Wednesday, August 13, 2008

Tesco to Offer Shoppers Free Plastic Bags in UK Stores Only if Requested; Still Offering Plastic Bags-Only in Fresh & Easy USA Stores; No Paper Option


In somewhat of a reversal of its position up until now on the single-use plastic carrier bag issue in the United Kingdom (UK), Tesco, parent company of Fresh & Easy Neighborhood Market USA, plans to require customers in all of its UK stores to only receive the plastic grocery bags if they specifically ask for them, Fresh & Easy Buzz has learned

Tesco customers will be required to ask the checkout clerks at all of the retailer's stores in the UK specifically for a single-use plastic carrier bag to package their purchases in. Additionally, the Tesco stores will keep the plastic bags under the checkout counters rather than in a visible site as they currently are.

Tesco shoppers also will be encouraged to bring bags from home to the stores as a way to reduce the volume of the free single-use plastic carrier bags given out in the Tesco UK stores as a part of the retailer's new program.

The single-use plastic bags will still be given free to shoppers if they request them. Tesco stores in Ireland have had to charge shoppers for each plastic bag they request for a number of years because of a national law requiring a plastic bag charge on the Island.

As we reported in a series of stores earlier this year, the British government and the nation's retailers have agreed to a voluntary commitment by those retailers to reduce the number of single-use plastic carrier bags the stores use by 70% by the spring of 2009.

Thus far, plastic bag use by retailers has only been reduced by a few percentage points towards meeting that ambitious 70% goal.

Earlier this year, British Prime Minister Gordon Brown warned UK retailers that if the 70% goal isn't achieved by next spring, he would back the passage of a law that will levy a per-bag fee on each free single-use plastic carrier bag used in a retail store, similar to the bag-fee law that's been in effect in Ireland for a number of years, along with numerous other nation's, states and cities throughout the world.

According to polls in the UK, such a law seems to have widespread voter and consumer support. One recent independent poll said support for such a law is running as high as 70% among UK residents. In fact, numerous cities and towns in the nation are moving forward with their own plastic bag fee and ban legislation measures.

Single-use plastic bag ban and fee laws are being enacted throughout the world, including in the United States.

Just last month the city of Manhattan Beach, (Southern) California, where Tesco opened a Fresh & Easy grocery store on July 2, passed a complete ban on the use of plastic bags for every retail store in the city regardless of format or size, for example. Other U.S. cities that have passed either bag bans or laws thus far include San Francisco (a ban), Seattle, Washington (a fee) Palo Alto, California (a fee), Mailbu, California (a ban) and a number of others. Scores more are considering ban of bag fee legislation.

Further, a bill that if passed would require retailers to charge customers 25-cents per single-use plastic carrier bag is making its way through the California State Assembly. Other U.S. states are considering similar legislation as well.

On February 28, 2008 the London Daily Mail newspaper launched what it calls its "Banish the (plastic) Bag" campaign in the UK. Shortly after the newspaper launched its high profile campaign, a number of retailers in the country announced various measures they would take in order to reduce the number of single-use plastic carrier bags they give out to shoppers in their respective stores.

Among these retailers, the Marks & Spencer food, grocery and general merchandise retailing chain has started charging customers 5-pence for each single-use plastic carrier bag they request at one of the retailer's stores.

Additionally, general merchandise retailer Debenham's, along with the UK National Trust stores, also have enacted 5-pence per plastic bag charges to shoppers in their respective UK stores, as has the Woolworth's general merchandise/drug chain. [For additional details on UK retailers charging for single-use plastic bags, read this March 8 piece from Fresh & Easy Buzz: More UK Retailers Jump On The 'Banish The (Plastic) Bag' Campaign.]

The UK's second-largest food and grocery retailer, Wal-Mart-owned Asda, said in March it would remove the single-use plastic carrier bags from outside its checkout counters and put them behind the counters, along with only offering the plastic bags if a customer specifically requests them. It appears number one Tesco is following number two Asda's lead by now planning to do the same.

