A recent study from research firm Roy Morgan analysed the 10 most and least trusted brands in Australia, determining that three top spots on the ‘most trusted’ list were awarded to Australian supermarkets: Woolworths, Coles, and ALDI.
“Distrust remains the number one risk factor for the nation’s companies,” said Michele Levine, Roy Morgan’s CEO. “Trust is a brand asset while distrust is a brand liability.”
If some of the most trusted brands in Australia are supermarkets, what do other retailers have to learn? And how can grocers in other markets leverage pricing to build trust with their customer base?
Trust is defined as relying upon or placing confidence in something. It is having certainty in someone’s integrity or ability. Trust is something built over time with care and intentionality, and when trust is broken for one reason or another, it’s often difficult to restore. Trust is the foundation of any healthy relationship in life, and that’s true with the customer-retailer relationship as well.
Living in Australia myself, I know this to be true: for the most part, Australian grocery retailers didn’t take advantage of the pandemic as a way to drive up prices. This is likely one reason why consumers rated supermarkets as highly trusted brands.
In Melbourne where I live, we had one of the world’s longest COVID-19 lockdowns at 111+ days. During that time Australia’s grocers focused on safety: their mission was to get customers the products they needed quickly, providing wipes for shoppers’ trolleys as well as hand sanitiser, and enforcing mask wearing and social distancing in stores. That consistent service was a source of trust and safety during a really uncertain time.
We hope that a pandemic like this is a once-in-a-lifetime event. However, there will certainly be other moments when businesses may be tempted to operate in their own self-interest instead of the best interest of their customers’. Surge pricing or price gouging is a breeding ground for distrust, so retailers must avoid any appearance of this kind of pricing “at all costs”. In the long run, what’s best for the customer is what’s best for the company, as evidenced by consumer trust in the retailers who got it right.
If consistently or unfairly raising prices gives consumers reason to doubt a retailer’s motives, then learning how to price properly is a sure-fire way to foster and maintain the trust of consumers.
It is a balance though – you need to be competitive enough with other retailers that you don’t lose the basket altogether while also not swinging too far in the other direction so that consumers lose trust in your seemingly high prices. Retailers can start building a consistent price image using two best practices:
That second recommendation is nearly impossible to do manually with a spreadsheet and human brain power alone. That is one reason why pricing is an excellent use case for artificial intelligence.
Looking at demand for every grocery item is nearly impossible to do without AI. There’s so much data, so many different criteria – there’s no way a data scientist or team of experts could get their hands around all of the factors that go into setting the right price; at least not in a continuous manner to stay on top of constantly changing consumer behavior.
More than three years ago, Revionics conducted a survey with Forrester Consulting to ask consumers about their price perceptions and shopping behaviors. The research showed that as long as they’re presented with prices that they’re willing to pay, 78% of consumers trust data science more than a human to provide fair prices. Our assumption at that time was that customers accept that scientific pricing is ‘fair.’
If that still rings true today – and I sincerely believe that it does – then it would make sense that embracing AI-enabled technology to make better pricing decisions is in a retailer’s best interest to build trust.
Revionics’ AI models have been learning for more than a decade, and our pricing engine is not only focused on short-term outcomes. Trust is a long-term metric, and we’re committed to helping retailers like you build that trust with consumers, by delivering competitive prices customers are willing to pay while still achieving your financial targets.
For even more on the topic of trust and pricing, read about how TBC Corporation and Pilot Company adapted during COVID-19.