Kroger Chain to Run In-Store Pilot with Loop

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12/16/2021
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Loop’s global reuse platform will soon make its in-store debut in the U.S. at 25 Kroger-owned Fred Meyer stores in Portland, Oregon. The pilot, set to begin in early 2022, will offer a variety of products to customers in reusable packaging, including products from leading national brands and from Kroger’s Simple Truth private label.

Loop aligns with our vision of a future with zero-waste packaging,” said Lisa Zwack, head of sustainability for Kroger. “It also aligns with Kroger’s sustainable packaging goals for 2030, specifically our aim for 100% of ‘our brands’ packaging to be recyclable, compostable or reusable.”

To qualify for the program, products must be sold in packaging that can be reused a minimum of 10 times before being recycled into the same packaging. Within those criteria, brands have great latitude as to the materials and type of packaging they use for the program.

Each package is created by the brand with Loop’s guidance. The package can be a bespoke package designed for the Loop program, such as the stainless steel, double-walled ice cream container Haagen-Dazs is using for its Loop packaging. It can be sourced elsewhere, such as a reusable hand soap dispenser used by a soap brand for the program. Or the Loop packaging can be an existing product, such as a Kraft Heinz glass ketchup bottle that meets the program’s reusability standards.

Consumers will pay a deposit for each package and use their Loop tote to return their empties to a collection bin in front of Kroger stores. Loop will service the bins several times a week, sort the returns locally, refund consumers their deposits, send the empties to a regional cleaning center and ship them to the manufacturer for refilling.

According to Loop CEO Tom Szaky, one interesting insight that influenced the program is how much consumers are willing to pay for it. “They are willing to pay a little extra for the content in a reusable packaging and we found that the upward limit of that was around a 25% premium,” Szaky said. “What was more interesting was that consumers were not sensitive to the deposit prices.”

According to Szaky, this was the case for even very value-driven consumers and even for $10 deposits on products that only cost $5. “With a $10 deposit, you can spend up to $8 or $9 on the package as a brand, and that’s a huge budget if you think of the higher-quality materials, more functionality, all the things you can do with more money at your disposal.”

Szaky also noted that while you would expect more traditionally eco-conscious brands to do particularly well, mass-market brands have seen the best results in initial pilots. “They’ve had an even bigger pop with consumers, and they’ve found that reuse brought to them a lot of consumers that were not buying their products before,” he said.

The program will be promoted at Kroger through the circular and other earned channels, with participating brands doing their own earned, social and digital campaigns to support the program. In-store support will include informational point-of-sale materials as well as in-store Loop ambassadors who will explain the program to shoppers.

Loop’s move to an in-store retail model began in France with a pilot at Carrefour starting December 2020, then with similar pilots at AEON in Japan and Tesco in the U.K. Each of those chains has started to expand their Loop programs to new stores and additional SKUs after success with their pilot runs.

Loop considers a pilot successful if the products perform equal to or better than their non-Loop counterparts in both trial and repeat, if they aren’t just cannibalizing the sales of existing products, and if the packaging is being returned. “In other markets, we’re seeing 80% of packaging come back within 60 days,” Szaky said. “We have to see the returns, or the program is not really delivering on the reuse component.”

Kroger will likewise be in test-and-learn mode with its pilot. “Our expansion plans will be guided by the pilot, and then we will consider next steps based on customer feedback and engagement,” Zwack said.

The Kroger initiative is part of a larger Loop global expansion that will soon include another in-store pilot in select Walgreens stores in New York.

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