2010 : US top retail brands
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2010 : US top retail brands

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Why strong brands are stronger

Why strong brands are stronger
Profiles of the top 50 brands
Opportunity for innovation
Why Target grew, and what is happening to Best Buy

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2010 : US top retail brands Document Transcript

  • 1. The MostValuable U.S.Retail Brands2010Why strong brands are stronger Profiles of the top 50 brands Opportunity for innovation
  • 2. Since 1978, we have been creating retail brand Today, we have 1,200 associates in almost 40experiences for companies around the offices around the globe and a practice that bringsworld. Interbrand Design Forum’s talent for together a diverse team of thought leaders.game-changing innovation led us to create a This deep talent pool makes our business bothbusiness model that integrates analytics- rigorously analytic and highly creative.based strategy — the first and only companyto do so. As a result, we have changed the dialogue, defined the meaning of brand management,This unique ability to address retail’s growing and continue to lead the debate around brandcomplexity has brought many of the world’s as a valuable business asset. By making brandtop companies to our doorstep and propelled central to our clients’ strategic business goals,Interbrand Design Forum to the forefront of we help them create and manage the value ofthe industry. their brands.We have been part of Interbrand since 2002,and two years ago we added Interbrand to ourDesign Forum name to reflect our place in theworld’s largest branding consultancy.
  • 3. ContentsManaging Brands for Value 2A perspective on the 50 top retail brands fromChief Executive, Lee Carpenter.The List 4Interbrand Design Forum’s Most Valuable Retail Brands 2010.Evaluating the Top U.S. Retail Brands 6Understanding our methodology for valuing brands.Climbers and Fallers 6Which brands are new to the list? Which dropped off ?Profiles of the 2010 Most Valuable U.S. Retail Brands 8A snapshot of the top 50 retail brands and insightinto what’s driving growth.Strong Brands Get Stronger 18Strong brands refine their ambitions, stay consistent, andmaintain the momentum behind their internal workings.2010: The Year of Optimization 20Brand-led companies streamline their assets andimprove perceptions because they know whatmatters most to customers.Back to Basics 22Price may matter more this year, but brand is still important.Undifferentiated propositions kill value.Leaders Embrace Social and Technology Trends 24Top retailers build a community of interest around theirbrands through mobile marketing and social networking.The Demand for Innovation 26Without profitable new ideas companies cannot createenough lift to sustain brand value.Contact Us 28Details on how to get in touch.
  • 4. ManagingBrand ValueThis year, the most striking shiftin the 50 Most Valuable RetailBrands is the overall increase inthe value of the top 25, and thedescent of the bottom 25. Proofthat you can’t just manage a brand.You have to defend it.With all the headlines about dropping demand, Lessons from the leadersshuttered stores and beleaguered consumers, you’dthink our second Most Valuable U.S Retail Brands study From a competitive perspective, the tough marketwould read like a train wreck. The opposite is true. demands differentiation, innovation and value-add like never before. Brands need to be clear andOf the one and a half million retail companies in America, compelling to stand out from price-based competition.2009’s 50 top brands are remarkably intact. Together, thetop 25 retailers have increased their brand’s economic One of several lessons we draw from the list, is thatvalue over the previous year. As calculated through the strong get stronger. The performance of Walmart,Interbrand’s rigorous proprietary analysis, the upper which increased its lead by an even greater margin thishalf of the list not only survived but prospered. By that year, demonstrates that as a company refines its idea ofsame calculation, the next 25 as a group lost value. brand, it unlocks pockets of value creation which can lead to big impact due to increasing returns to scale.Broadly speaking, companies that declined in value slashedprices at the expense of brand equity, and failed to see anyreturn on their innovations this year. Rising companies, onthe other hand, had their brand proposition fully in place to Brand-led companiestake advantage of the downturn, invested in their brandsand convinced the customer of their relevance and worth. know the customer, know themselves and create anThere’s more to it than that, of course. Retailing is acomplex business. That’s why we continue to debate and environment for innovation.discuss the actions and strategies of the leaders. Theconversation provides an opportunity to learn from theirsuccess as well as their missteps.2 | Interbrand Design Forum
