The reverberations of the emissions scandal rocking Volkswagen will be felt far beyond the engines that power the global automotive industry.
The reverberations of the emissions scandal rocking Volkswagen will be felt far beyond the engines that power the global automotive industry. And there are ramifications and warnings for the retail industry from the debacle that must not be ignored.
Trust has become a business currency in its own right. And Volkswagen, a brand built around quality, aspiration and dependability has inflicted untold damage on itself by acting in a way that shattered those values.
An article published in the Harvard Business Review in the wake of the VW furore pointed out that in 1975 intangible assets were just 17% of the market value of the S&P 500. Today that figure has reached 84%.
Those intangible assets are tied up in the brand value of a business – or how consumers feel about the company. Among the most important blocks that build that value is trust.
“Retail’s high-profile nature and emotive relationship with consumers means it suffers more than other sectors”
Yet trust in institutions has been eroding for years, accelerated by events from the Libor scandal to the horsemeat fiasco, which reaffirmed to an increasingly cynical public that big business cannot be trusted.
That matters to retail. Retail’s high-profile nature and emotive relationship with consumers means it suffers more from this stereotype than other sectors. Yet few industries rely on brand trust to such a degree.
The often untold truth is retail has an enviable track record when it comes to its social responsibilities.
This week alone Aldi boss Matthew Barnes affirmed his pride in its outstanding compliance record with the Groceries Supply Code of Practice, for instance.
And Iceland chief Malcolm Walker held a supplier conference with the express aim of becoming “the best food retailer to do business with” adding to accolades won as an employer.
Yet maintaining trust has never been harder for retailers. Partly this is down to the explosion of channels that must be managed, which has added complexity and multiplied the touch points at which trust can be won or lost.
But the digital age, from social media to consumer blogs, has also created a culture where transparency has become a prerequisite for business success.
And consumers now demand that retailers know all about their products. And those same channels mean that any brand that is perceived to be failing is broadcast across the globe in seconds at a frightening volume.
As businesses such as Volkswagen stumble, retailers will have to work ever harder to ensure shoppers know they can trust them.
It is hard to overstate the power of personalisation. However, while much talked about, few retailers have yet to grasp its full potential.
That is why we have devoted our attention – both online and in this week’s magazine – to shining the spotlight on some of the best examples, and exploring the difficulties of treading the line between what is appropriate and what is not.
So please get personal with us and share your views on Retail-week.com.