Plastic Bags, Social Change and Competition

Plastic Bags, Social Change and Competition

Tesco and Morrisons have stopped providing plastic bags for 5p – instead, the cheapest bag you can buy costs 10p (and is slightly higher quality, intended for reuse). Asda has announced it intends to do so at the end of the year. Sainbury’s still offers 5p bags (though they are also higher quality and intended for reuse). M&S and Waitrose (which have a noticeably smaller market share than the big four) still offer 5p bags.

This is a fascinating development. No major supermarket charged for bags before the government introduced the compulsory levy, yet it has taken less than three years for roughly 70% of the groceries market to voluntarily increase the price to 10p. It’s unclear whether the profits from the more expensive bags will go to good causes (my understanding is that supermarkets may not keep profits from 5p bags, but may from more expensive ones), but Tesco at least is claiming that it will.

The calculation is clearly that the better reputation from being seen to reduce plastic use is worth the added cost to consumers (at least, those who forget to bring bags). Of course, a price-conscious shopper is hardly going to trade upwards to M&S or Waitrose, but they could move to Asda or Morrisons – and those stores, at least, clearly don’t think that’s happening. On the face of it, this is quite surprising, especially for an item where the cost is so visible, and it’s also surprising that it’s the more mainstream supermarkets, with more price-sensitive shoppers, leading the way. Had M&S and Waitrose adopted the 10p bag policy first, that would have been less surprising.

Do people really care about reducing plastic so much? Are they actually much less price-sensitive than we assume (it does, perhaps, seem a bit petty to switch supermarkets on this basis)? Or is it simply that competition is so intense that any extra money paid for bags is simply recycled into a slightly reduced price for the overall shop (though this theory doesn’t hold up if the money is given to good causes)?

The intriguing thing is that, whatever the explanation, there was nothing to stop supermarkets charging 10p for bags before 2015 – but none did. Either
supermarkets, with all their customer research, simply misread the market before that time or, alternatively, social norms have changed so much in three years that consumers are now actively happy to pay above the government minimum for bags when they previously weren’t. Either one would represent a rather surprising result.

5 thoughts on “Plastic Bags, Social Change and Competition

  1. I have to say I think this is a huge success story.

    In Wales, where the 5p charge came into force in 2011, consumer support increased from 61% in 2011 to 74% in 2015. See https://gov.wales/topics/environmentcountryside/epq/waste_recycling/substance/carrierbags/?lang=en

    The summary of points in Walea (as of 2015) is

    * It is estimated that single use carrier bag use between 2011 and 2014 has declined by 71%.
    * Between 2001 and 2014 there has been an estimated overall reduction in all bag use by 57%.
    * Consumer support for the charge has increased since 2011 from 61% to 74% in 2015.
    From when the 5p charge was introduced in * October 2011 to October 2014 additional donations to good causes have been estimated at between £17m and £22m.

    Presumably the donations to good causes in England (assuming pro-rata) are more like £400m, or >£100m/year. So by increasing costs to 10p, the retailers net themselves ~£200m/year between them (which they may or may not pass on to good causes).

    I expect that if the retailers had done this themselves, the tabloids would have criticised them, as they (or at least some of them) did in England when it caught up with Wales.

    If you look at the incredible momentum behind reducing plastic usage (e.g. straws) based on things like Blue Planet, then now is a very good time to do this kind of thing. It’s much harder to criticise a nice to reduce plastic usage right now.

    1. Agree – sorry, wasn’t intending to imply it wasn’t a success story, more surprise at how much it had been!

  2. I think there’s a sort of Schelling point here. Before the levy, people would have seen a supermarket charging for bags as a rip-off. It’s not about the extra money per se it’s the principle of the thing: you’d feel they were trying to dupe you and rip you off.

    Once that principle has been broken, as the absolute amount paid is small it doesn’t influence decisions very much. As the old joke goes, now we’re just haggling over the price.

    Some of this is because people accept the underlying principle and social norms have changed in that sense. But I think in another it’s just that people had to accept the concept of ‘paying for bags’ because it was introduced in a coordinated way by law. The supermarkets couldn’t have coordinated it for competition law reasons and the first mover would risk being seen as ripping people off.

  3. PS: in terms of law leading public opinion, it’s also very interesting how banning smoking in pubs seems to have led to a much stronger sense that this ban is the right thing to do (though I haven’t seen stats on this).

    I also think that it’s likely that legalising same-sex civil partnerships led to a boost in support for both the civil partnerships themselves and indeed for same-sex marriage.

    I’m not sure in any of these cases it was because the change meant there was new evidence that changed the logic of the arguments that had been made earlier. More just that people become accustomed to the new way of doing things.

    1. It is interesting, and interesting to see times when that doesn’t happen as well: grammar schools, utilities nationalisation, free university and capital punishment all still have significant levels of support even decades after the fact. And, though it was a while ago, Prohibition never became popular! It’s really hard to predict which way it will go.

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