  • 5. Some brands that increased significantly in value The Brand Primer: How to build valuethis year, such as Target, proved themselves moreefficient and effective. We attribute that to the “Brand” is the particular set of tangible and intangiblefact that brand-led companies maintain their brand assets that consumers attribute to a retailer. The moreequities at the same time they streamline their distinctive your proposition, the tougher it is forassets, guided by what matters most to the customer. the competition to copy.It’s not news that customers have changed. And you Brand functions as an asset. If a brand plays a role indon’t need our league table to tell you that the market choice and the consumer must choose betweenplayed to the retailers with low price propositions. competitors, then the brand contributes to earnings and profit. It is therefore quantifiable and valuableBut Dollar General shows us that although the to its owner. The companies at the very top of theimportance of brand might be less as price becomes rankings understand the dynamics of their brands’more of a priority, there’s a battle brewing for the influence, so they can bring their power to bear inloyalty of the new deal seeking shopper. The winners times of change.will be those with engaging brand experiences andmore trend-relevant offerings. Brand ideas must have the power to generate value. Take Whole Foods Market, which crafts a unique sensoryIn every category, however, we can see that an laden experience with the promise to engage inundifferentiated proposition quickly kills a brand’s responsible food production. The idea produceseconomic value, most dramatically in the case of exceptional value, affecting as it does everything fromAbercrombie & Fitch. the merchandise and its display to the behavior of employees.The recession happened in the midst of social changebrought on by technology. We shop differently, we Brand drives demand through every aspect of the business.think differently, and our social behavior has changed. By using brand valuation as a diagnostic tool, retailersThe profile of American Eagle Outfitters shows gain insight to the precise economic benefits of theirhow retailers win by embracing these new social brands. It clarifies which factors drive demand, whatand technological trends. role the brand plays across each factor and how strong the brand is versus its competitors.And finally, we can see that even within the ranksof the top retailers in America there’s more going Brand helps us see at which point in the shopping experienceon than just a drop in retail demand overall. Some we are in danger of losing the customer. When you canbusinesses have been slow to bring something new pinpoint the role brand plays in driving purchase,to the shopper which caused them to lose brand you can craft an experience that will influencevalue — it’s remarkable how quickly it can happen. shopper choice.Once again, the list tells us that brand-led companiesknow the customer, know themselves, and create Brand helps us understand exactly what must be changedan environment for innovation. and how in order to maximize value. A change to the existing delivery could provide increased customerThoughtfully, commitment. It might be as complex as a whole new service offering or as simple as consistency. When you identify which business elements create economic power, you can make smart decisionsD. Lee Carpenter about investing resources into these previouslyCEO Interbrand Design Forum unrecognized market opportunities.and Interbrand North America Lastly, leaders understand that brand building isn’t a separate exercise from the day-to-day running of the business. It is integral to it. The Most Valuable U.S. Retail Brands 2010 | 3
