:06:23] The Three Pillars of the Business Model
Rolf Keller: And it has, I would say, three pillars. First is Circle Products. So we buy back larger amounts of furniture that is no longer needed from contract clients, really at large scale in large quantities. Bring them back to our Circle Hub, store them, and start the refurbishment process once we have new contract buyers for these kinds of furniture. And we do a very comprehensive refurbishment process. So, typically, or actually the majority of the products that we take back and buy back is actually completely dismantled. And the individual parts are cleaned. Aluminum gets repolished to get its original shine again. And then the individual pieces are, yeah, reassembled again. And we often work with reupholstery, so, and new seat covers. So you as a client, you have the option to really specify the furniture piece according to your needs in the desired colour that you’re looking for. So that’s pillar number one.
Rolf Keller: And pillar number two is the Circle Services. So we do exactly the same also for furniture that is in possession of our clients. So we bring them back either to our Circle Hub, again, refurbish them completely and bring them back to the client side, or we refurbish on site. And the third pillar is the take-back service and buyback service, which of course feeds into the first pillar. Because ultimately what we can sell as Circle Products, yeah, are furniture pieces that have been previously used by contract customers. And overall, the Vitra Circle product saves roughly 60 to 90% CO2 equivalents versus a new product, because it avoids the production of a new product. And, yeah, typically comes at a price point of roughly 20% less. So it’s also budget-friendly for our customers.
[00:08:39] Commercial Structure: Costs and Revenue Streams
Patrick Hypscher: Wow. Nice. And let me just to clarify, since we’re talking business model here. So you mentioned the three pillars. Would it be fair to say that especially for pillar one and three, it’s basically on the cost side you have the costs of buying back, taking back the furniture. Then you have the cost positions of refurbishing it, and so on as you elaborated. And then on the revenue side, you have the sales price that comes a bit with a discount in comparison to new products. That’s more or less it.
Rolf Keller: That’s more or less it. There also comes like the position of storage, of course, because you can ultimately only sell what you have on stock. But essentially that’s it. We sell our products — maybe just as an addition, we sell our products via a digital platform to our dealers. So all our dealers have access to the digital platform. They can specify the furniture, they use furniture according to their needs, wherever that is possible. Working with, yeah, new fabric covers that we attach to the products, because that’s from an environmental perspective reasonable, and ultimately makes fitting the individual pieces into the colour concept so much easier.
[00:10:03] How Product Design Enables the Business Model
Heiko Tullney: Mentioned already a lot of things across the entire system, which is great. I think it’s good to deep-dive a bit into the one or the other aspect, which is important to understand. And as you mentioned in the beginning, you have the Aluminum Chair is the one that you would like most. And I guess that’s also because of its design, which seems to be a very important aspect, especially for Vitra being a design brand. So I wonder, and how does the product design is enabling your Circle for Contract business model? What relevancy does it have, the design of it, of the product?
Rolf Keller: It has a huge impact. So I think the fundamental basis of our business model is did we have products that are worth retouching. Did we have products that are worth taking back, that we have products that are worth storing, for a certain amount of time. And especially are worth retouching because that is done by humans. And the complete disassembly process, that refurbishment process is very manual. So that’s, I think, really the fundamental basis, that we have products that are not only iconic in design in terms of that they are timeless. That products actually are out there having been in use for decades and they’re still perfectly fine to take back. That is the one point. And then there’s also the point of course about the durability, that those products are not only aesthetically still appealing in today’s world, in today’s view on aesthetics, but also that they are durable, that they are still able to refurbish. So that’s really the fundamental basis.
[00:11:51] Modular Design for Repair and Reuse
Rolf Keller: And the second basis really comes down to the product design as such. So already years and decades ago, we have switched towards modular design. And not only modular design to enable all kinds of different configurations of products, that is of course appealing to our customers. But really about thinking about modularity from a repair and reuse point of view, that furniture, even after decades, can still be repaired. That individual parts can be replaced and not entire modules. I think that’s very important. So for instance, if you think about the design of an office chair, if at some point an armrest gets broken or the mechanism inside the armrest, it’s important that it’s designed so it can actually be repaired, so that you can only actually replace the mechanics as such, or even repair the mechanics as such, and not replace the entire armrest. Or they can replace the individual pads. That allows us to do refurbishment very consciously towards the environment and also, yeah, very holistically. And I think that’s really the number one enabler.
