Getting rid of plastic bags: a windfall for supermarkets but it won’t do much for the environment

Moves by major supermarkets to stop providing free plastic bags could earn these businesses more than A$1 million a year, but may only have a small impact on the environment.

Australia’s two supermarket giants, Woolworths and Coles, have announced that their stores will stop offering their regular plastic bags within 12 months. Instead, customers will be able to buy a more durable plastic bag at 15 cents apiece, or simply bring their own.

These bags are factored into the cost of doing business for these supermarkets. There are costs beyond just the bags themselves, such as the costs associated with sourcing and negotiating with packaging suppliers, procuring them, shipping and warehousing them, and distributing them to stores only to then give them away.

Supermarket margins are already feeling the strain of price deflation. These businesses are generally making less than 6c in the dollar, so the opportunity to phase out this cost certainly makes good business sense. The table below provides an estimate of current costs.

While retailers stand to pocket this saving, the switch to stronger, multi-use plastic bag brings with it its own costs. To begin with, the bags alone cost more (9c each) and also have associated procurement costs.

However, the new scheme will immediately reduce customers’ bag usage. Being optimistic, it would be reasonable to see an 80% decline in plastic bag use as shoppers actively search for alternatives to free bags. Read more

Gary Mortimer - The Conversation - 17 July 2017