Thursday, February 28, 2008

Ditch those plastic bags and make us more profit.

So Marks & Spencers are doing their bit for the environment and starting to charge for plastic bags; how decent of them, how noble of them, how blah blah blah. Okay let's look at this in a little more detail.

As it stands the big stores don't charge for the cheapo bags so the cost of purchasing them has to be absorbed by the company as part of the profit it makes on the goods it sells. This isn't too bad as they're pathetically cheap to buy in bulk and spreading the cost is probably less then a thousandth of a penny across the range. Still it is a loss, but what can you do? Well you could start charging for them, but you stand the risk of alienating your customers. So let's call it an environmental action, charge 5p per bag and give the profits to some eco-charity; who could complain about that?

Well note the bit about giving the profits to charity, so instead of the costs being absorbed indirectly they're now being paid for directly. This means the company makes more money. It gets better when you consider how people re-use these bags for various jobs; bin-liners, storage, keeping your muddy boots separate from other things. What are people going to use instead? the answer is bin-liners and a quick Google shows an increase in sales by around 70% in those areas now charging for carrier bags. So instead of getting plastic bags for free we're paying for them instead and while it can be argued that overall less will be used, it's still more then the pious companies would have us believe is being saved.

To put it simply Marks and Spencers will be making a profit by no longer absorbing the cost of carrier bags and from the increase in sales of binbags by inconveniencing their customers while at the same time making them feel happy about it all. Someone deserves a bonus.

For those who ask 'Why don't we use paper bags' the answer is 1) they're more expensive and 2) they take up a greater volume. However now we're paying directly for them and use is likely to go down expect them to be brought in after a year or two.

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