Small businesses can do well out of deposits

This opinion piece was published in Knack.

The expansion of the system, which already exists for beer bottles, to all plastic and canned beverage packaging brings changes. That the retailer reacts somewhat hesitantly is only human.

But a deposit system is not inherently good or bad for the local shopkeeper. Everything depends on how it is organised and what role the small shopkeeper is given in it.

Inspiration from the North

Precisely on that point, Environment Minister Joke Schauvliege was very far-sighted. She took the Norwegian deposit system as a model for her Waste Plan. This provides for financial compensation based on the number of empty beverage containers returned.

How does the Norwegian system work? Norwegian producers pay 0.52 cents per can and 1.56 cents per bottle they place on the market to a central system operator, Infinitum (on whose board Coca-Cola also sits, by the way). Added to this are the proceeds from the sale of high-quality PET and cans. Finally, there is income from the plastic bottles and cans that are not returned, which helps fund the system with their deposits.

From this large pot of money, supermarkets and retailers are compensated with a so-called 'handling fee'. Because this involves hundreds of thousands of bottles and cans per machine, the annual income runs into thousands of pounds.

According to Infinitum, the central system operator in Norway, supermarkets recoup their investment within about 3 years. However, the estimated lifespan of a reverse vending machine is 7 to 10 years, which means that after 3 years, these machines become real cash machines.

Lessons for Flanders

From an environmental perspective, local small retailers are better than megalomaniac shopping centres that force people to drive miles to do their shopping. It would therefore only be fair if the financial compensation for small retailers in Flanders were high enough to cover the system's costs for them.

Besides, a local shopkeeper who has a handful of customers returning a few cans and bottles a day doesn't need to purchase a reverse vending machine at all. In Germany, for example, you can see that these bottles and cans are accepted manually without any issues.

The implementation of the deposit system in Flanders could also provide for voluntary participation for small-format shops. That way, small shops are not forced to join, but they are allowed to if they fear competition from supermarkets.

Impulse buys

In any case, there are other potential benefits of deposits for the local retailer. Someone finishing their can of drink as they pass a shop will quickly pop inside. In trade jargon, this is referred to as increasing footfall.

Who knows, this passing stranger might make an impulse purchase. And with good service, they might become a loyal customer. Shops sometimes invest thousands of pounds in window displays or promotional campaigns just to get customers through the door. A deposit system does exactly that. Many customers who return empty beverage containers buy something "now that they are in the shop anyway".

The shopkeeper can use a deposit system to strengthen the bond with their customers. In doing so, they can distinguish themselves from online delivery services. Customers cannot hand their empty bottles to the PostNL, DHL, or UPS delivery driver standing at their door. But they can bring them to their local retailer. This is a unique advantage for local shopkeepers in the fierce competition with online sales. The local social connection and contact established through deposits can be worth its weight in gold.

The independent retailers of Germany and Scotland

It is interesting to note that retailers in deposit countries are much more positive about the system. LIDL in Germany, for example, has completely closed the loop themselves and is proud of it. They have the facilities to produce, fill, and recycle the bottles themselves. In this way, they also manage to make their bottles from at least 50% recycled material. Unfortunately, this is not possible with the less clean plastic from the blue bag. That deposits can be positive for small retailers was also the conclusion of a Scottish retail federation, which also indicated that they think it is important to take on their responsibility.

It is time for supermarkets and beverage producers to make different choices. We know there are also positive voices about deposits within these sectors. The system becomes profitable after 3 years, strengthens customer loyalty, and enhances their eco-friendly image. So let the frontrunners in the circular economy step forward.