It’s a Saturday morning in Germany and the parking spaces of an industrial estate are packed with cars. People are doing a quick food shop for the weekend or filling shopping trolleys with goods for the new working week. Consumers have plenty of choice, with two discount stores, one full-range stockist and one or sometimes even two drugstores right next door to each other. When all the shops are equally accessible, retailers have to come up with new ways of holding on to customers or attract new ones. This applies all the more to the future and the demographic changes. A shrinking society means that there are less and less customers and more and more competing providers.
Retailers, like product brands, enjoy different levels of trust amongst their customers. This was revealed in a survey conducted by the GfK Verein of 2,000 consumers who are representative of the German population. They were asked to rate three different shops that were randomly presented to them. The only condition was that the persons surveyed had to shop there at least occasionally to create a real basis for the assessment. In all, eleven stores with the highest sales of everyday consumer goods were tested in this way for their trust potential. Does the retailer pull out all the stops to satisfy its customers? Do customers have complete trust in a certain provider? Or does a specific retailer even have a competitive edge when it comes to trust? Marks were awarded based on these questions relating to competence and good will, level of trust and competitive edge in terms of trust.
Broadly speaking, the examined retailers presented themselves very positively in the eyes of their customers. On a scale of 1 (strong opposition) to 7 (very strong concurrence with positive statements) an average of 50% of the persons surveyed expressed a high level of concurrence (7, 6). They were convinced that the retailers they assessed would do everything to satisfy customers. A further 47% agreed, with a few reservations. Alongside this large satisfied majority the 3% who have nothing positive to say about the retailers at all is insignificant. The answers to the question of how high the level of trust is in the respective retailer showed a similarly high level of concurrence. Half of those interviewed agreed without exception that they have complete trust in the respective retailer and a further 46% subscribed to this, with minor reservations. On the other hand, it appears to be more difficult to gain a competitive edge when it comes to trust. Only 42% said with certainty that one specific retailer is more trustworthy than the others and 7% took a totally opposing view.
A glance at social demographics shows hardly any differences between the sex, age groups or origin of consumers. All population groups place their “complete trust” in “their” retailer to an equal extent for the most part and will probably stay loyal to the shop of their choice.
Seemingly, the drugstore chain dm has no need to worry about customer loyalty at the moment. dm gained top marks on all three questions and took first place in the overall index, as expected. Its rival Schlecker, on the other hand, came last in the overall rankings.
The places in between are occupied alternately by full-range stockists and discount stores. The market leader Aldi came top out of the discount stores. It has succeeded in simultaneously acquiring a positive price and a high trust image amongst consumers. Hence, the archetypal discounter managed third place, visibly outperforming its competitors. The big full-range food stores, on the other hand, achieved consistently good ratings and Edeka even managed second place in the overall rankings.
What does this mean in practice? Not only brands, but also retailers apparently have their own trust image that varies from outlet to outlet. Accessibility plays a key role for customers, but a positive trust image will be important at the latest when consumer choice is so large that cut-throat competition sets in. Competition will definitely increase in the coming years, given the demographic change. When the population shrinks, the ratio between providers and buyers shifts. More and more retailers are then vying for few and fewer customers. Of course, then it will depend on the product range, which must include the strong brands, but the retailer’s trust image will also be a crucial success factor in the battle for customers. A retailer that commands a high level of trust contributes more to the brand’s image than a less trusted one. Retailers and manufacturers, whose battles for position are getting ever fiercer, therefore actually pull together. One supplies the strong brand and the other creates trust amongst customers, who seize it, producing a classic win-win situation. And it gets better. Brands that command a high level of trust not only create a good image, but also scope for upping prices.
This is to be demonstrated based on specific examples from different product groups taken from the brand trust survey conducted by the GfK Verein. For reasons of discretion the evaluated brands are presented anonymously.
The example of chocolate brand A shows that consumers are willing to pay for quality. It is the front-runner not only in terms of customer trust, but also price. Consequently, 65% of the persons surveyed thought the price was high, but that it was justified by the quality of the product. All the other consumers thought the brand was too expensive. Remarkably, a similar number of consumers say this about the competing brand B, which has a low trust image, although it is only roughly a third of the price on average. Its quality is apparently considered to be so abysmal that even the low price is still too high. This is a real disaster for a brand that wants to win customers primarily on the back of the cost benefit. It is compounded by the fact that a further 15% think the price is still too cheap, so the brand loses on both counts.
Most people also think sparkling wine brand A, which has a large price tag and a high degree of trust, is expensive, but that the quality justifies the price in this case, so half of consumers are not put off by the cost. 5% think this about brand B, which enjoys a lower degree of trust and costs considerably less. The only thing that the two brands have in common is the number of consumers who rate the product as being too expensive. Brand B also even puts off 30% of all potential purchasers with its ‘reasonable’ price, which is obviously rated as a bad sign of quality.
Coffee brand B has to contend with this problem as well. 11% of those surveyed think that the low price indicates a lack of quality. Worst still, just under a third of consumers consider the price of a product that they trust less to be too high, although the price is lower than that of the rival product. In comparison, only 20% think that about the more expensive, but in consumers’ eyes more trustworthy brand. The performance of the weaker fruit juice brand was similar. It costs less than the competing product, but that’s not enough for consumers. Just under half think the price is still too high for its quality.
A high trust index can therefore lead to higher prices even being accepted. Conversely, low prices do not compensate for a brand’s low trust image. On the contrary, in some cases, the bargain tag can even be counter-productive.
To sum up, only if brands with a high degree of trust can be established will there be a chance of stopping, in some cases, the destructive downward price spirals. Therefore, an investment in trust makes sense economically for manufacturers and the trade both in the short and medium term and is also an investment in securing their long term future.
Data source: GfK Verein (Brand Trust Study Summer 2010, Retailer Trust Study December 2010)
For enquiries please contact Claudia Gaspar of the GfK Verein: firstname.lastname@example.org