BrainTrust Query: Will new bag laws discourage big basket sizes?
We love laws here in Canada. The City of Toronto just introduced a new one banning the use of plastic grocery bags. Well, not actually banning them but mandating that any company that uses them in a retail capacity must charge a minimum of five cents per bag to the customer. This is meant to deter their use as they have a half-life of a million years, or something like that. I am for any initiative that helps protect the environment. But, when it comes to being environmentally friendly, we in retail industry have challenges and opportunities to consider.
Some chains such as Loblaws have now started charging for bags company-wide and their value brand, No Frills, has actually been charging for bags for decades. I presume other chains will soon jump on this as a way of conveying an environmental commitment. Good stuff for Mother Earth!
A recent visit to my local Loblaws got me thinking and I concluded that retailers will need a new strategy to cope with this trend. I love a good deal and I found myself without my usual ball of plastic bags. (I'm not as classy as my wife with her neatly folded canvas reusable bags.) Realizing that I had no bags actually convinced me to end my store visit early, hence preventing me from buying more products. As an exercise, I picked the longest line to see if I was the only one that forgot bags or had this thought process. Out of six customers in front of me, five forgot bags and only one bought a plastic bag (for five cents).
Here's the scary part: three of the remaining customers reduced their orders considerably. And even more questionable was that the cashier failed to recommend their store-branded reusable bag for 99 cents.
I'm a big believer in building the basket to build margin. The new bag policies seem to counter this. Can we save the environment and still make money?
Further, a recent study funded by the Environment and Plastics Industry Council here found that these reusable bags are hot beds of bacterial growth. Not only do I have to remember to bring bags now, but I also have to maintain and wash them as well? None of the POP material surrounding these reusable bags indicates anything about care and use. It's just one big plastic hassle.
Discussion Questions: Groceries are dependent on big orders to become profitable. Will the trend of charging for bags act as an obstacle in building bigger baskets? What strategies can grocers implement to maintain impulse buying in the store?