  • 6. The Most 6 2009 Rank 5 15 2009 Rank 15Valuable U.S. CVS 14.122 $B Costco 5.488 $B Change in Brand Value 12% Change in Brand Value -4%Retail Brands 7 16 2009 Rank 9 2009 Rank 172010 Sam’s Club Avon 10.540 $B 4.917 $B Change in Brand Value 11% Change in Brand Value -7%For the second time, Interbrand 8 17 2009 Rank 6 2009 Rank 18Design Forum is delighted tounveil what is possibly the most Dell GameStopuseful barometer for successful 10.291 $B 4.729 $Bretail brand management. Brand Change in Brand Value -12% Change in Brand Value -7%valuation is a great tool for showinga business how to optimize its brand. 9 18 2009 Rank 10When done right, the brandbecomes a value creation engine. Coach Dollar General 8.887 $B 4.679 $B Change in Brand Value -2% NEW1 10 19 2009 Rank 1 2009 Rank 14 2009 Rank 22Walmart Amazon.com Kohl’s154.144 $B 7.858 $B 4.580 $BChange in Brand Value 19% Change in Brand Value 22% Change in Brand Value 40%2 11 20 2009 Rank 4 2009 Rank 11 2009 Rank 25Target eBay AutoZone25.500 $B 7.350 $B 4.055 $BChange in Brand Value 49% Change in Brand Value -8% Change in Brand Value 44%3 12 21 2009 Rank 2 2009 Rank 8 2009 Rank 20Best Buy Lowe’s Tiffany & Co.17.806 $B 7.072 $B 4.000 $BChange in Brand Value -19% Change in Brand Value -34% Change in Brand Value -5%4 13 22 2009 Rank 3 2009 Rank 13 2009 Rank 16The Home Depot Nordstrom Victoria’s Secret17.043 $B 6.753 $B 3.992 $BChange in Brand Value -18% Change in Brand Value 0% Change in Brand Value -30%5 14 23 2009 Rank 7 2009 Rank 12 2009 Rank 19Walgreens Staples Gap14.319 $B 5.805 $B 3.922 $BChange in Brand Value 28% Change in Brand Value -20% Change in Brand Value -10%4 | Interbrand Design Forum
  • 7. 24 33 42 2009 Rank 21 2009 Rank 37 2009 Rank 35Polo Ralph Lauren Marshalls Bath & Body Works3.094 $B 1.185 $B 843 $MChange in Brand Value -26% Change in Brand Value 7% Change in Brand Value -25%25 34 43 2009 Rank 26 2009 Rank 36 2009 Rank 43Bed Bath & Beyond T.J. Maxx Big Lots3.045 $B 1.154 $B 825 $MChange in Brand Value 19% Change in Brand Value 4% Change in Brand Value 37%26 35 44 2009 Rank 32 2009 Rank 49 2009 Rank 46Netflix Aéropostale Tractor Supply Co.2.303 $B 1.036 $B 631 $MChange in Brand Value 82% Change in Brand Value 132% Change in Brand Value 15%27 36 45 2009 Rank 28 2009 Rank 29Old Navy American Eagle Buckle1.981 $B 1.021 $B 624 $MChange in Brand Value 24% Change in Brand Value -34% New28 37 46 2009 Rank 23 2009 Rank 34Sherwin-Williams Urban Outfitters Family Dollar1.928 $B 935 $M 620 $MChange in Brand Value -36% Change in Brand Value -18% NEW29 38 47 2009 Rank 30 2009 Rank 47Banana Republic Whole Foods Advance Auto Parts1.686 $B 926 $M 561 $MChange in Brand Value 9% Change in Brand Value 87% NEW30 39 48 2009 Rank 33 2009 Rank 24 2009 Rank 41RadioShack JCPenney American Girl1.439$B 923 $M 534 $MChange in Brand Value 15% Change in Brand Value -68% Change in Brand Value -17%31 40 49 2009 Rank 31 2009 Rank 42 2009 Rank 27PetSmart Rent-A-Center Abercrombie & Fitch1.317 $B 868 $M 484 $MChange in Brand Value -14% Change in Brand Value 41% Change in Brand Value -81%32 41 50 2009 Rank 39 2009 Rank 38J. Crew Dick’s Macy’s1.224 $B 868 $M 472 $MChange in Brand Value 28% Change in Brand Value -19% NEW The Most Valuable U.S. Retail Brands 2010 | 5
  • 8. Evaluating the TopU.S. Retail Brands Climbers and FallersThe Interbrand method for valuing brandsexamines brands through the lens of financialstrength, the importance of the brand in drivingchoice, and the likelihood of ongoing revenuegenerated by the brand. Which brands are new to the list?To start, all contenders for the list must be a market- Which brands dropped off ?facing brand, with publicly available financial data,and positive Economic Value Added. Interbranddetermines brand value the same way analysts value While the long-term fallout from the recent economicother assets: on the basis of how much they’re likely crisis is still in motion, a few new dynamics haveto earn in the future. emerged in the short term. The most evident is that consumers are more value conscious, trading off egoThose projected profits are then discounted to a benefits for price. Some brands are proving to be outpresent value based on how risky the projected of sync with a world where frugality is being called “theearnings are; that is, Financial Forecasting. new