Analysis: 'Green' Retail Marketing Tesco's Fresh & Easy Neighborhood Market said last week its sales of reusable, canvas shopping bags has doubled since it introduced a budget canvas bag for 99-cents in October, proving economists throughout the world right when they say selling a given good or service for a perceived or real low price will often stimulate consumer demand for that given good or service, say beyond the level of such demand for a $2.99 canvas tote bag, which we believe was about the price of the single canvas bag available at Fresh & Easy before it introduced the additional 99-cent budget version.
Fresh & Easy says it introduced the 99-cent budget canvas bag (pictured above at left), which is made from 100% cotton and the grocer says can hold up to 100 pounds, in October, primarily to reduce the number of single-use plastic carrier bags it uses in its 100-plus small-format, convenience-oriented combination grocery and fresh foods markets in Southern California, Bakersfield, California, Metropolitan Las Vegas, Nevada and the Phoenix Metro region in Arizona. That number is high because unlike nearly all other supermarkets and grocery stores in the Western U.S. do, Tesco's Fresh & Easy does not offer paper grocery sacks along with single-use plastic in its stores. No paper or plastic option.
We think its bad business for Tesco not to offer the paper grocery sack option in its Fresh & Easy stores since all who have experience in the Western U.S. food and grocery retailing market know there is a huge segment of consumers who seriously dislike single-use plastic carrier bags, don't often or always bring reusable bags to the stores, like paper grocery sacks, and might just not shop in stores that don't offer the paper option.
Perhaps a chain that has more business than it needs could get by without offering the paper option. However, Tesco's Fresh & Easy isn't in that category, and by not offering the paper bag option, just as is the case by not accepting paper checks, manufacturers' coupons and WIC vouchers from poor mothers, along with not offering at least one or two full-service checkout lanes in the stores, the grocery chain continues to write its own prescription for doing less business than it could, in our analysis.
In the United Kingdom where Tesco is based, supermarkets don't offer paper grocery bags. The retailer brought this practice, as it did its entire British retailing model in our analysis and in the opinion of numerous Fresh & Easy employees, over with it across the pond when it created Fresh & Easy Neighborhood Market, opening the first stores in November of last year. The movement to banish the plastic bags in the UK is even stronger than it is in the U.S. though.
Paper grocery sacks also are easier to recycle in the U.S. Unfortunately few if any cities allow residents to recycle single-use plastic grocery bags in their curbside recycling programs. Therefore most of the bags end up in the regular home garbage can, thereby ending up in landfills rather than being recycled. Paper grocery bags on the other hand are excepted in all curbside recycling programs, as is paper of every type.
The good news from an environmental perspective is, at least in California, that supermarkets over a certain size (including the Fresh & Easy markets) now have recycling bins in-store where shoppers can bring their single-use plastic carrier bags to be recycled. This is by law in California. The law, which also requires these retailers to sell reusable grocery bags, was passed last June in the Golden State. Neither Nevada or Arizona have such a law at present.
Despite believing strongly it's bad business and bad "green" retailing behavior for Fresh & Easy not to offer the paper bag option and only the free single-use plastic bags, we congratulate the grocer for offering the budget reusable canvas bags for 99 cents. And they are a quality bag for that price. The cheaper reusable bags are, the more consumers' will purchase (and hopefully use) them. Of course that's the key; bringing the bags with them to the store. That's the consumer's responsibility and not the retailer's.
We think reusable bags are the ultimate goal because both plastic and paper grocery bags have environmental problems with them, although recycling of the paper bags is so much higher because the infrastructure is better in place for consumers to do so. And yes, we are aware it takes more natural resource inputs to make a paper bag than it does a thin, single-use plastic carrier bag. But the ease of recycling outweighs that in our analysis. Just look on the s and the beaches in America. You will see tons of single-use plastic carrier bags but hardly a paper grocery sack in site.
Numerous retailers -- Wal-Mart, Target, Safeway, Kroger and many others -- are now selling reusable bags for 99 cents to a couple dollars. Target has even been promoting a canvas reusable bag at 50 cents each for the last few weeks in its stores and weekly advertising circular.
It's just a matter of time, especially in California, before laws are passed throughout the U.S. (many cities already have passed them) that either ban single-use plastic carrier bags completely or in what is becoming an increasingly popular law, places a fee of from 5 cents to a quarter per bag on the plastic bags at the store. If shoppers want a plastic bag they have to pay for it under these laws.
Some city governments also are including paper bags in these fee schemes. We think that's a good idea. And we are betting we are going to see a rash of bag-fee legislation by cities and states, not just for green reasons, but also as a way to generate new funds for the cities in these bad economic times.
For example, New York City mayor Michael Bloomberg said last week he plans to initiate a law that would put a fee on single-use plastic carrier bags at every retail store in New York -- and there are a lot of them. He mentioned the revenue would not just be used for environmental programs but also for the general fund.
Earlier this year the city of Seattle, Washington placed a 20-cent per plastic-bag fee on the single-use bags used at supermarkets in the city.
The California State Legislature had a bill before it this year to levy a 25 cent per plastic bag fee at the point-of-purchase. However, because the legislature was unable to agree on a budget until months after its deadline, that bill, along with many others, was never voted on. A version of it is expected to be brought up again next year.
