Written by Marcela Balart

What takes years to build and seconds to destroy? 

Last week, the ACCC completed its public hearings as part of its supermarkets inquiry.  

Over the course of November, current and former senior executives from Aldi, Coles, Metcash, Woolworths and others, were grilled on everything from pricing strategies to profit margins, site planning, land banking and supplier holidays. 

In September, the ACCC announced it would also take Woolworths and Coles to Federal Court in separate proceedings for allegedly breaching and misleading consumers through discount pricing claims.  

Together, the picture that has emerged from the consumer watchdog is largely one of misplaced trust in the Australian supermarket industry.   

In a remarkable set of circumstances, it has meant that while customers struggle through a cost-of-living crisis, Woolworths and Coles, who dominate 67 per cent of the market, have been able to generate pre-pandemic profits.  

It should then come as no surprise that while the Federal Government opened the supermarkets inquiry, it did not trigger it. Instead, it was fuelled by people power and consumers incensed by the deception and greed of corporate Australia.  

The case study for how to simultaneously damage both brand reputation and customer trust is playing out before our eyes. It’s clear the court of public opinion has spoken, and consumers will no longer tolerate organisations that take advantage of their trust, particularly at a time when they are most vulnerable.   

Misleading customers will always incur a cost and one that may be too high to recover from. But when trust is broken, what does the path forward look like? 

Step 1: A is Authenticity  

It is said time heals all wounds, but if there isn’t a genuine and concerted effort by organisations to be transparent with their stakeholders and, most importantly, act with authenticity then it is all for nought.  

Doubling down for the wrong reasons or skirting around the issue will only deepen the mistrust. After all, with the 24-hour news cycle and the staying power of the world wide web, there’s no such thing as yesterday’s news.   

While rebuilding your brand’s reputation is complex and challenging, the first and most crucial step is simple – acknowledge the issue, apologise for it, address it and act authentically.  

At this stage, neither Woolworths nor Coles have acknowledged any wrongdoing and continue to fight the allegations. Woolies went so far as to say discounts were valid after three weeks at a fixed price. With more than 510 products examples of alleged deceptive and misleading representations, the ACCC was quick to argue that given the sale price was higher than the original, the so-called discounts were “illusionary”. 

Coles attempted to convince the competition inquiry that focusing only on low prices was sending customers away. It just doesn’t pass the pub test.  

Step 2: Getting back to basics 

A break in customer trust often follows a deterioration in company’s processes or practices. In some cases, it can be intentional and in others, a symptom of an organisation losing its way.  

Revisiting and resetting when it comes to company purpose, vision and mission can be the difference between being able to recover from a crisis and take steps to rebuild or destroying the brand altogether.  

Like many travel businesses, Intrepid Travel, faced revenue losses in addition to staff layoffs as a result of the global pandemic to the brink of closure. Forced to confront who it was as a brand, it doubled down on its purpose and mission and is now on its way to being a billion-dollar brand.  

Step 3: Corporate social responsibility is non-negotiable 

Once you’ve reset your core business, it’s time to get your house in order.  

While sustainability and ESG are becoming an essential part of corporate affairs, businesses cannot afford to de-prioritise corporate social responsibility.  

Australian consumers are increasingly becoming more ethically minded, with research from Monash University revealing 51 per cent of shoppers said sustainability is an important factor when making a retail purchase. However, 62 per cent also said it was an important factor if products were ethically produced. 

Customers need assurance that operations are sound, including the treatment of the workforce and the supply chain.  

The ACCC’s inquiry included accounts of “clickbait” practices used to lure in shoppers, sometimes at the expense of growers’ profits and “land banking” where the Woolworths and Coles buy or put options on land or stores to squeeze out the competition. 

Woolworths supply chain workers have also taken action against the supermarket in an almost two-week strike amid poor pay and unsafe work conditions. Having already cost the grocer giant almost $50 million in sales, it’s just another nail in the coffin.  

Step 4: Getting to know your customers 

Earlier this year, we wrote about the impact of the changing landscape on shifting consumer values and, therefore, behaviours.  

Whether it’s the customers you have or the customers you want, cut through in your comms is not possible unless you put in the effort to understand them. There is no room for guess work here.  

Speaking at the ACCC inquiry was Aldi Australia. While the German retailer has less than 10 per cent market share, we learned it’s a piece of the pie it has been working towards for two decades.  

In addition to offering products that are competitively priced, executives shared that the breakthrough for the supermarket was working on its brand identity, addressing customer feedback on issues of quality, tapping into how Australians need to shop in a cost-of-living-crisis, and the growing importance of a sustainably operated brand.  

The latter resulted in Aldi officially becoming Australia’s first grocery retailer to go fully renewable from the Federal Government’s Clean Energy Regulator. A win for the brand, a win with customers, and a win for the environment.  

Both Woolies and Coles have acknowledged the supermarket as a “significant and credible competitor” during the public hearings.  

The ACCC’s final report for the inquiry is due to be submitted to the Government by the 28 February 2025, which will also coincide when the next federal election is expected to be called. 

Are you setting your plans for 2025? To discuss how IMPACT can help build your brand’s reputation, invest in brand building, or provide crisis support, contact Nicole at nicole@impactagency.com.au.