Retail

Coles’ plastic bag backflip did lead to a drop in sales, Wesfarmers boss says

Dominic Powell /

The chief executive of Coles’ parent company Wesfarmers has revealed the plastic bag ban and subsequent backflips on the issue has had an effect on the company’s overall sales, but promised the company’s weak-handed approach was necessary to help “stranded” customers.

Both Coles and Woolworths announced earlier this year they would ban single-use plastic bags from their stores come July 1, but each also tried to ease customers into the drastic switch by providing free reusable plastic bags for a few weeks after the ban date.

Woolworths stuck to its guns and started charging customers for the bags after their established grace period, but Coles’ approach was decidedly more wishy-washy. The company initially said it would start charging for its bags after its grace period, but then announced the free reusable bags would be available “indefinitely”.

However, after fierce backlash, the company then folded again, announcing it would stop the free bag hand-out by the end of this month. Speaking to media after Wesfarmers reported its annual results this week, Wesfarmers chief executive Rob Scott said from a sales point the plastic bag process was a “non-issue” but noted it did have some impact.

“We did say that when the initial change happened it did have an impact. It had an impact on our business and I’m sure for most people it would have had an impact in the first week or so. But following that, the impact hasn’t been material,” Scott said.

“So it would be wrong to assume that there’s been any sustainable or material impact from plastic bags on the sales of Coles or I’m guessing, other groups. That’s not to say it didn’t have an impact in the first few days and weeks when it was introduced.”

However, the Wesfarmers boss also reinforced the company’s reasons for backflipping on the bag ban, saying it was necessary so Coles customers didn’t feel “stranded” by the drastic policy change, saying there was “no question” customers had found the transition difficult.

“Well, we did a lot of planning around that within Coles, but I guess we were aware from feedback from our customers that a lot of our customers were struggling with that transition. Now Coles and indeed Wesfarmers is very supportive of the decision to remove plastic bags and are very committed to that. And I think if you look at Coles, in particular Coles’ credentials around recycling and their commitments going forward, they’re incredibly strong,” he said.

“But what we thought was important is to just not leave our customers stranded but to help them through this process. We’ve announced that we’ll be finishing up the provision of the reusable plastic bags by the end of this month and we think that should give customers ample time to adjust to the new process.”

Wesfarmers’ full-year profit plummeted 58% to $1.2 billion in the last financial year, largely thanks to its failings with Bunnings’ roll-out in the UK, with┬áreported impairments of $1.4 billion regarding the hardware store chain.

NOW READ: Why this small business owner has seen a 260% increase in sales thanks to the plastic bag ban

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Dominic Powell

Dominic is the features and profiles editor at SmartCompany.

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