‘Negotiate, inform staff and make good with customers’: The vital next step for Woolies and Coles as Federal Court proceedings loom
Trust is an economic driver for brands, so what does the ACCC case mean for Woolworths and Coles?
People achieve trust through competence, character, and care. The same can be true for brands, and both are tested under pressure, where trust counts the most. So, what happens when the ACCC alleges that two of the biggest brands in Australia engaged in deceptive discounting practices to their customers, especially when that allegation is made during a period of heightened cost-of-living pressure?
As is usually the case, the questions first come from customers and pricing movements were noticed by the sharp-eyed in increasing instances.
Concerns were voiced on social media forums, including Reddit, and many of them posed questions. For example, Woolworths allegedly raised the price of Oreo family packs from $3.50 to $5 before claiming a discounted price of $4.50. At what points was the item discounted?
The ACCC alleges that misleading and deceptive pricing occurred across hundreds of products, including brand favourites like Tim Tams, Twisties, and Coca-Cola. These promotional pricing practices formed part of the brand positioning of slogans like Coles’ “Down Down”, or Woolworths’ “Prices Dropped”, and the ACCC’s case rests on the argument that they misled consumers in these instances by artificially inflating prices before offering so-called discounts.
The scale of this investigation is one of the most staggering aspects. The ACCC’s investigation involved 266 products at Woolworths between September 2021 and May 2023. At Coles, 245 products were cited from February 2022 to May 2023. Consumer protection laws prohibit misleading or deceptive conduct in trade and commerce, which goes to the heart of the case heading for the Federal Court. If the ACCC’s allegations are proven, the supermarkets could face hefty penalties, with fines of up to $50 million per breach for conduct after November 2022.
Fines are only one of the potential penalties. On an expense basis, Coles and Woolworths will also have to invest board and executive time, staff energy, and money in the legal costs of the defence. They will spend company resources on legalities while the adverse online chatter continues, and their supermarket floor staff cop pricing questions and the occasional sly remark.
There may be another option. Negotiate with the ACCC on the penalties and remedies, inform staff, make good with customers, and invest in growing the brand. As quickly as possible.
We have seen what happens with QANTAS and Optus when brands lose trust. In extreme cases, revenues go down, and the C-suite changes personnel.
There is always opportunity in the crisis.
And lessons for all brands, too.
Adam Lang is the publisher of Mumbrella.
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Mea culpa? As if that will work, no matter how it’s spun by the very finest of spin docs. Profit driven, results rewarded…..a duplicitous duopoly plain and simple.
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Greedy corporate suits in ivory towers at play… Qantas could do with being taken to task also…? (Same dung, different logo.)
Are we are the latter stages of a capitalism that requires urgent reform? Friends and relatives of those suits at Woolies, Coles and Qantas possibly think so?
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It’s surprising how many communists work in the most energetic industry that drives Capitalism forward. Here’s a tip: pick up a year 10 Economics textbook
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