Kudos to Seattle for making the move away from disposable grocery bags. <link>
Here in my hometown a major grocery chain has opened it's first bagless store in the country. No plastic or paper is in the store unless you bring it yourself. As a preparation, they sold fabric bags made entirely out of recycled plastic bottles for 50 cents each. They hold about twice as much as a regular plastic bag, and they make the money back quickly through advertising (their store name is recognizable on the bags) and bulk ordering. Now that the store's gone bagless, they sell the recycled bags for 99 cents, and also offer recycled plastic crates for cars, and baskets.
The most noticable and immediate effect for me is the drop in noise pollution. The store has a calmness to it that most large grocers lack, and the lines are faster because people are packing their own groceries into just two bags instead of wrestling with 5 or 6 filmy plastic ones. It hasn't hurt the store's business and I actually go out of my way to shop there because it's a much nicer environment.
Seattle has the right idea, but stores should have the courage to go that extra mile and get rid of one-use bags once and for all.