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Stores are essential for the Loop reusable packaging program

A shopper at Fred Meyer store, a chain of hypermarket superstores located in the western United States, owned by Kroger. Kroger is the exclusive U.S. supermarket partner of Loop.

In the roughly eight months since the Loop reusable packaging service has been up and running with pilot e-commerce consumers in select markets, there have been package design hiccups, retailer additions and product-line extensions.

As an early adopter in Loop parent company TerraCycle’s home state of New Jersey, I’ve witnessed all of that firsthand. Now, I’m eager for the company to pull off its next planned U.S. milestone: integrating supermarket and drug store locations affiliated with The Kroger Co. and Walgreens into the business model, so customers can drop off empty containers more frequently, without having to ship back or find a UPS location to drop off the rather hefty tote used for deliveries. (Each easily can transport up to 20 or so items, depending on the assortment purchased.) 

If things go TerraCycle CEO Tom Szaky’s way, West Coast stores from Kroger — its various brands including Dillons, Fred Meyer and Ralphs are in 35 states nationwide — will start accepting Loop container returns by mid-2020. East Coast customers will need to wait until the fall, when Walgreens plans to do the same.

The idea is Loop accountholders will be able to return empty containers when and where it’s convenient to in-store bins. From there, TerraCycle will orchestrate transportation to facilities where they can be inspected, washed and sanitized prior to being refilled, Szaky said.

"You can drop off the product, no matter where you bought it," Szaky told me, when we chatted about Loop’s progress late last year.

Through a Loop spokesperson, Kroger and Walgreens declined to comment on their specific plans for the Loop service. Both went public with their Loop partnerships in May.

The Loop service will be available first in the metropolitan areas near New York and Paris.
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TerraCycle

Introduced in January 2019 to much fanfare at the World Economic Forum in Davos, Switzerland, Loop celebrated its first birthday last month, although the service only started delivering to consumers in its launch markets near Paris and New York in May. Its premise was simple: to carry only products that come in reusable, refillable bottles, jugs or cans. Those items are purchased online and delivered to the customer's doorstep via UPS. 

Loop is available to a "community of thousands" (TerraCycle doesn’t disclose exact numbers) in 10 U.S. states, and new consumer product brands are being added on an almost daily basis — ranging from pantry staples such as the dried chickpeas in my own cabinet to specialty nut butters to personal care items. Close to 150 unique products are available in both France and the United States, where the best-sellers include Häagen-Dazs ice cream (my favorite is the non-dairy coconut caramel blend it's testing), Tide detergent and Clorox wipes.

Right now, Loop caters to customers who aren't afraid to spend a little extra on groceries or that have a craving for niche items that might not find their way onto mainstream store shelves. The prices themselves are higher than you would pay in-store for similar items, plus the deposits can add up quickly: I've only got six items at home right now, but my "active" deposit account has a balance of $41. Loop is acting as the bank for that money. 

Szaky told me that while the current Loop customer may skew high-end or eco-conscious, TerraCycle is seeking to create a mass-market appeal by adding products you'd find in your neighbor's pantry. The Kroger and Walgreen's relationships will be instrumental in making that happen, especially if they become active locally in every place possible. Kroger is the second-largest U.S. retailer and largest grocery supermarket company with more than 2,800 stores; Walgreens, which operates in all 50 states, had close to 9,300 locations as of August. That's an impressive physical footprint.

Expansions into the United Kingdom, Canada, Germany, Japan and Australia are in the works starting in March and over the next two years in close collaboration with prominent retailers in those geographies including Tesco (UK) and Loblaw (Canada). As the service matures, more of these new markets intend to launch an integrated in-store/online version of Loop, with Japan and Australia likely to lead that charge, Szaky said.

The trouble with totes

While TerraCycle may be the primary corporate face of the Loop brand, the important role of retailers in scaling any reusable packaging model should not be downplayed. Partners like Kroger and Walgreens bring inventory and category management expertise, merchandising savvy, pricing know-how, logistics and e-commerce expertise and, of course, existing connections with everyday shoppers.

The future role retailers will play in collection will be crucial, as Loop seeks to shrink the amount of time containers spend in the hands of consumers before they are returned and refilled. Right now, that period varies dramatically depending on the product category — on a monthly basis for ice cream, for example, or up to three months for shampoo. Mostly, it depends not just on how quickly a consumer uses up a given product but on whether they decide to wait until a tote is full before a return shipment.

