Marketing experts believe the ongoing Coles and ACCC court case taking place in the Federal Court won’t have the “long term impact” or “reputational fallout” many think it will.
The Australian Competition and Consumer Commission (ACCC) is suing Coles over what it claims was a “planned” campaign to mislead customers with fake or “illusory” discounts on hundreds of common household items.
Yesterday, a second Coles manager was grilled in court over whether rushing a product onto the ‘Down Down’ promotion could have broken internal guidelines. The day prior, information also surfaced from a former manager who said “human error” is what led to the company putting Arnott’s Shapes on the promotion faster than what was allowed.
Earlier in the week, the ACCC used dog food product, Nature’s Gift 1.2 kg Adult Wet Dog Food Loaf, as an example of how shoppers were being misled. For almost 300 days until February 2023, shoppers were paying $4 for the product on a ‘Down Down’ promotion, before the supermarket raised the price to $6, before reducing it a week later to $4.50.
B&T spoke with several brand reputation experts earlier this week who believe the brand is only damaging its reputation, with one even describing it as “the perfect storm for sustained reputational damage”. In response, marketing professor Mark Ritson and brand reputation expert Shane Allison told B&T they do not believe Coles will endure lasting damage to its brand.
Ritson (pictured below) told B&T he doesn’t believe reputational damage is what could hurt Coles, and that “consumers don’t really respond”.
“People will go back to shopping at Coles despite this bullshit,” Ritson said.
He believes there needs to be more of a “systematic government response” to regulation, and this landmark case will provide a litmus test.
“Australia has been a bit of a soft legislative place in its early days of marketing, but I don’t think that’s true anymore. I think we’re going to see proper fines. If they’re guilty, it’ll be a minimum of $200 million and it could be $15 billion, although that higher end is not likely to happen.”
“We’ll see how tough they want to be in this new era, and that number will give us a good read.”
Ritson said although the case is “very interesting” it “hasn’t really piqued marketers’ interest yet.”
“But when that case eventually comes out of the ACCC, I think that’s going to be a landmark case. There’s a real moment coming where the regulatory pincers of the ACCC will really start to bite, as they are internationally as well.”
The numbers prove it
Shane Allison, CEO of Phronesis, leads a communications consultancy that helps businesses protect their reputation in crises.
He sat down with B&T to discuss their latest ‘Phronesis 2025 Reputation & Capital Report’, which suggests that regulatory actions like these rarely have a lasting impact on a company’s reputation or market performance.
While regulatory enforcement actions are often highly publicised, the research reveals that ACCC actions historically have minimal long-term effects on consumer trust or market outcomes. For instance, companies targeted by the ACCC typically recover their market capitalisation within 75 days on average.
“While tempting to declare that this will damage Coles reputation, Australians will continue to shop with Coles, more than likely trust the next ‘Down Down’ campaign and Coles will continue to have a strong market share,” he said.
“This is more of a reputation road bump for Coles. What our research shows is that ultimately, the ACC doesn’t have a huge impact on a company’s reputation,” Allison added.
The research, which studied 189 reputation incidents across 73 ASX200 companies, also identifies which regulatory actions do cause lasting damage (ATO investigations drive a -23.34 per cent relative underperformance), realigning why not all regulators are created equal when it comes to reputation risk.
Is ‘Down Down’ actually going down?
“The ‘Down Down’ campaign has been seared into the mind of every Australian over the period of the campaign, and it will take a lot more than a week of complicated headlines about how ‘Down Down’ prices are calculated, to really scare Australians off,” Allison said. “And that’s backed up by our research.”
“The supermarket has had a week of bad headlines, and relatively unmoved over the past five days and we expect them to continue to be able to enjoy the market share growth that they’re seeing.”
He described the process of the ACCC taking action as “very loud and noisy”, but believes it “fades very quickly.”
“This issue on ‘Down Down’ will disappear from the headlines quite quickly and be replaced by the drumbeat of the ACC chasing after other supermarkets.”
Despite fears around trust, Allison believes the people most concerned about the case are the ones in the industry itself than those outside it.
“This is more of a reputation road bump for Coles. What our research shows is that ultimately, the ACCC doesn’t have a huge impact on a company’s reputation.”
“ACCC actions historically have minimal long-term effects on consumer trust or market outcomes. For instance, companies targeted by the ACCC typically recover their market capitalisation within 75 days on average.”
“With Woolworth’s Coles and Aldi, they’ll all be watching this case closely, but for the vast majority of Australian’s they’ve already forgotten about this case, and it will quickly fade into the background noise of inflation.”
“People are still shopping at Aldi, Woolies and Coles. They trust that these supermarkets are going to provide them with the products they need at the time they need them, and are motivated by factors like convenience and range, not by pricing.”
He said it’s not the first time an incident like this has happened in the industry.
“Woolworths has been in the headlines about a similar incident as well and that invites scrutiny on the whole sector. If this was an isolated incident of one company, it would be different.”
Allison believes the case is being looked at by Australians as “an industry wide issue” and not something they have control over.
“People choose to let those issues go past, and they ignore them,” he said.
“An incident like this will serve as a warning for people inside the sector, but people outside the sector will kind of blow past it quite quickly.
“In order for the ACCC to really have a reputation impact on the supermarket sector long term, they’re going to need to prove something which is simple, clear and easy to understand, which our data shows they have a difficult time doing.”
The case continues today.
