Plastic bag ban backlash struck Coles’ sales figures, says Wesfarmers boss

IN the first public admission of the cost of the plastic bag ban changeover, the head of Wesfarmers concedes Coles took a sales hit.

Coles was hit by a dip in sales as shoppers grappled with the single-use plastic bag ban. Picture: AAP/Peter Rae

The boss of Perth-based conglomerate Wesfarmers, former Olympic rower and medallist Rob Scott, has publicly admitted for the first time that the company’s supermarket chain Coles was hit by a dip in sales in the early days of the phasing out of single-use plastic bags, as the transition caused disruption to shoppers.

And he believes other supermarkets would have encountered a similar sales hit.

Mr Scott said this afternoon some Coles customers had struggled with the transition to reusable plastic bags at the check-out, and Wesfarmers had to step in to support them and extend the period whereby these bags would be free.

From the end of this month the bags will cost 15 cents each,

“There is no question that a number of customers have found this transition difficult,” Mr Scott said.

“Initially it was quite a disruption and we found a lot of customers really struggled with the adjustment and that is partly why Coles made the decision to help provide bags to support the transition for our customers,’’ Mr Scott said today as Wesfarmers unveiled its latest full-year profit.

But that disruption had only flowed through to a minimal and one-off hit to Coles’ sales momentum over July when single-use plastic bags were stripped from supermarkets across the country by both Coles and Woolworths.

A later backflip from Coles to lengthen the time when it would hand out free reusable bags sparked a heated backlash across social media from environmental groups and Greens and anti-business activists.

Bag bans and backflips: A sign in a Coles supermarket, advises its customers of its plastic bag. Picture: AFP/Peter Parks

“Overall, it hasn’t really had an overall material impact on sales, but clearly we are supporting our customers as they make that transition,’’ Mr Scott said.

“We did say that when the initial change happened it did have an impact. It did have 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, so it would be wrong to assume there has been any sustainable or material impact from plastic bags on 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.’’

Mr Scott strongly defended Coles’ environmental credentials in the face of the social media backlash, and its decision to offer free bags while Woolworths had begun charging 15 cents for their reusable bags.

‘’What we thought was important was not to leave our customers stranded, to help them through this process. We did a lot of planning around that in Coles, but I guess we were aware from feedback from our customers that a lot of our customers were struggling with that transition,” he said.

“Now Coles, and indeed Wesfarmers, is very supportive of the decision to remove plastic bags, and very committed to that. If you look at Coles in particular, Coles’ credentials around recycling and their commitment going forward they are incredibly strong. Coles has been a leader in that space.’’

Leading US investment bank JP Morgan has previously said Coles’ about-face on charging for plastic bags was confirmation that phasing out plastic bags was having an impact on the supermarket’s sales and pre-tax earnings.

“We retain our view that the removal of single-use plastic bags is having a negative impact on sales (pressure on basket size from less pantry stocking and reduced traffic),’’ said JP Morgan analyst Shaun Cousins recently, “and having a negative impact on costs due to slower checkout processing requiring more staff training and more check-outs operating, and increased retailer contribution to promotions to drive sales.”

Wesfarmers chief Rob Scott Picture: Jay Town