Puper or Plustic: W%ut> t ie RedGImpuct on Store Costs? Hme> Wbut a! N m Study Found

aper or plastic?” That’s an easy question for shoppers. Their choices reflect personal preferences and are made long before they

reach the checkout. But for the retailer “paper or plastic” is not such an easy question.

For the retailer, the answer to that question can have a definite impact on front-end efficiency and store costs-and also on the shoppers’ image of the store. Yet many supermarkets lack the consumer and operating cost data to effectively manage the front end. Some offer the consumer a choice of bag types, some offer just one kind of bag, some make their decision on the basis of customer preference and some on the basis of cost alone. Few, however, have the information needed to make such decisions.

An activity-based costing study conducted by Willard Bishop Consulting for the American Forest & Paper Association aimed at providing solid facts on the total supply chain cost of handling grocery bags, as well as consumer preferences and attitudes toward different types of bags. This just-released study was conducted last summer in cooperation with Wakefern Food Corporation and 10 independent ShopRite stores in New Jersey. It covers:

Handling costs for wholesalers and retailers. Bag capacity impact on front-end costs. Ways to reduce bag costs. Consumer preferences. Ideal bag attributes.

The total cost of warehousing, transporting, and handling grocery bags runs from 0.56% of store sales for regular plastic to 1.25% ofstore sales for double paper, or from $87,000 to $195,000 a year for the typical supermarket.

On a cost per item purchased basis there is much less difference, the range being from just over a penny per item for regular plastic to two-and-a-quarter cents per item for double paper. This is because some bags are larger and can hold more items.

The primary cost drivers are purchase cost, bag capacity utilization, and front-end labor practices. Managing these areas can do much to minimize the bag program, and the Bishop study says that for retailers one of the most important steps in controlling costs is to ensure that baggers have the

SHOPPERS’ CHOICE Almost three fourths (72%) of consumers in Wilkzrd Bishop Consulting study preferred grocery bags with handles,

necessary training and discipline to maximize front-end handling efficiency.

“The study’s findings clearly show that disciplined management of the front end can deliver significant savings to supermarket operators,” says David Stuck, executive director of the Kraft Paper Group, American Forest & Paper Association. “Two productive ways are increasing the capacity of a bag and the elimination of double bagging. The introduction of a bag re-use program for shoppers is another effective way to reduce costs.”

transportation ABCs were negligible, nearly all of the cost being attributed to bag price and labor. In fact, the study found that labor-setting up and filling bags-accounts for more than half the ABCs of both paper and plastic bags.

The mdy concluded that supermarkets can cut bag costs s i i - candy by Wi on the number of items bang placed in bags.

“If supermarkets increased paper capacity from 6.3 units per bag to 12,” says the report, “they would reduce their annual total bag costs by $29,500. Similarly, if supermarkets increased plastic bag capacity from the current average of 3.8 to 8, plastic bag costs could be reduced by $2 1,500.”

Bishop’s activity-based costing found that warehousing and

.&*:*.\ NATIONAL GROCER 0 SPRING 1997

Not surprisingly, Bishop found that doubling bags adds tremendously to cost, from $30,000 to $40,000 a year in the average store for all paper or paper and plastic to $70,000 for double plastic. However, the study suggested some ways that stores committed to double-bagging could reduce costs by purchasing different types of bags.

bags may want to purchase super plastic bags. Super plastic improves strength but costs the retailer approximately $66,000 (per year) less in labor and materials. Similarly, stores that want the stability of paper and the ease of carrying by placing paper inside plastic may want to consider using paper bags with handles.”

The Bishop organization probed consumer preferences during 600 interviews with shoppers at the 10 New Jersey ShopRites and, to get a geographical balance, with focus groups on both the East and West Coasts. The researchers found that consumers prefer paper over plastic by 58% to 36%, with the main factors favoring paper being strength, size, and stability. Nearly three quarters (72%) preferred grocery bags with handles.

and their usefdness as trash can liners.

“For example,” it suggests, “stores doubling regular plastic

The benefits of plastic bags were seen as ease in carrying,

Attributes of the Ideal Grocery Bag (YO of Consumers in Study)

Handles 72% Strong/Durable 64% Paper 53% Plastic 10% Recyclable 12% Water resistant coating 9% Larger than current bags 6%

Almost nine out of ten of those interviewed re-use grocely bags-paper, paper with handles, or plastic-as garbage can liners, and 54% use regular paper bags and 26% paper bags with handles for curbside recycling, a purpose for which none reported using plastic.

The Bishop organization acknowledges that the paper versus plastic debate won’t be ended by its study’s findings, and comments:

“The debate really shouldn’t be about paper versus plastic at all. The debate should be about what is the most effective way to meet consumer satisfaction levels while minimizing front-end costs.”

Annual Value of Paper Bag R e u s e Program Per Store*

%of Total Bags Re-used

$ 6,174 $ 12,348 $ 18,522 $ 4,775 $ 9,550 $ 14,325 $ 3,375 $ 6,750 $ 10,125 $ 1,975 $ 3,950 $ 5,925

575 $ 1,150 $ 1,725 $ (825) $ (1,650) $ (2,475)

% of Consumers

*‘Me 14% of the Consumers

NATIONAL GROCER 0 SPRING 1997 “ 3

Study Fin& Consumer Pr$ermce For Puper Gocery Bugs

Bag preference ~y weekly HOIJSenOld Grocery spenatng

k s t h a n m %75-%125 Over $125 Fifty-eight percent of the consumers interviewed in No preference No preference No preference the stores prefer paper over plastic, while only 36%

prefer plastic. And, paper bags have a strong appeal with consumers, irrespective of their spending level.

84h 6% PA

Aavantages ot Paper ana wastic

Jeasy to carry Jused at home J used at home

Paper

(stability)

friendly

The main benefit of the plastic grocery bag is that it has a handle and is therefore easy to carry. For many consumers, the plastic grocery bag is also a free garbage can liner for the home.

Overall however, consumers said paper has more of the attributes they are looking for in a grocery bag including strength, size, stability, and can be reused.

Growing Use Of Paper Bags For Curbside Recycling

HOW do you re-use your grocery bags? (% ot Consumers in Study Re-using Grocery Bags)

Garbage CuttJside storage Tote

For the first time, the study shows that increasing numbers of consumers are using paper bags as an alternative curbside recycling bin. Paper bags also are used in the home as liners in garbage receptacles.

Liners Recycling

w Paper 0 Paper With Handle 0 Plastic

Total recovered paper: 20%. CJ