Consumers have always been clear-eyed about the role of brand trust in their shopping decisions: PwC analysis has found that for 70% of consumers, trust in a particular brand or retailer is an essential factor in buying decisions.
No surprise then that when companies combine, trust is a theme that carries through. That was a finding in PwC’s global survey of consumer attitudes toward mergers and acquisitions.
Close to 80% of respondents said if a company they trusted combined with one they didn’t trust, the combined entity would essentially have to begin again to regain their trust.
Smaller, direct-to-consumer brands are well-known for generating a staunchly loyal following. When a larger company acquires a smaller brand, preserving the consumer-facing elements of the acquired company, as PetSmart did with Chewy, can go a long way in reassuring customers that their loyalty continues to matter.
Streamlining the supply chain and back-office operations meanwhile, can boost productivity for the acquired company while introducing the acquirer’s customers to a new product line.
When Marriott acquired Starwood, both companies communicated frequently with their customers—mostly business travelers eager for information—to explain the situation and how it would affect them.
Conversely, private equity firms routinely buy retail brands with customers being none the wiser. And customers aren't overly concerned because the products they love are rarely affected. Therefore, the decision to communicate with customers must hinge on their perspectives.
An infusion of tech or product innovation is often the reason for a deal. However, absorbing the target company into the acquirer’s ecosystem can choke off innovation. Walmart pledged to maintain Jet.com’s spirit of innovation after the deal.
In the ensuing years, with Jet.com’s support, Walmart has evolved its online presence to meet changing customer preferences. Today, Walmart has morphed into a digital lifestyle brand that continues to innovate—launching a new Intelligent Retail Store to test emerging technology in a real-world environment.
The challenge that has upended many a merger is maintaining the brand identity that attracted a loyal following while also achieving the value that prompted the deal in the first place. Due diligence that combines customer sentiment analysis with actual customer and employee interviews can go a long way in navigating that balance.
This is because, as PwC analysis has found, employee experience powers customer experience (CX), which yields material benefits. Including customers on the M&A journey can stave off expensive missteps in a time of continued deal activity.
Private Consulting Solutions Leader, Chicago, PwC US
Consumer Markets Tax Leader, PwC US
Consumer Markets Assurance Leader, PwC US