Supermarket giant Coles could face long-term “reputational erosion” following ACCC allegations of false discounting on hundreds of products that are part of its red ticketed ‘Down, Down’ campaign, according to brand reputation experts.
The ACCC’s case against Coles entered its second day in the Federal Court this morning, alleging the supermarket chain used “utterly misleading” ‘Down Down’ promotions to trick consumers.
The consumer watchdog claims Coles raised prices before promoting them as discounts, alleging “substantially more revenue is generated on promotion than not” on hundreds of products, including household staples such as toothpaste, deodorant, cheese, shampoo and soft drinks.
Launched more than a decade ago and previously starring the likes of singer Casey Donovan (see below), Coles ‘Down, Down’ campaign has become synonymous with discounted products at the supermarket giant.
A total of 245 products between the period of February 2022 and May 2023 are part of the ACCC’s probe into Coles’ discount scheme. Rival Woolworths has previously been accused of similar tactics by the consumer watchdog.
Coles has denied wrongdoing and told B&T it will defend against all allegations.
Robyn Sefiani, founder and president of the strategic communications agency Sefiani, told B&T if the ACCC can prove Coles engaged in “planned deceit” and “disguised price rises positioned as price discounts”, “you have the perfect storm for sustained reputational damage”.
“Coles and Woolworths have been in the firing line since the Four Corners investigation into their behaviour (and alleged misbehaviour), which spectacularly and globally saw the downfall and departure of then-CEO of Woolworths Brad Banducci,” she said.
“With the Four Corners’ allegations now being tested in the court by the ACCC, consumer trust in the major supermarkets is now being sorely tested. Add to this the claim by the ACCC’s legal counsel, that Coles’ customers had been repeatedly ‘deceived’ and the pricing was not ‘fair dinkum’ and you have a once-loved brand in the firing line, with its reputation as a trusted, proud Australian company with family values and discounted pricing, under serious question.
“If proven, Australians trying to manage through a cost of living crisis will be angry, as trust in promised product discounts has been lost. Whatever the outcome of the court case, it is likely that consumers and consumer advocates will want to see more transparency in price discounts on the shelves of the two major supermarkets, and consumers may vote with their feet.”
‘A serious problem’
Sphere PR’s Louise Roberts, who works for a consultancy that handles crisis communications on behalf of clients, believes “this is a very serious problem” for Coles.
“It shifts the issue from a pricing dispute to a question of trust,” she said.
“The ‘Down, Down’ platform has long been positioned around affordability. If prices were raised and then presented as discounted, that creates a credibility gap and it raises governance and margin-strategy questions for the Coles board.”
Roberts believes for “an established supermarket brand like Coles” the biggest risk for them is “reputational erosion”.
“The supermarket duopoly is extremely powerful in Australia and is a high-frequency category. If shoppers start to doubt whether a ‘special’ is genuinely a saving, it undermines Coles’ entire value proposition. Consumers can accept higher prices in an inflationary climate, but they are far less forgiving if they feel they have been misled during a cost-of-living crisis.”
Roberts believes the long-term impact will depend on how Coles responds.
“Transparency and clear corrective action can contain the brand damage, but defensive positioning risks deepening consumer cynicism and further eroding trust,” she said.
“The majority of consumers have limited choice about which supermarket they shop at, since convenience trumps morals, so whether this leads to a mass exodus to tier two brands like Aldi and IGA remains to be seen.”
Monique Haylen, founder of strategic communications and digital influence agency MINT PR, also weighed in on on the saga.
“The real risk for Coles isn’t just the regulatory issue, it’s trust,” she said. “The reputational impact comes down to one thing, and that is whether customers feel they can rely on the value message.
“Promotions like ‘Down Down’ work because they signal value and transparency. But if shoppers start to question whether the savings are genuine, the issue quickly shifts from pricing mechanics to credibility.
“In a cost-of-living environment, consumers are highly price-aware and paying close attention to what they are actually getting at the checkout. There is very little tolerance for anything that feels unclear or misleading.
“Whether this becomes a longer-term reputational issue will come down to clarity. Once customers begin to question the value message, future promotions have to work much harder to land,” she added.
A matter of trust
Passionberry Marketing’s director and founder Geoff Main believes “it’s going to take a massive hit to their reputation”.
“But there are also consumers who see through these sorts of campaigns in supermarkets (not just Coles) that say ‘Down, Down’, and know they’re not actually not true. We may trust them on other specific features, like product quality, but not necessarily that their prices are actually going down,” he said.
“As a major consumer brand, Coles now needs to step up and do the right thing by the customer, talk about the right things and pick up their reputational pieces. They can no longer try to ‘shimmy past the system’.”
Fractional’s chief marketing officer Fabrizia Roberto describes the language coming from the ACCC as “reputationally radioactive”.
“At face value, this is more than a pricing technicality. When the ACCC uses language like “utterly misleading”, that’s reputationally radioactive for a brand the size of Coles,” she said.
Coles has spent decades building a position around value, trust and everyday reliability. Its ‘Down, Down’ platform is rooted in price leadership and consistency. If the allegation is that prices were first raised and then presented as discounted, that strikes at the core of that positioning. This isn’t a fringe campaign misstep, it goes to the heart of the brand promise.”
Roberto believes the reputational risk sits in the following three key areas:
- Trust erosion at scale: Grocery retail runs on habitual behaviour. Customers don’t re-evaluate every basket rationally, they operate on trust and shortcuts. If shoppers begin to question whether “specials” are genuinely special, Coles risks weakening one of its most valuable assets: default preference.
- Narrative fuel for competitors: In a cost-of-living environment, consumers are already sceptical about supermarket pricing. Even the perception of engineered discounts reinforces that narrative. Competitors don’t need to say much, the market conversation does the work for them.
- Structural commercial impact: If customers believe promotions are manipulated, the entire promotional mechanic loses power. That’s not just reputational, it directly affects margin strategy and long-term pricing credibility.
Gemma Manning, a regular customer at Coles, said she was left “disappointed” by what has emerged in the last 24 hours about Coles.
“Like many, I feel cheated by the brand that I have been loyal to all these years. I will start to shop elsewhere, which is frustrating,” she said. “I don’t appreciate the customer experience and how they have been ripping off their customers.”
B&T approached Coles for comment. The supermarket giant said it commenced its opening submission late yesterday afternoon, and will continue to defend against the allegations.
“Coles denies and is defending all allegations made by the ACCC. It would be inappropriate to comment further while legal proceedings are underway,” a Coles spokesperson said.
