Circular Business Models in Retail and Manufacturing: Mechanisms, Drivers, and Barriers

The retail sector and its associated supply chains are characterised by inefficiencies that result in substantial waste, driven by practices such as overproduction, overstocking, and high rates of product returns. To address these sustainability challenges, Circular Business Models (CBMs) offer an alternative to the traditional linear economy by extending product lifecycles and minimising waste. Despite their conceptual appeal, CBMs remain marginal in mainstream retail and are often adopted superficially, serving reputational goals rather than driving systemic change. This study presents a systematic literature review (SLR) of 90 peer-reviewed articles selected from an initial sample of 353 retrieved from the Scopus database, spanning a range of industries including fashion, electronics, automotive, and construction. We identify seven core mechanisms enabling circularity (e.g., R-strategies, eco-design, product stewardship), five primary drivers (such as regulatory pressure and value creation), and seven categories of barriers (ranging from consumer resistance to financial and policy constraints). By synthesising interdisciplinary literature across retail and manufacturing, this review provides actionable insights for firms seeking to operationalise CBMs and offers policy recommendations to accelerate the transition toward a circular economy.