And of course, San Francisco has banned single-use plastic carrier bags completely at larger supermarkets and drug stores. Palo Alto, where Tesco plans to open a Fresh & Easy Market also has placed a per-bag fee on single-use plastic carrier bags. Other San Francisco Bay Area cities are either in the process of enacting plastic bag fee laws or outright bans.
Cities like Manhattan Beach in Southern California have done the same. That city's ban is set to go in effect before the end of this month. Tesco has a Fresh & Easy store in Manhattan Beach. Therefore it will have to stop using the single-use plastic carrier bags. The grocer will either have to offer free paper bags at the store or force shoppers to either bring there own bag or buy one at the store, which won't likely go over very well with most customers.
Los Angeles County will soon revisit legislation it passed last year that would put a fee on each single-use plastic bag distributed at retail. The law was passed with a provision that state if a statewide fee law isn't passed then the county would go forward with its own law. Since that state legislation wasn't acted on this year, Los Angeles County is now considering going ahead with its own county plastic bag fee law.
Whole Foods Markets stopped using single-use plastic carrier bags in its 280 stores in the U.S., Canada and the UK in April of this year, offering just paper grocery bags for free, while pushing reusable bags.
Last week in Canada, that North American nation's retail grocers' trade association proposed a five cent per single-use plastic carrier bag fee scheme because it wants to get out in front of what is going to happen anyway that the Canadian government will soon pass a bill of its own design. Numerous cities in Canada have passed and are working on passing such laws; some to ban the plastic bags completely.
Loblaws, the largest supermarket chain in Canada, announced last week it will on its own start charging shoppers for single-use plastic carrier bags in its stores. [Canada's Loblaw to charge for plastic shopping bags Markets ...]
Fresh & Easy gives away the as bags to customers at every grand opening celebration and as part of each store's one-year anniversary celebration. Since opening its first store in November 2008, the company has given away over 175,000 canvas bags, according to chief marketing officer Simon Uwins.
Uwins says the grocery chain will introduce a reusable shopping bag made out of organic materials this month. It will sell for $2.99, he says.
Fresh & Easy stores also sell what they call "bags for life." These are reusable plastic grocery bags, popular in the UK. They sell for just 20-cents each at Fresh & Easy. The retailer also says it will replace the bags anytime they wear out for no charge, which is a very good deal for consumers.
Fresh & Easy wouldn't say what the sales of reusable canvas shopping bags doubled to from. Was it from 25 bags to 50? 5,000 -to- 10,000? That would be good information to have. But it appears to be proprietary.
However, doubling sales of the reusable bags in general is certainly a good thing from a "green" perspective. But we do believe Fresh & Easy will eventually be forced to offer paper grocery sacks in its stores because of all the single-use plastic carrier bag bans and fee schemes coming down in California, Nevada and Arizona. We expect numerous new laws to hit in 2009.
Therefore, why not get out in front of such laws. We suggest either offering free paper grocery sacks as an option along with the single-use plastic bags, like all of Fresh & Easy's competitors do, or being even bolder and packing all customer grocery purchases in the reusable "bags for life" the grocer currently sells for the reasonable price of 20 cents each. Perhaps say after a year of using those cheap reusable bags as the free default bag at the stores, combined with an aggressive public education program, Fresh & Easy wouldn't have to give too many out for free after that because shoppers would bring them back with them to the store.
Doing this would be innovative, provide a point of differentiation from the competition, as well as allowing Fresh & Easy to avoid using paper sacks but still be able to offer a free alternative to single-use plastic, which the grocer is going to have to start doing in Manhattan Beach, in San Francisco, and elsewhere very soon. It would be a very "green" bagging solution.
About introducing the 99-cent canvas bags in October, Simon Uwins says: "We want to make it easier for our customers to make green purchasing decisions," said Simon Uwins, Fresh & Easy chief marketing officer. "By offering affordable canvas bag options we can encourage customers to reach for a reusable bag instead of one that might end up in a landfill."
We do sincerely congratulate Tesco's Fresh & Easy Neighborhood Market for offering the affordable canvas bags. But the problem with that statement, and with using the 99-cent canvas bag as a green marketing vehicle by using it as a news hook in this press release, is that it is to landfills where most of the single-use plastic carrier bags Fresh & Easy offers as its only free bagging option in its stores go.
In other words, by only offering single-use plastic carrier bags as the free, default bag in its stores, Fresh & Easy is encouraging the filling of landfills as much as is it is trying to discourage that behavior by offering the cheap canvas bags. That poses some risks, particularly when trying to tout the program from a "green" marketing perspective, in our analysis. It's tough to sell, and tough for consumers to buy.
Offering a second alternative like the paper grocery sacks or the "bags of life" for free would make the "green" message much more consistent and much easier to buy, in our analysis and opinion. But make no mistake about it, we do like the 99-cent canvas bags.
Interesting on offering only plastic bags. The Trader Joe's in my neighborhood takes the opposite approach. They bag purchases in paper bags unless you specifically ask for plastic. They also ask each time if you brought a reusable bag with you. Very few customers ask for plastic I've noticed. Since Fresh & Easy has taken a number of ideas from Trader Joe's wonder why they missed this one?
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