Cost of living crisis could hit reusable packaging, Tesco warns

Supermarket chain Tesco has warned that the current cost of living crisis presents a potential obstacle to retailers looking to run reuse initiatives.

Tesco sold prefilled items in reusable packaging in designated aisles during the trial which took place from September 2021 to June 2022

Tesco ended its nine-month-long reusable packaging trial with Loop, a reuse platform run by waste firm Terracycle, in June and published a report on its “shared learnings” yesterday (15 August).

Launched in 2021, the trial saw customers pay a deposit for an item which was refunded when the packaging was returned (see letsrecycle.com story).

The supermarket claims the pilot, alongside another trial run online the year before, “proved” shoppers wanted to buy items in reusable packaging. Tesco sold more than 80,000 products across two years of trials.

However, reusable packaging often costs more to produce ‘per unit’ than disposable packaging, according to the report.

The pilots also showed the cost of cleaning and prefilling reusable packaging could cost more than the product inside. The retailer added that it knows “most customers understandably do not wish to pay more for products in reusable packaging”.

And, Tesco claims the investment required to deploy reuse at scale is “significant”, as it requires retailers to operate with new processes and manufacturers to create new production lines.

The cost of collection, cleaning and refill needs to fall, Tesco says, as “the current cost of living focus brings to the fore the need to control spending and ensure competitive pricing on refillable, durable packaging solutions.”

There is also a need for better labelling and communication, “to explain that a proportion of the price is a fully refundable deposit.”

Radical change

Giles Bolton, Tesco’s responsible sourcing director, said it was clear from the trials that a ‘prefill’ model of reuse had “strong potential” and could offer customers “the ease and convenience they expect”.

Reuse represents a radical change in the shopping experience

  • Giles Bolton, Tesco’s responsible sourcing director

However, he said there was still “much more” to do. “Specifically, work is needed to encourage a cultural and behavioural shift from customers,” he added.

“Reuse represents a radical change in the shopping experience and while customers support the environmental principle, industry, policymakers and supply chains will need to work hard and work collectively to support and incentivise customers to adopt new shopping behaviours, while ensuring they don’t come at a cost to shoppers.”

Tesco said the pilots confirmed that prefill shopping was most popular among a “small percentage” of eco-conscious shoppers. The supermarket claims its surveys show the public is “yet to fully appreciate the differences and benefits of reuse over recycling”.

Scaling reuse

Other key areas identified by Tesco to focus on to deploy reuse at scale across the UK include simplifying the customer experience.

To do so, Tesco suggests it could remove the need to download a stand-alone app to receive a refund of deposits, speed up deposit refunds and ensure the shape of packaging is “optimised for transport and to fit conveniently into the average UK household,” among other things.

Pilot

In both the online and in-store pilots, a refundable deposit of between 20p and £1 was paid for each item of reusable packaging to encourage customers to return it.

During the trial, customers returned their packaging at an instore collection point

The deposit was refunded in full via the Loop app when customers returned the packaging, either through a courier or directly to an instore collection point.

The returned packaging was then cleaned, refilled and made available for the next customer.

Related link
Sharing learnings on reusable packaging report

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