Rolf Keller: And what is also, I would say, important in terms of the modularity is, once a product is in the market and it has been performing very well, staying in there for decades, then of course at a certain point, there is also at a certain point always the discussion about, OK, what kinds of modifications should the product undergo? And I think what we at Vitra do very well is that we do those modifications consciously in the sense that the modifications are still compatible with previous models. So for instance, if you change the mechanism or if you change certain parts of, let’s say, an armrest, that they’re still compatible with the rest of the other chairs and the individual parts. So that’s definitely a big enabler for our Circle for Contract business.
[00:14:12] Evolution of Circularity: Classics vs. Modern Design
Heiko Tullney: Let me ask for a second to get a little bit more background on that one, because it’s super interesting. I mean, the point is that Vitra has a lot of classics. I mean, that’s why everyone loves Vitra, right? Yeah. So I wonder, and maybe you can explain that a bit, because you mentioned modularity. So what is the difference then from the classics that have been designed decades ago, right, or even further away, right, with probably not necessarily circularity in mind? Yeah. And today’s designs, that the new ones, is there any differences that you see, or is some instances where you say, what just happened? Or, yeah, because that’s, modularity is a nice thing. So how, what is your take on that one?
Rolf Keller: Absolutely. I mean, there are certainly differences, and vast differences. However, I would say that for the majority of our iconic pieces, take for instance the Aluminum Chair, that was surely not designed with having in mind or having on top of the mind the aspect of circularity. However, it still can be completely dismantled and still can be really refurbished and remanufactured from the ground up. So that’s, it’s very good. However, where it differs is that this process needs to take place in our factory. So you need the specific tooling to do the reupholstery, you need the specific competencies. So those are furniture pieces that we can only truly refurbish in our Circle Hub. Whereas the new furniture pieces, they can essentially be refurbished anywhere with the appropriate spare parts at hand and with the appropriate training. So that’s, I would say, that’s the biggest difference. But of course, there are some products from the past that, yeah, have in their designs some glued upholstery. So we, it’s very few that we have left. Of course, there are certain limitations to what you can do with the furniture. So you can clean it, deep clean it, and ultimately if that doesn’t work, then you can only replace the part as such without taking off the seat cover.
Heiko Tullney: Oh, very interesting.
Rolf Keller: But fortunately, fortunately, that’s the absolute minority of our products.
[00:16:44] Embedding Circularity in Development Processes
Heiko Tullney: I see, I see. But before we get into this point, you mentioned that we can refurbish this anywhere. Very interesting. I just want to understand also, because you mentioned, okay, there are some aspects that you are probably doing differently with the new designs right now. So how did you manage, or did you manage to implement that into your development processes? Like it is, it’s a different take, right? Modularity in the past was different purposes than maybe today. How did that change your processes?
Rolf Keller: So first and foremost, every new product that is launched has circularity and compatibility towards circularity on top of the agenda. So it’s really from the ground up. All the pieces are made towards it being easy to replace individual components, being very easy to repair. Reupholstering is very easily to do without specific tooling. So that’s, yeah, it’s really that circularity compatibility that is embedded in our product development strategy.
[00:17:46] The Role of Retailers and Partners in the System
Heiko Tullney: That’s the product, the hardware side, let’s say. But this is just the component inside of your business model. So I wonder, as retailers are a very fundamental piece of your business model, how are they involved into this new system? So because typically, I guess the linear way is like, okay, they sell it into the first market. Well, that’s a typical way. To what extent has this changed or influenced these stakeholders, with having a refurbish market, with having a second market maybe?
Rolf Keller: Yeah, that’s a good question. So, at Vitra we work very closely with our partners. So we really see them as our partners in the business. And that was one of the fundamental reasons why we said, OK, if we now set up Circle for Contract, we want to make it work for our partners as well. Because ultimately our hypothesis back then was that Circle Products would be sold alongside new products. And setting up like an entirely new distribution channel and going for instance direct, didn’t seem to be a wise choice, given that we would see that the power of the combination of Circle Products along with new products. So that was important for us, and that was actually one of the reasons why we also worked very consciously to replicate certain aspects of our way we do business, and translate that into the model we work with our partners in the Circle business. So for instance, one of those aspects is first and foremost, they get full visibility into our stock. They can specify the furniture according to the needs of our customers. And another aspect is that we replicated the model of list prices in the contract area. Of course there are volume discounts, and hence we set up kind of like a separate scheme of list prices that are applicable to our end customers, but also work with our dealers, so that we have fixed Circle list prices that our dealers can work with, so ultimately they can also give volume discounts to end customers. And I think in the aftermath, this was a very good decision, to really replicate areas that work very well in the new product business, and really replicate that to the Circle business.
