Thursday, April 17, 2008

Green Retailing Memo: Sainsbury's Rejects UK Bag-Fee Scheme; CEO Says Will Use A Customer 'Carrot' Instead of the 'Stick'

The combination of proposed legislation in the United Kingdom which would either levy a fee on each single-use plastic carrier bag a customer requests in a supermarket or ban the bags outright, along with a campaign called "Ban the (plastic) Bags," launched in February by London's Daily Mirror newspaper, has dramatically increased the plastic grocery bag use issue in the nation's supermarket and related retail industries, as well as among politicians and consumers.

British Chancellor Alistair Darling, who has the support of Prime Minister Gordon Brown, recently outlined a plan to pass legislation which would place a per-bag charge on the single-use plastic carrier bags unless the nation's retailers (especially supermarkets) take meaningful steps to reduce the bags' use.

In response, Sainsbury's CEO Justin King said yesterday: "Sainsbury's does not believe that charging for single-use bags is the only answer or that it is the most likely way to achieve lasting benefit for the environment."

"forcing customers to make a decision they don't fully understand is not the best way to achieve sustained behavior change," King added in a statement. "This (behavioral change) requires a series of actions to help customers to reduce, reuse and recycle."

Kings says beginning this weekend, Sainsbury's will test number of new initiatives and programs designed to determine what engages and helps people to reduce the number of single-use plastic carrier bags they use.

"Since last April, we (Sainsbury's) believe we've given away more free "bags for life" (inexpensive reusable carrier bags) than any other retailer," King says. "We now need to help customers remember to re-use them to make a difference on this issue and achieve a 50% reduction in disposable bag use."

Nearly all of the UK's leading supermarket chains--Tesco, Asda, Sainsbury's, Morrisons, Waitrose, Marks & Spencer and the Co-op among them--have pledged to reduce the number of single-use plastic carrier bags they use in their stores by 25% by the end of this year, over the amount the respective chain's used last year.

King has now set the single-use plastic carrier bag reduction goal for Sainsbury's to 50% by this time next year.

The primary "carrot" or rewarding mechanism Sainbury's plans to use in its campaign to reduce the use of the thin, single-use plastic carrier bags in its stores is to begin giving customers extra reward points for using their own reusable shopping bags in the stores.

The grocery chain will give shoppers 1-point on their reward cards for every reusable shopping bag used at the checkouts, including single-use plastic carrier bags from any retail store. In other words, bring your-own bag of any kind and get a reward point.

A survey of Sainsbury's shoppers by the retailer found that 73% of those surveyed wanted an economic reward for using their own reusable shopping bags in the stores, according to King. The reward points program will begin in June.

King says Sainsbury's also will hold store parking lot campaigns in which employees will hand out free refrigerator magnets and car stickers that remind shoppers to bring their own grocery bags to the store.

This isn't an original idea. Numerous supermarket chains in the U.S. already have a similar reward card scheme for customers who bring their own bags to the store, as does Tesco, the UK's leading retailer.

King also said Sainsbury's will soon begin using single-use plastic carrier bags made from 50% recycled content. The grocery chain's single-use plastic carrier bags currently in use are made from 33% recycled content.

Sainsbury's plans to monitor the progress of its reward card points scheme. King says as the chain learns what motivates shoppers more to reduce their desire for the plastic bags it plans on initiating other reward-based programs if needed.

Meanwhile, as we reported some time ago, Marks & Spencer, which is a food, grocery, soft goods and general merchandise retailer in the UK, is thus far the first and only grocery retailer in the nation to announce it will voluntarily charge customers a fee for each single-use plastic carrier bag they request. That fee will be about 10 cents per bag.

However, since Ireland has had a per single-use plastic carrier bag fee law in place since 2002, every UK supermarket chain with stores in Ireland must charge for the bags by law.

Meanwhile, not one of the UK's leading grocery chains--not even the "super green" Co-op--has said they will stop using single-use plastic carrier bags completely, like Austin, Texas USA-based Whole Foods Market will do in all its stores in the U.S., Canada and the United Kingdom on April 22, Earth Day.

Whole Foods currently has just one store in the UK, a huge 75,000 square foot natural foods' superstore in London. However, the retailer is in the process of scouting for numerous locations in the nation to open more stores.

Ironically, come April 22, the only supermarket in the UK then that will not offer single-use plastic carrier bags at all will be a branch of a United States-based grocery chain--Whole Foods Market.

Natural~Specialty Foods Memo Analysis

With all due respect to Sainsbury's CEO Justin King, he's wrong that putting a per-bag fee on single-use plastic carrier bags doesn't change consumer or shopper behavior. There's plenty of empirical evidence--not to mention common intuitive sense--suggesting it does just that.