Number three supermarket UK chain Sainsbury's and number four Morrisons also responded to the "Banish the Bag" campaign less than a month after it was started in February. Neither chain has yet to say it will charge for plastic bags or that it will make shoppers specifically request them like Asda has done and Tesco now plans to do. Rather, both chains have announced a series of moves, consisting primarily of giving away thousands of free reusable shopping bags and encouraging shoppers to bring their own bags to the store.

Sainsbury's recently launched a multi-front public relations campaign--both in its stores and through the media--designed to get shoppers to bring reusable bags to the stores. We also know Sainsbury's has for some months now been considering putting the plastic grocery bags behind the counters and requiring customers to specifically request them like Asda did and Tesco now plans to do. Sainsbury's decided however to go with the massive reusable shopping bag giveaway and "bring your own bag" public relations campaign instead.

We predict Sainsbury's will soon announce it will join Adsa and now Tesco and put the single-use plastic carrier bags behind the checkout counters and require shoppers to specifically request them. Sainsbury's didn't want to do this in part because it was worried doing so would give already number one Tesco a competitive advantage. However, Tesco has now opened the door--like Asda did before it--for Sainsbury's to follow suit.

We expect Morrisons to follow Asda and Tesco's lead as well. After all, if they don't follow suit, not doing so could actually now be an environmental retailing competitive disadvantage for the UK's number three and four supermarket chains, since number one Tesco and number two Asda are going to an "ask only" single-use plastic carrier bag policy in their respective stores.

Perhaps ironically, Tesco was the only one of the "big four" UK supermarket chains--Tesco, Asda, Sanisbury's and Morrisons--that had no response in terms of making any policy changes to the Daily Mail's "Banish the Bag" campaign from February when the cmapaing started, until now, previously saying it has and is taking internal measures to reduce the number of free, single-use plastic bags it's using in its stores.

Tesco CEO Sir Terry Leahy said earlier this year, and again recently, the retailer does not plan on charging customers a per-bag fee in its stores, like Marks & Spencer and the other UK retailers are now doing.

CEO Leahy has said publicly Tesco believes in consumer choice when it comes to the plastic bag issue, and that the retailer therefore had nor has no plans to take any major choice limiting measures to restrict that consumer choice in its stores.

It's arguable and open to debate whether or not requiring customers to request a plastic grocery bag is choice-limiting or not, we believe. The choice is still there after all--a shopper just has to exercise that choice verbally, which many already do when offered the choice of paper or plastic bags at the checkout counter.

Requiring customers to have to ask for the plastic bags though is a considerable reversal from Tesco's previous position, in that it said it wasn't for any sort of restrictions at all. But change of position often shows a learning organization at work, so we certainly don't fault Tesco for doing so.

In a story on March 4, 2008 titled: "Message From Across the Pond: Tesco is Right Square in the Middle of the 'Banish the (Plastic) Bags' Campaign in the United Kingdom,"we predicted Tesco would eventually modify its single-use plastic carrier bag policy in some way in order to reduce the volume of the bags it gives out annually in its UK stores, along with needing to do so in order to help meet the 70% reduction goal agreed on by the nation's retailers and the British government. It appears it is doing so now.

Tesco and the other top UK grocery chains don't want a law requiring them to charge customers for the single-use plastic carrier bags at store-level to be passed by Parliament. Therefore, seeing spring 2009 just around the corner, and with the UK's food retailing industry being nowhere near that 70% reduction level, flexibility in terms of internal corporate plastic bag policy change is in the air.

The new policy by Tesco to only give out the plastic bags when specifically requested by shoppers allows the retailer to for now stick to its pledge to not charge for or eliminate the bags, but to still attempt to reduce its usage without denying the plastic bag option to its customers. This is essentially the same logic Asda used in adopting its "ask only" plastic bag policy earlier this year.

Tesco's Fresh & Easy USA stores offer only free plastic bags--no paper

Meanwhile, Tesco's decision to give customers single-use plastic carrier bags in its UK stores if only specifically requested, raises a very important question for its Fresh & Easy Neighborhood Market grocery chain in the U.S. states of California, Nevada and Arizona, which offer only free plastic single-use carrier bags to shoppers and not the choice of paper or plastic bags.

