Consumer trust in Coles and Woolworths plummets following ACCC action

New data indicates most Australians believe the two supermarket giants put profit before consumer welfare, leading a significant number to reconsider who they spend their money with.

Woolworths once dominated as Australia's most trusted brand but now sits at the bottom on the ladder. Picture: Bloomberg

Two-fifths of people have changed their view of Coles and Woolworths after the consumer watchdog’s legal action against the pair fuelled distrust of two of the country’s biggest brands, a new survey indicates.

Most people interviewed last week for a consumer sentiment report hold a negative view of Coles and Woolworths, which they perceived to be prioritising profit over customer welfare during the cost-of-living crisis.

Half of the respondents, or 49 per cent, said the Australian Competition and Consumer Commission’s legal action had not changed their opinion, but many said this was because they were aware of the price-gouging allegations and already held negative views of the two brands.

However, 39.6 per cent said their views had worsened and expressed concerns about the brands exploiting consumers during difficult times. More than one quarter, or 26.7 per cent, said they would change their shopping behaviour with a desire to avoid supporting the companies they perceive to be exploiting them.

Despite the overall negative sentiment, 56 per cent said they would not change where they shop as a result of the legal action, citing a lack of alternative grocery options and a dependence on Coles and Woolworths.

The consumer sentiment data was part of a qualitative in-depth research study by Juno, an AI-powered research platform built and trained by researchers, in partnership with brand agency FutureBrand. Juno spoke with 202 respondents aged 18-65 years for 10 minutes for the report from Tuesday to Thursday last week to gauge the public response to the ACCC legal action.

Juno found that while the ACCC’s actions had reinforced negative sentiments, it had not drastically changed consumer behaviour as practical needs such as convenience and product availability remained paramount.

Coles has plummeted in brand trust metrics to rank as the fourth most distrusted brand according to Roy Morgan Research.

FutureBrand Australia chief executive Rich Curtis said the report highlighted the importance of trust and transparency to consumers, who “feel on the one hand that the ACCC action has simply confirmed their existing opinions, but on the other they often have limited choices to change shopping habits despite that distrust or dissatisfaction”.

However, Mr Curtis noted an interesting similarity in falling trust among consumers alongside the introduction of increased security measures by supermarkets.

“If customers don’t trust Coles and Woolworths, it’s intriguing to see how that’s been mirrored in store,” he said. “First, security cameras at self-checkout, then the guard gates that can trap you inside the store before you exit.

“It makes me wonder when the relationship between the supermarkets and their customers started to unravel; this isn’t something that happens overnight.”

The consumer data report comes on the back of Roy Morgan Research, which revealed in May that Coles and Woolworths ranked as the fourth and fifth most distrusted brands in the country, after Optus, Qantas and Meta. It marked a significant decline from ranking as the most trusted brands (Woolworths at No.1 and Coles No.2) just 12 months ago and was a record low for both brands since Roy Morgan began tracking trust monthly in early 2018.

Negative sentiment towards Coles and Woolworths had been building steadily throughout 2024 as cost-of-living pressures increased for consumers at the same time that the supermarket giants were posting record profits.

The ACCC legal action has served to confirm consumer concerns about unethical behaviours, according to Quantum Market Research managing director Richard Frost. “The ACCC’s action will cement what people are already feeling,” he said. “People don’t like the Coles and Woolworths duopoly and Australians don’t like a situation when they are left with little choice, especially when they feel tricked and forced into that choice.

“At this point in time, Australians may have more trust in banks and government than they do in supermarkets. No one is under the illusion that a bank has to make money, but with supermarkets it’s perceived as offensive how much revenue they generate a year from Australians of all walks of life.”

This is further reflected in research conducted in May for QMR’s AustraliaNOW study, which found 86 per cent of people agree that the major supermarkets are profiting unfairly from Australians, with 82 per cent stating more government regulation is needed for supermarkets.

“Coles and Woolworths are not highly trusted by Australians at any rate,” Mr Frost said.

“But the challenge for so many Australians is that they must still rely on these brands due to the lack of choice in their area.

“We spend a lot of our household budget in their stores, and they are an integral part of our lifestyles and consumers would prefer it if they could trust Coles and Woolworths. We desire good quality food and produce on our tables, and we have to go to Coles and Woolworths to get that.”