For example, as we reported here yesterday, Ireland passed a per-bag fee law in 2002. The government now reports single-use plastic carrier bag use has decreased by a whopping 94% since that law was passed.

A similar law in the island nation of Taiwan has achieved reduction results much the same as the Irish example.

Even absent this empirical evidence, don't we all believe in the main if a shopper is offered the choice of lets say three free paper grocery bags for their grocery order at the checkout, versus the choice of paying 10 or 15 cents each for three or four single-use plastic carrier bags to package the same grocery order, said customer will most likely on average say "paper please?"

We aren't criticizing King and Sainsbury's for its actions. Not at all. Nor are we saying the retailer's program can't achieve some results. Rather, we are merely stating facts in terms of behavior change on the issue, and offering empirical and inductive evidence for such change.

Further, whether we agree with the practice or not, the fact is laws that eliminate the use of the plastic carrier bags in retail stores most certainly change behavior fast.

For example, last year the city of San Francisco, California banned the use of the bags in grocery stores over 10,000 square feet in size.

There are about 30 supermarkets of this size in the city of about 800,000. The result: overnight there was a behavioral change since customers shopping those stores will no longer have the choice of plastic. Rather, it's either free paper grocery bags or bring their own reusable bags, which should be the ultimate goal of any scheme in our analysis.

Unfortunately perhaps for them, San Francisco's hundreds of grocery and convenience-oriented stores under 10,000 square feet in size haven't seen any increase in sales from consumers leaving the supermarkets over not being able to get plastic bags at the larger stores.

Our point is not to either advocate outright bans or bag-fees. There can be unintended consequences of even those schemes, such as a dramatic increase in the use of paper grocery bags which is occurring in San Francisco since the single-use bag ban was enacted last year.

However, although paper grocery bags actually require more energy inputs to produce than the plastic bags, and an increase in their use means cutting down more trees for the paper, they also are much easier to recycle. For example, nearly every city in the U.S. has household curbside recycling programs for paper grocery bags--but few if any take the single-use plastic grocery bags for recycling.

We hope Sainsbury's is able to achieve a 50% reduction in the number of single-use plastic carrier bags its stores use through its reward points program. However, we doubt it will, based on experience and data from with supermarket chains which have been doing similar schemes for sometime.

Further, the single-use plastic carrier bag issue is a serious one. The bags are littered all over the roadside by irresponsible individuals, are filling landfills and take decades to decompose once in them, and are clogging the Pacific Ocean with a plastic bag mass which currently is the size of the continental Unites States, and stretches from Hawaii to Japan.

Grocers are part of the problem, and therefore need to be part of the solution. Increasingly we think that solution is at least charging shoppers at the store for the plastic grocery bags. And, when done, it should be the law for all types and sizes of retail stores, not just supermarkets or grocery stores.

Of course, the main cause of the litter aspect of this issue are irresponsible individuals, who dispose of the single-use plastic carrier bags improperly. We think littering fines for this behavior should be tripled.

Lastly, but far from least, are the manufacturers of the plastic bags. The technology to make faster-decomposing (in landfills) and more-rapidly composting (compost pile) plastic carrier bags has been around for some years. However, the industry, with the exception of some entrepreneurial companies, has avoided it. Instead they've preferred to use the old technology because it's more profitable to do so rather than invest in the new technologies.

Further, rather than invest significantly in these new technologies and create a more rapidly-decomposing and faster-composting bag, the single-use plastic carrier bag industry's leading companies seem to have decided to spend that money fighting bag-bans and bag-fee legislation instead. The industry seems to have left grocers to fend for themselves on the issue.

We all know that in business, when your product no longer offers more benefits than it does negatives, it becomes obsolete. That's what has happened to the traditional single-use plastic carrier bag. As a result, the focus of the issue has become how to reduce the use--and the plastic bag industry isn't even a major player in the discussion.

Recent Related Pieces From Natural~Specialty Foods Memo:

>Green Memo: "Ireland Has Reduced the Use of Single-Use Plastic Carrier Bags By 94 Percent With Bag-Fee Law; Has Exceeded EU Recycling Targets." [Click here to read.]

>Green Retailing Memo: "California State Assembly Committee to Vote On Plastic Bag-Fee Measure Monday; Many Grocers support Bag-Fee Legislation." [Click here to read.]

>Food & Grocery Legislation Memo: "California Assembly Natural Resources Committee to Consider Second Plastic Bag Bill Along With Original Today." [Click here to read.]

>Green Memo Feature: "Scientific Evidence From the Lands and From the Oceans Suggests it's Time to Solve the Plastic Waste Issue." [Click here to read.]

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