Circular Transition in the Denim Industry. The Convergence of Business Model Innovation, Consumer Engagement, and Proximity

Research on the circular economy (CE) has expanded rapidly, yet business model innovation and consumer behaviour are typically examined as separate domains, while proximity is treated as a contextual backdrop rather than as a relational mechanism. Little is known about how these three dimensions interact in operationalising CE, particularly in sectors that are both environmentally intensive and culturally embedded. This chapter investigates how circular business model innovation, consumer engagement, and proximity jointly shape the transition from linear to circular models in the denim industry. The study adopts a qualitative, exploratory single-case design, drawing on interviews, field observations, and documentary sources collected between 2022 and 2025 at ALFA, an Italian denim manufacturer operating a central-Milan microfactory. Three insights emerge: business model innovation advances through vertical integration combined with incremental and radical innovations (regenerative cotton; denim-to-fertiliser loops); the microfactory reframes consumers as citizens, narrowing the attitude–behaviour gap; proximity enables trust and transparency while constraining scalability. The chapter offers an integrative perspective on circular transitions, challenges the incumbent/startup dichotomy, and repositions proximity as complementary to globalised networks. Denim is proposed as a paradigmatic laboratory for circular transitions in fashion and textiles.