[00:20:50] Addressing Cannibalization and Market Potential
Heiko Tullney: I really love that approach because I think it makes you quite unique and very special considering the entire system. Because typically what we hear in the markets here and there is like considering circularity as a closed loop for oneself, maybe not thinking too much about those who are in or could be potentially included into that loop. So it’s lovely to hear that you think about your partners and retailers and involve them into the business. Still, I wonder because there is this, the one question everyone has when it comes to refurbished products or reprocessed or whatever it is, is the question like, would that maybe cannibalize our classic business? What, would I love to sell more of the new ones instead of having maybe a discount on others? So how do your partners and the retailers perceive that? Is that, how do they get that into their business as an addition, as a substitute, or how is that working?
Rolf Keller: Yeah, so our partners as well as we see it as an addition. There are customers, of course, and many customers prefer to buy new. But there are customers that prefer Circle products. We have also large contract customers that want hundreds of task chairs, hundreds of workstations, essentially, yeah, equipped or delivered with Circle products. It’s conscious decisions that our end customers take. And, yeah, we see it more as an addition. Of course, it cannibalizes to a certain extent. However, the question is also from a manufacturer point of view. And now also with the circular economy really going into and becoming quite swing, is essentially if you as a manufacturer don’t pursue the circular economy, someone else will do it. And then ultimately that will cannibalize your business and you will not be part of that. So, yeah, it was a conscious decision to pursue this business model for us.
Heiko Tullney: Well, I can only agree more than 100% to that. I think that’s a mandatory set of mind which everyone needs to consider for future markets. And it’s good to hear that this is an addition, because that’s also crucial to understand. It’s not replacing your classic business. It’s an addition for now.
Rolf Keller: It’s an addition and it’s really unlocking new client potential for us. To a clientele that we have not served before.
Rolf Keller: Yeah. So overall, it’s a win from an economic perspective as well.
[00:23:46] Service Business and Partner Incentives
Heiko Tullney: Yeah, I guess so. Still, coming back to the point because you mentioned it, a refurbishment can be done anywhere. Does that act also add a business on the service side? So I could argue and say a retailer may be afraid of losing business or saying, oh, instead of selling a new furniture, or it may be serviced anyway, anywhere or refurbished anywhere. Are the retailers also involved in that, let’s say, service business aspect?
Rolf Keller: When we sell those services of, for instance, the Aluminium Chair refurbishment and Soft Pad Chair refurbishment that we do inside the Vitra factory, and if it’s the dealer actually making the deal, then of course the dealer also participates from that sale. So we give them their fair share, because ultimately they have nurtured the lead, they have consulted the client, and they are also part of the process, because they are typically getting the chairs out of the buildings of our customers, and getting it into their warehouse. And that makes it practical for us to, whenever we deliver furniture, to actually also take back these furniture, bring them back to our factory, disassemble them, clean them, refurbish them, and ultimately, yeah, reassemble them and send them out again to the same dealer, so we can keep the same routes. So our dealers play a very active role also in the centralized services that we offer.
[00:25:32] The Logistics of Buy-Back and Take-Back
Heiko Tullney: Absolutely. And what I really love is that you are already considering in that business area the incentivization incentives for your partners, because that’s what at least makes them join into that new business area and business model and be part of it and participate in it. So maybe we can talk a little bit about the contract, because that’s, it’s even in your name, right? Not your name, but the model’s name, Circle for Contract. So, say, I wanna understand that a bit more, because I believe it’s a very important aspect of how furniture or devices can circulate. So how are the contracts for circularity set up? How do you get in touch and involve you, even the end customers, because yes, you, it’s your partners, it’s the end customers, it’s users, yeah, right. Then you want or need to get something back. How is that model being designed?
