May 8th 2024.
A recent survey has revealed that Australians' confidence in Coles and Woolworths has taken a nosedive, following a significant blow to their reputation. According to Roy Morgan, the supermarket giants have experienced the worst decline in public trust in the past seven years, with Coles dropping from the fifth most trusted brand to the ninth most distrusted and Woolworths plummeting from second to 34th.
Michele Levine, the chief executive of Roy Morgan, noted that this is a dramatic fall from grace for the two companies, as there has never been such a sharp decrease in reputation in the history of tracking data. She added, "Unfortunately, this is only the beginning. Our data indicates that the coming months will bring even more severe reputational damage for Coles and Woolworths."
The decline in trust can be attributed to the ongoing parliamentary inquiry into supermarket price gouging during the cost of living crisis. The two retailers have been accused of taking advantage of the situation and prioritizing profits over the well-being of their customers. This is evident in their financial reports, with Coles recording a $1.9 billion profit and Woolworths posting $1.62 billion in the last financial year, while the cost of food and non-alcoholic beverages increased by 4.4% in the year to January.
All of these factors have contributed to the significant drop in trust, according to Roy Morgan. Levine explained that this is a sharp contrast to the high levels of trust the supermarkets gained during the pandemic when they stepped up to keep their stores open and safe for customers. She believes that Coles and Woolworths are now paying the price for not recognizing the cost of living crisis as a genuine problem that needed to be addressed.
Levine also pointed out that while Coles and Woolworths may still be performing well at the checkout, their declining trust and increasing distrust are what she calls "lead indicators." In other words, they are early warning signs of what's to come. She added, "This has already been reflected in Woolworths' share price, which has dropped by 22.5% since mid-June last year. Distrusted brands become vulnerable, making them prime targets for competitors like Aldi and other international players seeking to expand into new territories."
Roy Morgan conducts monthly surveys of around 2000 Australians to measure trust and distrust levels of approximately 1000 brands across 26 different industries. This data serves as a valuable insight into consumer sentiment and can help companies understand the impact of their actions on their reputation and public trust.
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