That question is, since Tesco PLC is on the record as saying Tesco will not eliminate or charge customers for the plastic bags in the UK because it believes in customer choice on the issue, why does it not believe American shoppers should have the choice of either plastic or paper grocery bags in its U.S. Fresh & Easy grocery stores?

Is consumer choice only a UK priority when it comes to paper or plastic bags? Why the double standard and the two radically different policies?

We think Tesco PLC and Tesco's Fresh & Easy Neighborhood Market USA need to address this issue, particularly in light of the fact the international retailer now will require UK shoppers to only receive free plastic bags in its stores if they ask for them, when in it's U.S. Fresh & Easy grocery stores shoppers don't even have the choice of requesting paper bags, but rather must except plastic or buy one of the retailer's Fresh & Easy reusable "bags for life" for 20-cents each, purchase one of its canvas shopping bags, or bring their own bags from home. At Fresh & Easy USA stores the choice when it comes to free carrier bags is plastic or plastic.

We are surprised offering only single-use plastic carrier bags has not become a major negative public relations issue thus far for Tesco's Fresh & Easy in the U.S., where the plastic grocery bag issue is getting close to if not already becoming as much of a hot button environmental issue as it currently is in the UK.

In fact, in this July 23, 2008 piece: "Plastic or Plastic: Single-Use Plastic Carrier Bag Bans in California Cities Threatening Tesco Fresh & Easy's Free 'Plastic Bag-Only' Policy,"we suggested that in our analysis Tesco's Fresh & Easy Neighborhood Market USA is just one environmental or union group away from finding itself the target of a campaign against the grocery chain for offering only single-use plastic carrier bags in its Fresh & Easy grocery markets, thus threatening the retailer's "green" or environmental image, which it has been working hard to cultivate in the media and in consumers' minds.

We believe unless Tesco's Fresh & Easy starts offering customers the choice of free paper as well as free single-use plastic grocery bags in its stores very soon that it's now even closer to having such a negative public relations campaign launched against it because of Tesco's new policy of offering single-use plastic carrier bags in its UK stores only if customers specifically request the bags.

In fact, we think Tesco's new plastic bag policy in the UK actually ups the anti on the issue for the retailer to follow suit in the U.S. and do the same at its Tesco Fresh and Easy Neighborhood Market USA grocery stores, adding the paper grocery bags at its stores in California, Nevada and Arizona, and offering the single-use plastic grocery bags only if a customer requests them.

We have no vested interest in Tesco's Fresh & Easy doing this. Rather, it's merely our analysis that if the retailer doesn't do so, it's headed for a potentially negative campaign against its plastic bag-only policy, which likely will lead to the retailer doing what we suggest anyway--but only after much damage is done.

We also believe it's anti-customer choice to not offer the paper grocery bag option along with plastic. Further, we think it's an anti-"green" retailing practice to offer plastic-only. Our preference is for reusable shopping bags, and we congratulate Tesco's Fresh & Easy Neighborhood Market USA for making available its inexpensive (20-cents each) reusable "bags for life," which the retailer offers to replace for free when they wear out, in its stores. However, until using reusable bags becomes common in the U.S.--and probably even after--we suggest that any retailer that doesn't offer the choice of paper or plastic has a serious "green" retailing problem.

It's also a very hard to understand the plastic bag-only policy if one has any knowledge of U.S. food and grocery retailing, since many consumers just plain hate plastic grocery bags enough to not shop at a store at all because they don't offer the paper bag option. Why would a start up food retailer like Fresh & Easy in need of as big of a potential customer base as it can attract exclude a potential portion of that customer base by not offering a choice between paper and plastic grocery bags?

Why Tesco already doesn't offer the paper grocery bag option in its Fresh & Easy Neighborhood Market grocery stores in America, the land of choice, is rather a mystery, since every supermarket and grocery store of note in the U.S. offers free paper and plastic grocery bags to consumers.