Rolf Keller: Yeah, so, also a good question. The majority of our take-backs and buybacks are actually initiated by our own sales teams that are out there, in partnership with our dealer partners. So we have a tandem model of pursuing opportunities and working together in certain projects. And typically, once we have new furnishing projects, there is already an installed base of Vitra furniture. And ultimately, at a certain point, the question comes up, so what do I do with my old Vitra furniture, because it shouldn’t go to waste. And of course, our own sales teams as well as our partners know that we take back and buy back appropriate furniture and offer them to us proactively. So we are at a point where, yeah, we do not necessarily need to go out in a targeted approach towards end customers to buy it back, because actually the buyback opportunities, they come straight out of from the markets, because we are there, our partners are there, and they are aware that we are interested in buybacks and takebacks of beautiful furniture.
[00:28:06] Partner Education and Criteria for Success
Heiko Tullney: And that’s interesting, we just say, look, they are aware of it. So how transparent is that to them? So, I mean, yeah, what I want to get more deeper in is, there’s the contract side. So once I purchase the products for Vitra, I could consider that in the contract, say, hey, maybe in 10 years, whatever, there’s an active take-back scheme in place. But how’s about those that maybe do not know about it? And how do you get in touch with them? Is that part what your partners and retailers are doing, or how do you create this awareness?
Rolf Keller: Yeah, I mean, of course we invest in partner education, trainings of our own sales team, so everyone knows roughly what are the conditions for a take-back, because obviously you cannot go out and simply buy back one chair out of the middle of nowhere. It’s logistically doesn’t make much sense. So there’s a certain set of criteria that needs to be fulfilled in order to make a take-back worthwhile. Yeah, and we invest quite some time educating our partners to really identify those areas where we can actually make a difference, where it is worth thinking about a buyback. And that, yeah, naturally makes up the opportunities for buyback that come back to us.
[00:29:35] Buy-Back Models: 90% are Paid Transactions
Heiko Tullney: Yeah, well, that’s absolutely essential and makes absolute sense. So in that regards, because you mentioned maybe two models, which is take-back and you mentioned also buyback. I wonder, is that a mix? So the typical take-back is, okay, you don’t worry, I take it back. You have the all the hassle I take. Or you can say, oh, I actively, I wanna get that back. So I actually give you money if you give that back to me. How is that model? Is it a mixed thing? Is it, how does that model work?
Rolf Keller: So I would say roughly 90% of the take-backs that we do, we actually buy back the products. On very rare occasions that we can say only, OK, we can take back the products, release the hassle on your side. Those are typically situations where the logistic side is highly cumbersome to do. The furniture is on the top floor of a high-rise building, and the lifts are very, like, tiny, and there’s quite a lot of disassembly work required. And the furniture is not in very good shape. So those cases exist. And then we offer those applicable customers and situations, then we offer to take back the furniture. But of course there are also certain situations in which we need to charge the client for taking back because of the high logistics costs. But I would say in, like, as I said, 90% of the cases we actually buy back the furniture, so the customer gets paid out. And we need to look into each case, case by case. Of course we always have like a set of strict rules of what we can spend on a certain product in a certain age, certain condition, also certain configuration. But then always there comes, in the area of, OK, where is it located, how is it stored, what’s the situation, what’s the timeline. Also, because when if it’s like well ahead, you can plan very easily. If it’s tomorrow, then of course you need direct transports, routed, which are quite expensive. So there’s a set of things that really come into play. And that needs to be rightly considered. And this is why we really treat each case by case.
[00:32:17] B2B Dynamics vs. B2C (eBay/Resale)
Heiko Tullney: That’s so nice to hear. Which brings me to a question that I personally, or always have when it comes to the business model and you talk about buyback, is that this typical very pragmatic question, say, look, if I possess some valuable furniture, maybe some Vitra classics, I maybe prefer to sell them myself somewhere. Or the other way around, we say, I have some, whatever, cheap, maybe not so fancy furniture of low value, right? Yeah. Or maybe that’s the reason where I, or that’s the point where I would love someone to buy back. Yeah. How do you deal with that? Like, how does that fit into your business model?
