This unprecedented move is in response to strong backlash by customers who are struggling to switch to reusable bags.
We know that offering free lightweight plastic bags causes excessive plastic use. We also know that banning lightweight bags can increase the use of heavier plastic bags (such as bin liners). Coles’ decision brings out the worst of both worlds: giving out heavier plastic bags for free.
Free vs. fee
Consumers respond to price changes: if prices go up, demand falls. Increasing the use of reusable bags by introducing a small fee has generally been successful around the world. This includes examples from Canada, Botswana, Portugal and Ireland, where introducing a €0.15 tax on plastic shopping bags reduced usage by over 90%.
An alarming example for Coles is that of South Africa. They removed lightweight plastic bags and introduced a fee of 46 rand cents for thicker plastic bags, later reducing it to 17 cents. The initial high price point almost halved the use of plastic bags, but when the price was lowered the use of plastic bags increased over time.
Behavioural economics suggests that people are more sensitive to loss than gains, so financial disincentives for plastic bags are particularly useful. For example, it has been found that use of single-use bags can decrease substantially when a charge is framed as a tax, compared to a bonus for bringing reusable bags.
A habit of free bags
Cole’s backflip is particularly troubling from a behavioural economics perspective. The thicker reusable plastic bags were meant to cost 15c. Coles are essentially offering a 100% discount on these bags compared to rival supermarkets. This, combined with the “power of free“, means that people may take more bags than they need when shopping – increasing plastic usage.
Switching to reusable bags without an added cost means that they are conceptually very similar to the old single-use bags (but with more plastic content). This replacement will not help people to kick their old single-use habits. In fact, they may develop a new habit of using the reusable bags as single-use products. If consumers continue their old habits, this could lead to even more plastic going to landfill and entering the environment.
Coles is in a difficult situation. Not only has this decision divided shoppers, but if they decide to charge for these bags in the future, they are likely to experience another round of backlash as consumers experience another bout of loss aversion – but this time the loss will be associated with a higher quality product.
Now that the decision is made, it is important that Coles is able to evaluate the impact: How many free bags are being distributed? How many bin liners are being sold? How are the thicker plastic bags being used?
Coles also has a responsibility to take alternative measures to reduce plastic use. Financial disincentives are not always the best option (for example charging for bags can cause additional hardships for low income households). They are also not the only option for reducing our reliance on plastic bags.
A more equitable solution could be to use behavioural science to help consumers break their habits. For example, instead of giving out free plastic bags, Coles could loan their reusable canvas bags for a small fee that is refunded on return. This would encourage reuse while avoiding additional costs for low income households or backlash from customers – everybody wins.