According to PepsiCo supremo Indra Nooyi, trust is “the intangible trading currency for consumer industry companies” and there is an emerging demand for products that are ‘LATTE’: Local, Authentic, Traceable, Transparent and Ethical.
As evidenced by the horsemeat scandal, or the current furore over confusing promotions in supermarkets, there is no doubt that trust and transparency have become huge issues for consumer-facing companies. With online searches and social media putting customers in the driving seat, these companies cannot afford to be anything less than open.
In fact, in a 2015 global survey of more than 500 senior consumer executives, conducted by KPMG and The Consumer Goods Forum, trust was considered the single most important driver of growth, with a third of respondents planning to actively invest in trust in the coming years.
By removing certain high-sugar drinks from its shelves, Tesco is declaring that it cares about its customers. Similarly, Diageo has become the first major drinks company to list ‘per serve’ calorific content on its products. These voluntary moves indicate a willingness to listen and respond to consumers’ concerns.
Given the interdependence of retailers, manufacturers and suppliers, trust cannot be considered in isolation. Having worked to build a sound reputation, suppliers will not want to see brands undermined by inappropriate promotions. Neither do retailers wish to stock products that generate unhealthy publicity due to food safety issues.
Millennials are driving the agenda for ethics and sustainability, and are more likely to voice their feelings via Twitter, Facebook, Instagram and WhatsApp. It’s vital to respond effectively, answering any negative allegations head-on. One option is to utilise predictive analytics, enabling organisations to respond to various scenarios.
Trust is hard to gain, easy to lose and difficult to quantify. Indeed, measurement may be the next frontier, enabling us to compare profitability and shareholder value with trust levels. Until then, it will remain an intangible but essential part of corporate strategy.
Liz Claydon is UK head of consumer markets at KPMG