Rolf Keller: Yeah, so first and foremost, we only buy back from business customers for the Circle for Contract part. It’s a different thing for the Circle Stores, for the private customers. But for the business customers, we only buy essentially from organizations. And it’s such organizations by tendency do not start like looking for ways to sell products in channels such as eBay, because it would be very cumbersome to actually, yeah, list the individual products. They would need to refurbish the products probably themselves, to make them, yeah, pleasing in terms of hygiene and also aesthetics. And this is what we, by tendency, do not see because of the reasons of actually quite some work behind that. And the same, also because of liability topics and warranty topics. Whenever you sold, for instance, via eBay to a private customer, you are liable and need to have a guarantee or have a regulatory liability towards the end user. And business customers by tendency do not want that. So that only leaves up the room of selling furniture to other business customers, because then you can restrict those liabilities. However, we also don’t really see that many cases, because then you end up in the issue of lot sizes and a gap in fitting quantities. So for instance, if you have 20 chairs and you want to sell them and you would have a buyer that would be interested in having 30 chairs, then obviously there would be a gap of 10 chairs, and how would that customer actually fill that gap, for instance, if the fabric of that chair does no longer exist? So that there is a natural mismatch in that market. And also, by tendency, business customers do not look on, let’s say, the traditional areas where you would look for, where you would try to sell the products, aka eBay. They wouldn’t go there on other platforms, because they are usually used to working together with their architects, they are working together with trusted partners, with trusted dealers to ultimately make that transaction. So this is naturally not given in the contract market.
[00:35:36] Solving Stock Mismatches through Re-upholstery
Heiko Tullney: That’s an essential piece of this business model, your business model, like, it’s a B2B business, and that makes the fundamental difference to B2C and it answers a lot of questions and what makes total sense. Maybe, maybe last point, to get again to this buffer that you already mentioned. Say someone needs whatever 10 chairs, and you can’t, maybe you only have nine, or there’s, I guess the dimensions are different on, someone needs 1000 and you only have 900, right? How do you deal with that buffer? Is that part of the stock keeping so that the partners, retailers, whoever is involved, your sales force, need to deal with that and make proposals accordingly? How do you deal with that?
Rolf Keller: So there are actually two solutions to that challenge. So one is going through our trusted partners that are selling new products alongside Circle Products. There is always the option to fill that gap with new products. So that’s really one of the big opportunities for every end customer. Another one is actually the point I mentioned earlier about the reupholstery, because whenever we take back, for instance, 20 red chairs, we can always, yeah, reupholster them, get new seat covers on them to make them fit with 20 other black chairs that we bought back. And can offer them to the client seeking the 30 chairs, for instance, in the same colour combination. So that’s really one of the fundamental benefits an original manufacturer has in the circular economy, to really make use of the modularity as such, in ways where it’s actually really sensible to do, because much of this, the CO2 equivalents, they are not in the seat cover as such, but they are more in the bulkier parts and the heavier parts, such as the mechanism, such as the aluminum parts. And the seat covers, they only add the lowest point towards the overall footprint to the product. So this is how we solve it.
[00:38:00] Environmental Proof and CO2 Savings
Heiko Tullney: But that’s amazing to hear, because you also solve what I mentioned in the beginning, that I like the design principle of repetition. Even for that, you have a solution because you can just adjust it. That makes so much sense. I really love to hear that.
Patrick Hypscher: Wonderful. I wanna pick up what you mentioned towards the end and bring it back to the intro. Rolf, you talked about the CO2 equivalence, and you mentioned there is like a 60 to 90% benefit of the Circle. That also includes transport. And, wow. And do you provide a kind of a proof of that to the customers? Is it important for customers? Do they demand that? Is it for some even a driver to go for the circular solution?
Rolf Keller: Definitely. So, I would say really the majority of our customers makes a conscious decision for Circle Products. And for the large or larger projects, we can really calculate that based on the individual specifications of the client. So, for instance, if they want a chair with a new upholstery, of course it needs to be calculated based on the total amount of like spare parts, of the total material that makes the refurbished product. Also, if parts are replaced, we of course document that. And then we can provide our customers with kind of like an end bill of the CO2 equivalent that have been saved in comparison to a new product.
[00:39:43] Why Circularity is Irresistible for Vitra
Patrick Hypscher: Well, that sounds like one of the poster pieces in terms of circular business. So both benefits on the commercial side and on the circular and environmental side. That brings me to my final question. What makes Vitra Circle irresistible for Vitra?
