Food-bev companies feature among SA’s best corporate reputations

“All you have in business is your reputation,” says Virgin founder Richard Branson. Quite how to build that reputation is less easy to summarise, but it seems to boil down to consistency.

It is telling that in the 2017 SA RepTrak Pulse reputation survey, conducted by Reputation House and released this week, seven of the top 10 companies with the best reputations were in the fast-moving consumer goods and retail category.

Companies in these two sectors have to be consistent: stock must always be available, and the experience with customers must be reliably good.

JSE-listed milk producer Clover was the top-rated reputable company in SA in 2017. It scooped top spot in 2016 as well.

From rank two to 10, the remaining companies in the top tier were Coca-Cola, Pick n Pay, Nestlé, First National Bank, Woolworths, Spar Group, Old Mutual, Discovery and TFG.

It was no surprise that state-owned enterprises (SOEs) had the lowest standing on the rankings. Eskom, subjected to the on-again, off-again leadership of Brian Molefe and a number of scandals, was cited as the “least reputable” SOE by respondents.

Reputation House chairman Dominik Heil says though this survey has been conducted in many countries, there are some interesting differences between SA and the rest of the globe.

“Usually banks have really weak reputations around the world,” says Heil, “but South Africans seem to like banks.”

First National Bank ranked at number five, Capitec at 21, Standard Bank at 28 and Nedbank at 29. Absa is 44th.

Heil says that, historically, SA mobile network operators, led by Vodacom and MTN, have had some of the best reputations in the world. “That their reputations have decreased over the past year suggests they are falling in line with global trends,” he says.

Of the 50 companies listed on the rankings, telecoms are in the bottom 10 — with the exception of Vodacom Group, at 32.

One intriguing aspect of the survey findings is that the reputations of SA corporates were improving overall, as a counter to political turmoil.

“The corporate sector is seemingly an anchor of stability for people,” says Heil.

But is a good reputation a valuable expense? Does it, in other words, lead to greater profits?

David North, Pick n Pay’s group executive for strategy and corporate affairs, says there is theoretical evidence attesting to the strong relationship between profit and reputation.

“What we do know is that a good reputation tells you that customers think you are doing the right thing in terms of service, products, pricing, supporting local communities and acting with integrity,” he says.

North says reputational strength stems from integrity. “When organisations act with integrity, the result is likely to be a good reputation. And with a good reputation, customers give their loyalty. Loyalty means customers are willing to spend more with you.”

Pick n Pay’s loyalty programme, said to be the largest by membership in SA, grew to 7m active members in the year to end-February. At the time of the results, CEO Richard Brasher said this translated to 20 swipes at tills every second.

Heil says though there is no exact science between reputation and financial performance, the one can certainly influence the other.

“Reputation is shorthand for perceptions and emotions that drive behaviours, such as buying from a company or investments in a company. It is obvious that the propensity for people to buy from a shop drives turnover and the propensity of people to invest in a company has a positive influence on the share price,” he says.

Shoprite, Africa’s largest food retailer, climbed the rankings to number 25 from 28 in 2016. However, in 2014 and 2015 the grocer was in the top 10.

Heil says the hefty package awarded to Whitey Basson, Shoprite’s former CEO who left at the end of last year, could have been a factor in Shoprite’s positioning in the past two years….. Read the full article here