Why Mark Ritson has it wrong on Coles 

In his recent Mumbrella column, Mark Ritson argues that the ACCC’s action against Coles over pricing is purely a legislative matter. Coles, he suggests, may face regulatory consequences, but there will be no meaningful reputational damage. 

But reputation today rarely collapses overnight for major incumbents. It thins out. Quietly. Gradually. Then structurally. And when it does, the financial consequences are neither theoretical nor confined to communication metrics. 

We know this because we track it. 

The SenateSHJ Crisis Index 300 — the only global index analysing the financial impact of corporate crises across more than 300 listed companies on 27 stock exchanges — shows that when trust failures crystallise into full-blown crises, the consequences are severe and enduring. 

On average: 

• Share prices fall 35.2% 

• Earnings per share decline 68.6% 

• It takes 425 days – well over a year – for companies to recover to pre-crisis share price levels 

• Nearly one in three companies never fully recover their pre-crisis market value. 

The Coles matter is not in that category – yet. But that misses the point. For Coles, the danger isn’t immediate collapse. It’s cumulative reputation erosion. 

Trust is behavioural, not rhetorical 

Modern reputation is formed less by brand positioning and more by observed behaviour. Customers, regulators and investors don’t always assess single incidents in isolation. They aggregate incidents and patterns. 

When shoppers begin to feel “managed or manipulated” rather than treated fairly – particularly during a cost-of-living crisis – each allegation becomes another data point. No single event may cause defection at scale. But over time, the pattern reshapes how the brand is judged. 

And this judgment changes economics. 

Supermarkets operate on thin margins but immense scale. They rely on customer habit, convenience, perceived value for money, assortment of stock and availability, and perceived fairness and integrity. The last two translate to a reputation and trust operating asset, and when this declines, several things happen: 

• Customers become more price sensitive 

• Competitors’ promotions become more effective 

• Political scrutiny intensifies 

• Regulators feel emboldened 

• Activists gain traction 

• Media framing hardens. 

None of that shows up instantly in quarterly sales. But it shifts the long-term cost of doing business. 

Reputation now flows into governance 

Commercial controversies quickly become governance questions. 

Pricing practices are not just operational decisions; they are interpreted as reflections of leadership intent and corporate culture. The shift from “what happened?” to “what does this say about who you are?” is where reputational damage becomes structural. 

Investors increasingly treat brand trust as a proxy for governance quality. We have seen this play out repeatedly during AGM seasons, where remuneration votes and board elections become vehicles for expressing broader dissatisfaction about culture, transparency and leadership conduct. 

In that environment, pricing allegations are not siloed within marketing. They are evaluated as signals about oversight, incentives and ethical trade-offs. 

This sort of governance-linked reputation risk carries a financial premium. 

Coles misled a lot of trusting customers

Slow reputation erosion reduces resilience 

The Crisis Index 300 data reveals something boards often underestimate: companies that enter a crisis with diminished trust suffer deeper and longer financial damage. 

Reputation functions as a shock absorber. When trust is strong, stakeholders grant benefit of the doubt. Recovery is faster. Regulators show more procedural patience. Investors maintain confidence. 

When trust is thin, the opposite occurs. Share price reactions are sharper. Media narratives are less forgiving. Recovery periods are longer. 

A 425-day average recovery is not just a statistic – it represents extended capital constraint, management distraction and opportunity cost. A 68.6% EPS decline signals impaired profitability long after headlines fade. 

The compounding effect is what matters. 

If a brand like Coles experiences incremental trust erosion over time, its resilience in a future, unrelated crisis – supply chain failure, safety issue, cyber incident – will be materially lower. The pricing controversy may not be catastrophic. But it weakens the reputation buffer. 

And weakened reputations are expensive. Echo Research reputation-value statistics show that in the UK, corporate reputation accounts for roughly 30% of total market capitalisation of FTSE 350 companies, equivalent to about £719 billion (A$1378b) in shareholder value in 2024.  

Purpose under pressure 

There is another dimension Ritson overlooks: narrative coherence. 

Large retailers position themselves as supporting Australian households, backing communities and helping families manage cost pressures. When conduct appears misaligned with that positioning, the gap between promise and behaviour becomes corrosive. 

Reputation damage is rarely about legal technicalities. It is about perceived fairness. 

During periods of economic stress, fairness becomes a heightened societal trigger. Allegations that suggest asymmetry – particularly involving essential goods – amplify sensitivity. That doesn’t mean customers revolt overnight. It means memory accumulates. 

Legislation can reset rules. It does not reset memory. 

Leah Weckert, CEO and managing director of Coles Group

The real long-term risk 

The most significant error in dismissing reputational damage is assuming reputation only matters if customers immediately defect. 

Reputational erosion expresses itself in slower, more structural ways: 

• Reduced pricing power over time 

• Increased cost of regulatory compliance 

• Greater scrutiny in future inquiries 

• Higher governance risk weighting from institutional investors 

• Lower tolerance during unrelated crises. 

You rarely see its deterioration in a single quarter. You see it in gradually declining goodwill, sharper reactions to future missteps, and boards spending more time managing sentiment than shaping strategy. 

The Coles situation may well result in legislative consequences. But to assume there will be no reputational dimension is to misinterpret how trust operates – particularly in essential-service categories during economic strain. 

The long-term risk is not a headline collapse but rather the slow downgrade of trust and the compounding cost of operating without it. 

These dynamics are explored in greater depth in SenateSHJ’s Future of Reputation 2030 report, based on interviews with 44 global reputation and corporate affairs leaders, which highlights how reputation has shifted from a communications output to a governance and enterprise-value determinant. 

And that shift is precisely why this debate matters. 

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