Photo: RetailWire
Retail has a customer trust problem
According to a new Gallup poll, U.S. consumers do not trust retailers as much as they used to — and they do not have much trust for anyone else, either.
The study states that customer trust has been declining for years and identifies several potential factors contributing to the issue, such as:
- Greater access to information about retailers via the internet as well as social media’s potential to provide a megaphone for criticism about negative interactions with a retailer;
- Retailers’ inability to keep up with Gen Z and Millennial demands for commitments to social responsibility;
- Failing to empower employees to deliver the experience that customers are looking for.
The study suggests that retailers can remedy the deficit in trust by focusing on “core values and purpose,” creating the kinds of human interactions that cannot be accomplished strictly with technology and empowering employees to “deliver magic to customers.”
The decline in consumer trust in retailers comes alongside a decline in public trust in other U.S. institutions, according to Gallup. While year-over-year trust in small businesses dropped two percent, from 70 percent to 68 percent between 2021 to 2022, other institutions saw larger drops during that time frame, including those with lower rates of trust to begin with. Trust in big business dropped four percent from 18 percent to 14 percent, trust in the medical system dropped six percent from 44 percent to 38 percent, and trust in banks dropped six percent from 33 percent to 27 percent.
A PwC study from last year, however, paints a different picture of what builds customer trust than the Gallup poll.
While the new Gallup study found that 85 percent of Gen Zers trust a brand more when it takes a strong social stance, the PwC study found that only 27 percent of customers overall believe that businesses that take a stand on social issues are more trustworthy.
In a study by Morning Consult, 42 percent of Gen Zers said that they do not tend to trust the average American company and that trust must be earned.
Discussion Questions
DISCUSSION QUESTIONS: Do you agree with Gallup’s assessment of the state of trust for retail businesses and the steps retailers should take to earn customer trust? How important is trust to the customer experience and what do you think retailers can do to earn more of it?
Poll
Loading …BrainTrust
DeAnn Campbell
Head of Retail Insights, AAG Consulting Group
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Trust is a very nebulous concept when measured in surveys. We hear a lot about the need for retailers to take strong social stances. Morally, they probably should where it is appropriate to do so. However there is a massive disconnect between what consumers say in surveys and how they act. We see this time and time again when a retailer has some breach of sustainability or some ethical violation: consumers keep on using it regardless. All of this suggests that trust that drives retail usage is more linked to service, products, quality, availability and the factors that shape the shopping experience.
Trust is vital for long term relationships, which is what all retailers want with their customers. Gallup’s results are not surprising and the steps they recommend are reasonable, if not new. Ultimately, retailers need to do what they say they’re going to do and simply treat customers with respect. And of course retailers should empower employees to deliver a great experience, but words are easy – actually doing it consistently is difficult.
I would not go out and condemn the entire industry. “Shrinkflation” did not help to build trust. Pricing errors do not build trust unless they are handled immediately and with few questions asked. I have not personally encountered situations where I said “I am never shopping here again.” It is very important for focus group and research companies to ask the right questions correctly or the results may be misleading.
You lost me at “and empowering employees to ‘deliver magic to customers.’” Who writes like this and what does that mean? Magic is illusion — tricking people.
Trust comes from people but unless retailers dedicate a budget to training, we’re pretty much left with “Let’s make a deal.“
“Who writes like this?” Answer: people whose advice you should’t trust.
Trust is a big challenge for retailers because there is still a wide gap between what customers say they want and what they actually buy. Companies like Lush earn high points for their strong environmental practices, but the larger share of shoppers still buy from cheaper competitors. You can do everything right as a brand or retailer to earn customer trust, but still lose that trust by raising prices to enable those trustworthy practices.
Trust is earned and sustained over time. Retailers need to “walk the walk,” including empowering employees to take appropriate action on the spot.
Customers are savvy and cannot be fooled. Trust is directly connected to brand loyalty but today’s economic landscape tells us otherwise. Customers are looking for the best price and that’s a fact. Shein projects its revenue will more than double to nearly $60 billion by 2025 and customers are well informed on the brand’s unethical practices. Gen Z and Millennials may demand socially responsible practices from brands but their closets tell us otherwise.
Clarity and transparency are important when evaluating brands and products. I used to be very attuned to focusing on product attributes. Now I include broader considerations when making purchase decisions. And yes, those considerations are political and environmental. I buy fresh coffee beans instead of the little plastic cups. I buy bar soap instead of liquid in a plastic container. I didn’t buy that pillow I was thinking about. I switched to a different brand of beans than the one I had been buying for quite some time. These decisions had nothing to do with product. I had either lost trust in the brand or felt I could simply be less wasteful. Consumer thinking evolves over time. Product and brand performance also needs to evolve to maintain consumer trust.
Trust is eroded when brands/retailers talk about delivering great experiences for customers but don’t back up that promise with in-store or on-site reality. Here are two examples:
It took us six months and three voice calls (getting conflicting responses each time) to disconnect Mom’s AOL account after she died — and they were pulling $40 a month out of her bank account that whole time. Never letting go of subscription revenue is the whole business plan, however.
You’ve hit on a key sore spot Bill.