The only significant exception is Whole Foods Market, Inc. which stopped offering plastic bags completely in April, 2008 in its U.S., Canada and UK stores as part of its environmental retailing program. Trader Joe's, which in a number of ways Tesco modeled Fresh & Easy after, has for years used paper grocery sacks as the "default bag" in its stores, only giving shoppers single-use plastic carrier bags if they ask for them.

One key reason we believe Tesco decided not to offer paper grocery bags in its Fresh & Easy grocery stores is because the self-service checkout stands it uses in its stores (Fresh & Easy only offers self-checkout. Store clerks will assist customers to checkout if the shoppers request help)
aren't designed with slots to hold the various sizes of paper grocery sacks like traditional full-service checkout stands are.

Not offering paper carrier bags, which cost more per-bag than single-use plastic carrier bags do, also offers Tesco's Fresh & Easy a cost savings. Saving money at every possible turn--from putting Fresh & Easy stores into empty retail buildings and hiring all part-time store employees except for the store manager, to lowering overhead and expenses across the board--is a major aspect of Tesco's model with Fresh & Easy, allowing the retailer to then offer basic groceries and fresh foods in its stores at everyday prices designed to be lower than competing, larger supermarkets' everyday retail prices are.

However, we are reminded of that old television commercial about Fram brand automobile oil filters. In the ad, the spokesman, who is an automobile mechanic, holds up a Fram oil filter, looks into the television camera and says to viewers: "Use Fram oil filters. After all, you can Pay me now...or Pay me later."

In other words, the Fram oil filters cost a bit more than other brands (pay the mechanic now) but they also prevent consumers from later having to spend lots more money (pay me later) at the mechanic's shop for repairs caused by failing to use the "superior" brand of oil filter. It's a takeoff of the prevention concept as it applies to getting regular health check ups, maintaining your home...and of course taking regular care of your car so as to avoid costly repairs in the future.

Our analysis is that Tesco's cost savings by offering only the cheaper single-use plastic carrier bags rather than also offering the higher costing paper grocery bag option like nearly 100% of U.S. grocers do, is a "pay me now or pay me later" scenario.

The retailer may be saving some money at present by only offering the less-expensive plastic bags, but it could end up paying much more later in lost sales (not offering the paper carrier bag option could already be doing that), damaged brand reputation, and expensive public relations fees should one or more environmental group decide to launch a campaign against the retailer for offering only single-use plastic carrier bags in its Fresh & Easy grocery stores.

Here's a positive suggestion for Tesco's Fresh & Easy: If it doesn't want to add the paper carrier bag option in its stores, just bag all customer grocery purchases in the inexpensive "bags for life," providing them to customers for free with a reminder to bring them back and use them over and over, and get rid of the single-use plastic bags completely

The short -to- medium term overhead cost of doing so would be considerably higher than it is currently for the single-use plastic carrier bag-only policy, and even a bit higher than offering both single-use plastic and paper carrier bags.

However, over time it should end up being more economical for the retailer because at least theoretically since the "bags for life" are reusable, at some point one should see a statistical curve in which more shoppers are reusing more of the bags (bringing them back with them to the Fresh & Easy grocery stores) than the stores are giving out for free. A comprehensive in-store consumer education program could help make this behavior happen sooner rather than later as well.

In addition, imagine the public relations bonanza and potential marketing advantage such a policy could bring Tesco's Fresh & Easy Neighborhood Market USA, even "one-upping" Whole Foods Market, Inc. and it's free paper carrier bag-only policy, and Trader Joe's with its "ask only" single-use plastic bag and default paper carrier bag policy, in the green retailing battle.

Tesco will have to address its single-use plastic carrier bag-only policy at its Manhattan Beach, California store before December of this year when that city's plastic bag ban is enacted, requiring all retail stores in the city to stop offering the bags to customers.

Additionally, Tesco plans to open at least two Fresh & Easy stores in San Francisco early next year. Those stores won't be able to offer shoppers single-use plastic carrier bags either because of the city's ban on them.

Further, cities throughout California, along with a couple in Arizona, are currently debating enacting single-use plastic carrier bag bans of fee laws. These include cities where Tesco already has eisting Fresh & Easy stores and others where it has new stores planned for.

