Supermarket giants Coles and Woolworths have lost their place among Australia’s most trusted brands, according to new data that reflects public anger over high grocery prices.

Roy Morgan’s annual consumer ratings have declared hardware chain Bunnings to be the most trusted brand for another year running in 2024.

But there has been huge movement in the supermarket category, with German grocery chain Aldi emerging as the nation’s most trusted brand, dethroning Coles and Woolworths.

Roy Morgan said the chains had lost “their positions as the country’s most trusted brands” as “the decline in trust, combined with sharp increases in distrust, has fundamentally altered public perceptions of these brands”.

“[Coles and Woolworths have] plunged in public esteem as questions about record profits and alleged ‘greedy’ behaviour has seen their trust levels plummet, and distrust soar,” Roy Morgan chief executive Michele Levine said.

How Coles and Woolworths lost trust

Plunging trust in Coles and Woolworths reflects a torrid year for the nation’s largest supermarkets dealing with the PR fallout from soaring grocery prices in 2022 and 2023.

Most recently the Albanese government has launched a series of regulatory crackdowns against the supermarkets, while the competition regulator has accused them of marketing “illusory discounts”.

University of Sydney retail expert Lisa Asher said the Roy Morgan rankings show how damaging the period has been for Coles and Woolworths, which had seen trust soar during COVID-19.

“Coles and Woolworths were considered trusted brands,” Asher said.

“This was until the cost-of-living crisis, where we saw high price increases while they enjoyed higher margins – while families struggled to feed their families.

“The term for this globally in academic literature is greedflation.”

But hardware chain Bunnings also can’t rest on its laurels, with Asher saying that recent revelations about its treatment of suppliers at a Senate inquiry show its brand is also at risk.

“The Price Gouging Senate Inquiry brought their businesses and the way they operate into the public domain for public opinion,” Asher said.

“Bunnings were highly scrutinised during this inquiry, but this was not acted upon or given much airtime.”

Coles, Woolworths deal with fallout

After initially responding with hostility to mounting public anger about grocery prices, leaders at Coles and Woolworths have changed tack more recently under new chief executives.

Coles appointed Leah Weckert as CEO last year and Woolworths Group has just retired long-term managing director Brad Banducci for Amanda Bardwell back in February.

It’s the go-to strategy for big corporations facing reputational crises; Qantas did the same thing recently, and so has Optus after its major cyber attack in 2022.

Roy Morgan said it could take some time though for the new leadership to restore public trust.

“While these brands have installed new leadership to restore trust in these brands – this process is likely to take several years,” they said.

Both Weckert and Bardwell face a trial by fire in coming months that could significantly influence whether the major chains are able to improve their standing with consumers.

First, each will need to front up to shareholders at the upcoming Coles and Woolworths annual general meetings, where they are sure to face questions about reputational costs.

The scrutiny won’t stop there.  Several legislative reforms being mulled by the Albanese government and ongoing ACCC reviews will spark opportunities for the major supermarkets to be grilled at Senate inquiries and in public submissions.

Interestingly, however, Coles has decided to defend proceedings against the ACCC claiming it has misled customers, which will require it to maintain a defiant stance, at least in court.

Woolworths has merely said it is investigating the claims, without committing to a position.

Asher said the supermarkets will need to recommit to “being authentic in what they do” to win back the trust of consumers.

That includes “moving to a stakeholder model where shareholder returns are important, however so are employees, suppliers, customers, and the environment”.

“This means demonstrating how they are reducing inefficiencies in their business models, to bring down prices and give back to those which rely on them to feed their families,” Asher said.

Spotlight on Bunnings

Asher said that despite winning the award this year, Bunnings is facing increasing scrutiny over its behaviour as a new public inquiry prepares to get underway.

The company has a “very healthy” earnings margin, Asher said, which is higher at 11.9 per cent for Bunnings than Woolworths (6.1 per cent) and Coles (5.2 per cent).

“The ‘big box’ senate inquiry will bring Bunnings and their practices to the public for scrutiny,” Asher said.

“When a company does not really have any competition, who will scrutinise you if you offer cheapest prices everyday?’’