Rolf Keller: So at first, it makes sense from an environmental perspective, but also from a business perspective. This has always been important that this is not a pilot that is worth pursuing for marketing reasons, but this, and, or, let’s say, for environmental reasons alone, but that actually, it should actually pay off as a business as such. And this is surely the case with our model. So this is important. And what makes it super attractive for us, of course, is, I think, there is not a furniture maker out there that has such a broad portfolio of iconic furniture pieces that are, yeah, that have been manufactured with that kind of dedication, with that kind of quality. And that are still aesthetically so pleasing to retouch. So our installed base is an absolute asset for us. And we really are, yeah, using that asset and making it a part of our business. And that ultimately makes it so attractive.
[00:41:22] Expert Reflection: A Blueprint for Success
Patrick Hypscher: It sounds like a real privilege, and I’m pretty sure many listeners right now are like a bit envy to what you’re doing there. But I mean, there is only one Vitra. And, Heiko, let’s try to make that a bit applicable to other companies and zoom out a bit. So, what’s your perspective here? When does refurbishment, especially through dealers and sales partners, when does that work?
Heiko Tullney: So, I think what Rolf just described is a perfect blueprint for success, to me at least. Why I assume on here is that it consists of three major piece or pivotal pieces, which is the contract. So it’s built into that business model, which is super important. As even when you purchase something, or you have a contract signed, it’s already there. So it’s in the beginning. The second part is that it’s seen and understood as a systemic approach. It’s, so it doesn’t leave anyone out, it involves everyone. So even the retailers, so they are part of it. And the last, and I think even maybe the most important topics, we’re talking business here, is in the incentives. So why should I join? It’s not like thinking about oneself, it’s thinking about who is in that system, who could participate, and why should someone participate. And that makes it a whole success case. And I think that’s absolutely nice to hear that. And yeah, as I said, I think to me, this is a blueprint.
[00:42:59] Overcoming the Barrier of Modularity
Patrick Hypscher: Definitely, definitely. And let’s turn it around. What are the barriers you need to overcome if you wanna build something like that?
Heiko Tullney: Typical barriers are, and that’s what we’ve described, what Vitra solved already decades ago, is modularity. Modularity is a barrier because it’s, in many cases it’s understood as, or more interfaces, the processes become more complex and all that stuff. But we have here the case where it shows that modularity is an enabler for a future business. It was once set up for a different purpose. And now again, second time, and its life pays off and say, look, it sure we now can use that. And it makes perfect sense and it always made sense. And I think that’s a barrier to overcome, especially for products which are not modular yet. Right.
[00:43:51] Commercial Success and De-risking the Future
Patrick Hypscher: Yeah, definitely. And to wrap it up, how do you see the contribution of such a model towards the commercial success of the company?
Heiko Tullney: I think that the most important part is what we talked about, was, is that it’s in addition to the existing business, which is so important. It’s not cannibalizing anything. It’s just adding to it, which means it could even grow or, yeah, become more important and be more relevant. It’s de-risking the future. I think that is the privileged part of it. And that’s so smart to do it. So I’m really happy to hear that.
Patrick Hypscher: Yeah. Nice. Wonderful. Now this was kind of a playback. Let’s maybe play it back to Rolf. Anything to add, any additional thoughts, listening to Heiko’s reflection?
Rolf Keller: I think Heiko summarized it perfectly well.
[00:44:51] Outro
Patrick Hypscher: Wonderful. Well, thanks for driving that business and sharing your experience with us. Thank you. And Heiko, thanks, awesome interview. Yeah, looking forward to a next one.
Heiko Tullney: Yeah, thank you, Patrick. I’m looking forward for the next one. And, well, thank you so much for sharing all the insights. That’s amazing to hear. And I bet it will have a positive influence on those who maybe had doubts. There is no reason to have doubts. It’s only do it.
Rolf Keller: Very glad to hear.
Patrick Hypscher: This was the first episode in this series Irresistible Circular Businesses in sponsoring partnership with Indeed Innovation, the global design and innovation firm pioneering the circular economy. If you want to get the actionable one-pager about this conversation, sign up for the Circularity.fm newsletter. You can find it at www.circularity.fm. Do you want to learn more how leading brands are turning returns into revenue? Then download the Recommerce Playbook by Indeed Innovation. You will find the link to it in the show notes. In the next episode, Johnson & Johnson will share how they use take-back to grow sales. Let’s drive a profitable circular economy. And please don’t forget, the most abundant renewable resource is your imagination.
Jingle: My name is Patrick Hypscher and this is Circularity.fm, the podcast about understanding, building and managing circular business models.