With the change in policy by Tesco in the UK, in which it will now only offer single-use plastic carrier bags to customers who ask for them, it makes sense for the retailer to do the same in its U.S. Fresh & Easy grocery stores, including at a minimum adding paper carrier bags to the mix and logically only offering the free plastic bags upon customer request. If not, it then should bag all customer orders in its inexpensive reusable "bags for life," using those bags and eliminating single-use plastic all together and not adding the paper carrier bags in its grocery stores, for the reasons we've suggested in our analysis above.

Reader Resources:

Click here for a selection of past posts in Fresh & Easy Buzz about the single-use plastic carrier bag issue in the U.S., the UK and elsewhere internationally.

3 comments:

Anonymous said...

I really can't believe they don't offer paper bags. I've asked the clerks at two Arizona Fresh & Easy's if they would get paper bags for people like me who hate plastic and don't always remember to bring reusable bags. The clerks said they have asked management but were told its company policy to not offer paper, with no exceptions. I seldom if ever shop at the stores now because they refuse to offer me that choice. The clerks said many customers ask for paper often.

Philip said...

Could someone please explain why Americans want paper bags. In UK supermarkets, they were phased out about twenty five years ago, and I have never heard one single person complain about it. Personally, I cannot for the life of me think of a reason to ask for a paper bag. They are obviously wasteful, and old fashioned to boot. So why on earth do Americans want them in 2008?

Fresh & Easy Buzz said...

Philip:

When in the UK I visit lots of supermarkets--from Tesco, Asda and Sainsbury's, to Waitrose, ect.

I notice that in the main most UK shoppers, like most U.S. shoppers, still don't bring their own bags to the grocery store. I know that's changing though a bit.

That's why Gordon Brown and company has said if the retailers' don't dramatically reduce plastic bag useage(by about 75%) they will impose a bag-fee charge law or an outright ban.

Do you think a per-bag fee would be a good idea throughout the UK, like Ireland has?

Or should the government just back off on the whole issue?

In the U.S., consumers generally deam paper bags to be more environmentally friendly than single-use plastic, largely because the bags are convenient to recycle. Pretty much all of the city and town curbside recycling programs in America take them; you just drop them in your recycling bin and they are picked up.

On the other hand, nearly zero of the same city recycling programs take the plastic bags--so they end up in the trash and filling the landfills. Also littered all over the streets and on the beaches.

In some states like California, the larger supermarkets are now being required to put plastic bag recycling bins in their stores for shoppers to return them to the store. However, most shoppers don't do it. They are lazy and like to be able to toss their grocery bags in the curbside recycling bins. Other than California only a couple other states are doing this.

There also isn't much of a plastic bag recycling system set up in the U.S. In the case of paper it's an extensive system. The last statistics were that about 50% of paper grocery bags are recycled and about 3% of plastic are in the U.S.

But I think the big thing with most Americans is that they just want a choice. Like in the UK choice is a big deal in America. Some like to use the paper bags for things at home. Others just hate the plastic bags. Then others like the plastic bags but hate paper.

For example, in big cities where people take public transportation to shop, they often like the plastic because its much easier to carry multiple bags on and off the bus. Some people like to use the plastic to line their garbage cans at home with as well.

If the UK were to ban the plastic bags, like the Daily Mirror and others are advocating, don't you think the stores would offer paper then, since they would be afraid of not having some sort of free bag for shoppers? What happens to those who don't bring reusable bags, or only have two but buy enough groceries to fill four? Or those who forget to bring their own bags to the store on a given day?

The cheap 'bags for life' seem to be the best answer--but even in the UK the majority of shoppers still don't bring their own bags to the store. Even more so in the U.S.--although more so are doing so as well.

But I think the main reason U.S. shoppers want both plastic and paper available is choice. Many supermarkets eliminated paper in the 1980's and 1990's--but nearly all of them brought paper back along with keeping plastic becaue customers complained.

I wonder if a UK chain did start offering paper along with plastic if many customers would like to have the choice?

Don't know, but would be interesting to find out.

Thanks for your comment.