Retailers spend a lot of time talking about trust—its importance, how to build it, and why it matters. But far fewer are prepared to face the reality of distrust, a force that can be even more powerful and disruptive. If trust is the glue that holds consumer relationships together, distrust is the solvent that can dissolve them in an instant.
Distrust isn’t merely the absence of trust; it is an active, often visceral response. For retailers, large and small, understanding distrust is crucial in an era where consumer values are shifting, and transparency is demanded more than ever before. When left unchecked, distrust can cause reputational damage, market value erosion, and irreversible loss of customer loyalty.
Trust vs. Distrust: A Double-Edged Dynamic
Trust is often cited as a retailer’s most valuable intangible asset. It’s what turns customers into advocates and transforms transactions into relationships. Brands like Apple and Toyota thrive on this kind of trust, building loyalty that outlasts occasional missteps.
Distrust, however, is not just the shadow of trust. It’s the deep sense of rejection that surfaces when customers feel betrayed. Distrust spikes sharply in the wake of corporate scandals, ethical breaches, or broken promises. The Medibank data breach, for instance, wiped $1.6 billion from its market value as customers reacted with palpable anger and disappointment. Distrust is powerful because it is emotional, often driven by a sense of having been deceived or taken advantage of.
The Journey from Doubt to Rejection
The journey to distrust often starts with a seed of doubt. It could be an inconsistency in the brand story, a product that doesn’t quite deliver, or a customer service experience that falls short. This doubt festers, growing into suspicion—a nagging feeling that perhaps the retailer is not as committed to its values as it claims.
For retailers, this is dangerous territory. If suspicion is left unaddressed, it transforms into fear—a belief that not only is the brand unreliable, but it may actually be harmful. Fear ultimately drives rejection. Consumers walk away, choosing competitors or abandoning the category altogether. Once distrust takes hold, regaining lost ground is an uphill battle.
The Role of Economic Narratives in Trust and Distrust
Economic narratives significantly shape consumer trust or distrust. As Nobel laureate Robert Shiller has pointed out, stories that capture public emotion can drive economic behaviours more effectively than data. During crises or scandals, negative narratives can spread like wildfire, altering consumer sentiment and deepening distrust.
Retailers must be aware of how these narratives can affect them, especially when economic or ethical missteps are involved. Crafting positive, credible stories that resonate with consumers can counterbalance negative economic narratives and help them recover from trust deficits.
For instance, Bunnings Managing Director Michael Schneider brilliantly diffused the potential distrust around facial recognition technology in stores last week – by providing context and changing the narrative.
Digital Media: An Amplifier of Distrust
In today’s media-saturated environment, distrust is amplified at lightning speed. Social platforms can magnify a single customer complaint into a crisis, creating an echo chamber that reinforces negative perceptions. The Cambridge Analytica scandal is a prime example. Facebook’s initial attempts to downplay the incident only fuelled greater distrust, leading to a significant dip in user engagement and market value.
For retailers, this means that the stakes are higher than ever. Mistakes aren’t just noticed; they’re broadcast, dissected, and used as ammunition by competitors. The reputational cost is enormous, especially for SMEs, who often lack the resources to mount large-scale recovery campaigns.
Moral Blindness and the Erosion of Trust
A key driver of distrust is moral blindness—the inability or unwillingness of leaders to acknowledge the ethical dimensions of their actions. When a retailer prioritises profit maximisation over ethical behaviour, it creates a fertile ground for distrust. Instances of ‘greenwashing’, misleading sustainability claims, or poor labour practices are examples where moral blindness erodes consumer faith.
This is particularly damaging in retail, where consumers are increasingly values-driven. They want to support brands that align with their principles, and when they perceive a disconnect between a retailer’s stated values and its actions, their reaction is swift and often unforgiving. Moral blindness, whether it’s ignoring supplier conditions or whistleblower reports, contributes to a culture where distrust thrives.
Distrust and the Global Retail Landscape
The dynamics of distrust are not confined to local markets—they have global implications. Brands that have faced major trust crises, such as Facebook or Volkswagen, demonstrate how distrust can spread internationally, affecting not just local consumer bases but entire markets. For multinational retailers, the risk of distrust is amplified as missteps in one region can lead to global repercussions.
In contrast, trusted brands like Apple and Toyota manage to maintain their consumer loyalty even through occasional crises. Their ability to navigate distrust is tied to consistent transparency, a focus on ethical practices, and the careful management of global narratives to rebuild and sustain trust.
Turning Distrust Into Opportunity
While distrust is a powerful force, it can also be an opportunity. Retailers that successfully navigate distrust do so by owning up to their mistakes. Transparency, accountability, and swift action are the most effective tools in combating distrust. When customers see genuine efforts to make things right—beyond PR spin—they are more likely to give the brand a second chance.
The idea is not just to build trust but to actively manage distrust. This involves taking control of the narrative, particularly when things go wrong. Positive narratives, backed by genuine corrective actions, can mitigate the impacts of negative events. For example, after the emissions scandal, Volkswagen’s recovery relied heavily on owning the problem, compensating affected customers, and focusing on future sustainability innovations.
Strategies for Retailers
Transparency and Accountability: Retailers must be proactive rather than reactive in addressing issues. Openness about challenges and visible actions to solve them build credibility.
Ethical Practices: Strengthening oversight and committing to real social and environmental responsibility reduces the risk of ethical breaches that fuel distrust.
Crafting Positive Narratives: Retailers should craft compelling, authentic stories that speak to their core values and communicate these consistently across all channels. Leveraging narrative economics—the idea that stories shape economic outcomes—can help reframe consumer perceptions even after missteps.
Global Sensitivity: It is crucial for multinational brands to understand the global implications of distrust and ensure consistent ethical behaviour across all markets. What happens in one region can influence consumer perceptions globally, making it essential to address distrust on an international scale.
Conclusion: Harnessing Distrust as a Differentiator
In a landscape where every retailer claims to be trustworthy, the true differentiator may be how well a retailer manages and mitigates distrust. The brands that will thrive are not those that avoid mistakes but those that handle them transparently, act swiftly to correct them, and demonstrate an unwavering commitment to ethical practices.
When confronted and managed properly, distrust can ultimately strengthen a retailer’s position in the market. It offers an opportunity to connect with consumers on a deeper level by showing that while mistakes happen, a genuine commitment to improvement sets the best retailers apart.
Michele Levine, CEO of Roy Morgan
