Australian supermarket giant Coles told staff it would keep giving away reusable plastic bags – sparking an angry backlash from environmentalists and a hasty backflip – so it could get shoppers through checkouts quicker during its popular Little Shop toy giveaway.
Coles removed thin, single-use plastic bags from its checkouts in Australia at the start of July, but for several weeks decided to give its thicker AU15c reusable bags away for free as customers got used to the change.
Facing complaints from some customers, Coles on Wednesday said it would keep giving its ‘Better Bags’ away for free in Australian eastern states and Western Australia until further notice, and would only start charging once shoppers got used to bringing their own bags.
Environmental groups blasted the decision, saying free bags removed any incentive for customers to reuse or bring their own bags, and a day later Coles backpedalled on its decision, saying it would end the free bag offer on August 29.
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And while Coles said the extended bag giveaway had been aimed at helping customers better “transition” to the new regime, an internal memo sent to store managers and obtained by Fairfax tells another story.
The memo says the move would help stores get customers through their checkouts faster while they experienced busier than normal trading thanks to its Little Shop toy promotion.
The promotion, in which customers receive small plastic-wrapped plastic replicas of everyday supermarket products for every AU$30 (NZ$32) they spend, has been wildly popular and has even prompted a secondary resale market for the toys online.
“As you know, teams have been working hard to bring Little Shop to life for our customers and we’ve had a great response across the country,” the memo says.
“To help make life easier for our team and customers during this busy time, we have made the decision to extend the complimentary 15¢ Better Bag offer until further notice.
“This means you can focus 100 per cent on serving customers quickly through the registers. It also gives our customers additional time to form the habit of remembering to bring their own reusable bags.”
Coles will start charging for its reusable bags two days after the Little Shop promotion ends.
Giving away the plastic Little Shop toys at the same time as trying to reduce other plastic waste has been criticised by some environmentalists.
Coles managing director John Durkan told staff in a memo this week that the free bag offer was about “doing the right thing” by customers who were struggling with the transition.
“Putting our customers first is in our DNA and we must always be empathetic and responsive to their needs,” Durkan said.
Coles has been rewarding customers who bring their own bags with Flybuys points.
The bag saga has unfolded as Coles comes under pressure to perform before its parent company Wesfarmers spins the supermarket operator off in November as a separate new AU$20 billion company listed on the ASX.
Citi analyst Bryan Raymond has estimated the Little Shop promotion could boost Coles’ like-for-like sales by 50 to 100 basis points for this quarter, helping it narrow the gap with its rival Woolworths, which has beaten Coles on that measure for the past five quarters.
The current quarter will be the last sales result Coles releases before the spin-off, influencing how investors value its shares when they hit the market.
Woolworths has also made the switch to reusable bags, and has been charging customers for reusable bags since July 8.
JP Morgan analyst Shaun Cousins slashed his earnings guidance for Woolworths because of the move, predicting it would lead to customers buying fewer items and slower checkout times.
Single-use bags are now banned at supermarkets in the Australian states of Queensland, Western Australia, South Australia, Tasmania, ACT and Northern Territory. The state of Victoria plans to ban them by the end of 2019, leaving New South Wales as the only state or territory not to act on the issue.
Coles is owned by Wesfarmers, which also operates Bunnings and Kmart.
– Sydney Morning Herald