Global warning: Trade groups around the world warn of deposit return damage to small stores

Convenience stores from America to Australia are being damaged by deposit return schemes experts have warned, as the recycling initiative edges closer to UK shops.

Retail Express spoke to trade organisations, publications and recycling groups from countries with deposit return schemes ahead of the Scottish government’s rollout. Just under two thirds of respondents said the system was harmful to convenience retailers.

Issues included increased losses for small outlets, hygiene issues, space, logistical problems, lost business to multiples and higher collection costs.

Describing the impact of the schemes in different states in America, Jeff Lenard, vice president of strategic initiatives at US convenience trade body NACS told Retail Express: “By far the biggest challenge is for convenience stores with limited resources and space that also sell food to go. It greatly complicates operations in a small location and also slows down transactions for other customers.”

Nele Peil, general manager at the Estonian Retailers Association, which represents large multiples, said: “Stores with high rates of bottle returns (mainly larger stores) are able to cover more of their costs. Smaller stores definitely are not able to do so, and are
net losers.”

ACS chief executive James Lowman said that he was worried about cost and operational burdens for retailers. “Deposit return schemes inevitably impose operational, administrative and cost burdens on retailers,” he added.

“Those who support deposit return schemes often cite models in other countries, and it’s timely that Retail Express is making clear that those systems do have a negative impact on retailers.”

Two in five respondents said the scheme either benefited or had no impact on convenience stores. They highlighted generating profit, reducing litter and increasing footfall as the positive effects of the schemes on small retailers.

Karin Brynell, managing director of Sweden’s grocery trade body Svensk Dagligvaruhandel, told Retail Express drinks are key to convenience and are growing in sales. “The deposit system helped this trend as it makes it possible to dispose of containers in an easy and sustainable way,” she said.

A statement by NFRN chief executive Paul Baxter outlined barriers for the scheme to overcome, but said the NFRN supports the Scottish government’s plans. “Scottish Government figures show the net benefit to retailers could be up to £8.7m a year, and the NFRN wants to make sure that small retailers see their fair share,” he said.

The responses also highlighted other trends. Schemes with voluntary retailer schemes were more popular than mandatory ones and the Belgian system stands out as a successful model for both recycling rates and retailers.

In response to political pressure, Belgian drinks suppliers implemented a one-way deposit system rather than face a tax and/or mandatory deposit return scheme. In this system, a non-refundable deposit is paid by the consumer on each bottle, which funds the supplier’s responsibility for hitting a government set recycling target. This can be through recycling centres, curb side collections and other means, but most importantly, retailers are kept out of the equation unless they chose to take recycling.

Christophe Sancy, editor in chief of Belgiums leading grocery trade publication told Retail Express: “Maybe it shouldn’t be all about money. Trust the consumer and give them a chance to adapt their habits for positive reasons.”

Despite the mixed responses to the impact of DRS, Excel Vending – a Scottish supplier of DRS machines – said retailers can be confident that the Scottish DRS system will work for them. Its director John Macdonald told Retail Express: “Zero Waste Scotland are not going to re-invent the wheel, they will look at existing models and pick the best bits so we’ll get a very capable solution.”