Our experience reinforces our belief that this is not just a trend that is going to come and go.

One of Loop’s value propositions is that it can help brands better understand consumption habits as it reduces their dependence on single-use packaging. "In our model, we can report on repeat, refill, how long it takes, whether they take advantage of autorefill," said Heather Crawford, vice president of marketing and e-commerce at TerraCycle.

 

Right now, however, it’s difficult to estimate how long containers sit empty in customers’ homes as they transfer items into other receptacles or as they wait to fill up a return tote — the only tote size right now is 19 inches by 16.5 inches by 16 inches. The cushiony inserts that hold the containers can be reconfigured to handle the different sizes and to accommodate the heavy cold pack that's used to transport frozen items before they melt. If there's ice cream in your order, you can only consolidate a half-dozen more items or so into the same shipment. And be careful when you're picking the tote up: An empty tote containing a cold pack weighs more than 15 pounds.  

Speaking from personal experience, I’ve managed to return just two batches of spent containers in the service’s iconic tote since May. That's in part because I live in a two-person household and I had a tough time finding items that I actually wanted to order — right after I signed up for Loop, my doctor prescribed a food elimination diet that bounced many of the plant-based products in the Loop inventory off my plate. But mostly, I felt guilty about the carbon emissions impact of dispatching a UPS delivery truck to pick up an almost-empty package.

Ultimately, I opted for what I considered to be a more eco-friendly option: bringing my return tote to a UPS shipping location while I was out on another errand. But my experience isn’t unique and for some markets, notably Tokyo where people live in much smaller homes with far less storage space, TerraCycle is considering a smaller tote. Adding collection bins at retailers is also likely to reduce the reuse cycle, as consumers will be able to return containers far more frequently.

Haagen-Daz is one of the best-selling items on Loop. The shape of the pint jars are designed to withstand 100 cleaning cycles.

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Loop

Nestle, Reinberger Nut Butter share early learnings

While the Loop products in the United States and France are different, the categories where shoppers are gravitating toward in Loop’s reusable containers are similar, including quick-turn grocery and pantry staples that generate the "highest volume of visible garbage," Crawford said.

Loop also has helped generate interest in niche and specialty items, such as the various protein spreads sold by Reinberger Nut Butter, a small food company in the Philadelphia area that was less-than-impressed by its experience selling products through Amazon. 

Reinberger, which already distributed its mixed nut butter in reusable containers, changed its design to make it lighter and introduced single-nut lines unique to Loop, said Luke Rein, who manages production for the company. Its container isn’t entirely reusable — the aluminum lid needs to be handled differently because of the seal — but as sales grow, it’s addressing that issue.

"Ideologically, this matches up well and is a good source of revenue," Rein said. 

According to Crawford, the average Loop order size is eight to 10 items (far less than what its big tote currently can handle). It’s adding brands on an almost daily basis, after they meet the company’s container design criteria.

There have been some snafus with some products. For example, the initial containers for Tide's plant-based Purclean laundry detergent needed to be tweaked when the lids were found to leak, an issue that was annoying for me at home, as the detergent kept oozing down the side of the bottle onto my laundry room shelf. While the U.S. and French markets launched with about 80 products each, new regions likely will have at least 200 products at launch. 

In our model, we can report on repeat, refill, how long it takes, whether they take advantage of autorefill.

At this time, no containers used in the U.S. or France have reached their maximum reuse potential, Crawford said, at which point they will be recycled or upcycled.

That includes Nestle’s popular metal Häagen-Dazs ice cream containers, which posed a unique design challenge to the company, according to Steven Yeh, commercialization project manager for the Nestle ice cream team. The shape of the pint-ish-sized jars, designed to withstand 100 cleaning cycles, was rounded to make the ice cream easier to scoop and double-walled both for durability and to keep cold during the delivery process, Yeh said. (As already mentioned, Loop also includes a cold pack in its totes for frozen items.) It took six months to come up with the current container.

Nestle’s experience with Loop so far is being used to inform its strategies and perceptions about consumer subscription models. It will test another edition of the reusable metal containers at more than 200 Häagen-Dazs ice cream boutiques across the U.S., where it hopes to allow customers to bring them back for refills, starting in New York. 

"Our experience reinforces our belief that this is not just a trend that is going to come and go," Yeh said. "It reinforces our commitment to a reusable container. We need to focus even more efforts on this."

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