Do consumers distrust retailers because of their stance on social activism, or because of more nuts-and-bolts issues like pricing strategies and supply chain execution? It’s hard to say, especially after disruptions to many retailers’ operations during and after the pandemic.
“Distrust of institutions” is probably at or near an all-time high anyway, so the best response by a retailer might be to deliver on its brand promises as effectively as possible.
There are too many examples of retailers missing the mark when it comes to trust — data breaches, pricing issues, out-of-stocks, and poor service. When trust erodes, the opportunity for a retailer to develop a genuine relationship with that customer goes out the window, and their interactions become transactional. When that happens they lose the lifetime value of that customer relationship, and it isn’t easy to earn it back. To do so requires an understanding of what your best customers expect from your brand, and ensuring that you deliver on those expectations.
Gallup is right about the social media microscope and consumers’ high expectations reducing trust in retail. Empathy, human connection and empowered, tech-enabled employees can help retailers deliver magic.
Trust earns flattering word-of-mouth and loyalty. Listening to customers, adding value, and being consistent and sincere helps retailers build trust.
When you consider the fact that all consumers have unbounded platforms to investigate retail offerings and compare them to others in the marketplace, it is surely a mental lesson for them. Consumers can also read what discouraged shoppers are complaining about regarding their shopping experiences. It is a never-ending battle for retailers and all businesses. That is why businesses must be serious about enabling staff effectiveness with customers. Staff is very rarely trained appropriately, and I rarely find management working the floors of a retailer. SAD!
The big shots should be out of their offices and walking the floors, asking the great age-old question of customers — “How are we doing?” — to get a dose of reality. Create campaigns that tout the vision of happy customers bragging about their experiences. Trust is as sacred as sales.
It could be worse. The trust in government is in the low teens (depending on what research reports it.).
My recommendation for retail is pretty simple. Retailers must stand behind their espoused values and treat customers as their most important asset.
The connected and empowered consumers are now 10 steps ahead of retailers and brands. They are well-informed and align themselves with brands and retailers with clear value propositions but also inspire a sense of trust and transparency, which leads to consumer confidence.
Trust in any relationship is a delicate thing. The foundation of any retailer and consumer relationship is that it is built upon the foundation of the retail companies meeting their brand promise, consistently delivering quality products and services, and addressing customer needs. Retailers must consistently deliver by empowering and enabling their frontline staff with the tools, capabilities, and, most importantly, compensation structures to incentivize this.
I’m not in agreement with all the reasons. Trust and unreliability are not exactly the same. Many retailers had supply chain and employment issues. That made for an unreliable experience. It takes a while to shake that reputation. If a retailer’s contribution to a cause (or lack of contribution to a cause) doesn’t align with Gen Z’s cause, that’s not a breech of trust as much as it is a choice. Sure, we all trust people and companies/retailers that agree with what we agree with, so the stat makes sense. However if asked a different way (“Would you not trust a retailer that didn’t have a cause you believed in?”), it might have a different result.
Trust comes down to earned reputation. Retailers who deliver on their promises and make good-faith effort to correct errors are best positioned to build shopper trust over time. Taking the “right” social stance is more like wallpaper to me — it doesn’t fix a poor sub-structure.
Thinking more broadly, it seems to me that we live in a society where trust in all forms — institutions and fellow citizens — is eroding dangerously. (I attribute this to digital media, but that’s a Media Ecology lecture for another day.) Retailers are caught in the same bind as everybody else.
Ironically, I would say polls are probably trusted far less than retailers; and (often) for good reason.
This really shouldn’t be so hard: decide why you’re in business, conduct it honestly, and don’t worry about random voices, including web-site posts that seem to amplify hysterical over-reactions in social media (ahem).
Trust levels remain fairly high with major retailers overall, and we’ve seen this specifically in the home improvement industry. J.D. Power captures customer survey data on brand image across several industries. One of the image attributes surveyed is whether a retailer is “doubtable” vs. “trustworthy.” In home improvement, this trust attribute is captured for paint retailers, home improvement retailers, and appliance retailers. Over the last year, the trust data has remained fairly consistent with no significant shifts or trends. On a 7-point scale, where 7 is “trustworthy” and 1 is “doubtable,” customers on average are rating their trust with their retailer around a “6.”
A few of the retailers that perform above-average include Ace Hardware and Costco.
Overall, there does appear to be a trend of the more local neighborhood stores outperforming the big box stores on “trust,” but that isn’t always the case. In fact, even the lowest performing retailers on trust still pull in ratings above 5 on that 7-point scale. Trust drives reputation which strongly correlates to satisfaction and loyalty. Without trust a retailer can’t grow or thrive in such a competitive market. Communication, transparency, great customer service, and consistency are key to building trust.
Yes, trust has long been an important factor for consumers. As the Gallup article stated, the internet has empowered consumers to learn about the brands they shop at to ensure they are values aligned. However trust goes far beyond shared values. Trust is built through experiences and the customer shopping experience is the most important one a consumer will have with a company. Providing a quality customer experience by making it easy to find the products customers are looking for, giving personalized recommendations on all touchpoints, and delivering on brand promises (e.g., by having BOPIS orders available at the stated time) are all essential to building trust.