form of conspicuous consumption.” The value contributed by the brand, or Role of Brand, The Internet continues to transform the relationship is derived by using a proprietary analytic framework that brands have with their customers. Speed, that expresses brand earnings as a percentage of interactivity, and personalization are becoming Economic Value Added. It answers questions such as: increasingly important purchase drivers. Retailers“Are people shopping at Walgreens because the store without digital integration are missing the opportunity is conveniently located or because of the brand?” to stay connected with today’s mobile customer.Last, Brand Strength is assessed by figuring out how Despite the pragmatic and practical consumerrisky the future brand earnings are according attitudes, the shopping experience — in any channel—to factors like market leadership, stability and is still about winning their hearts and minds.geographic coverage. This risk analysis producesa discount rate that is applied to the brand Gaining sales through price and acceleratingearnings to come up with a Net Present Value, which growth through a better experiencerepresents the true economic value of the array offorces that make up a brand. After its public offering last year, Dollar General is making a strong debut at number 18 in the rankings.In the belief that brand is a corporate asset that Family Dollar (46) and Advance Auto Parts (47) havebelongs on the balance sheet, Interbrand pioneered been favored by the market. Both are workingvaluation and brand analytics to enable clients in the to find a way to keep the customers the recession hasstrategic creation and management of their brands sent their way. Family Dollar has aggressive expansionto make business more profitable. plans in the works, while Advance Auto Parts is concentrating on improving its retail experience.Although this is the second league list exclusively forU.S. retail, Interbrand’s rigorous, straightforward Staying on courseand profound analysis of brand value has appearedannually in BusinessWeek as “Best Global Brands” The biggest challenge any company faces in asince 2001. downturn is to go forward with its brand vision intact when pressure for short-term results intensifies. By steering a strong, steady course through economic6 | Interbrand Design Forum
  • 9. turmoil, Buckle (45) kept its customers shopping without Children’s specialty apparel retailer Gymboree (rankedresorting to price tactics. Brand watchers have certainly 48 last year) wasn’t so much hit by the economy as bybeen keeping a close eye on Macy’s (50) for the same its reaction to new federal safety laws regulatingreason, as its strategy is finally beginning to pay off. embellished clothing. The ensuing “loss of bling” drove them off-trend and took away their justification forNot special enough: The challenge higher prices relative to the competition. The whimsical,of relevance romantic wares of Anthropologie continue to capture the imagination of its core customers; the apparel brand,While “sameness” continues to be a source of ranked at 50 last year, was simply edged off the list bydissatisfaction for consumers, it’s an issue that many the overall market’s flight to value.companies can afford to ignore in flush times. However,downturns tend to accelerate the failure of undifferentiated A market in transitionbrand propositions, as is the case with high-priced surferinspired clothing brand Hollister (last year it ranked 40). Hit with the recession and the migration of readers toShoppers could find similar clothing at lower price points digital formats, book superstore Barnes & Noble (lastelsewhere. Men’s Wearhouse (45 last year) admitted it’s year 44 on the list) tried to keep up by entering thebeen slow to make itself more relevant, particularly in the e-reader competition while resorting to aggressiveonline channel. Both fell out of the rankings this year. discounts and price wars. As inventory becomes digital,Going forward, these businesses would be wise to look the brand may find its balance in a smaller footprint.inside their brands for latent competitive advantages. Dollar General Hollister 4.679 $B 2009 Rank 40 Rank 18 Buckle Barnes & Noble 624 $M 2009 Rank 44 Rank 45 Family Dollar Men’s Wearhouse 620 $M 2009 Rank 45 Rank 46 Advance Auto Parts Gymboree 561 $M 2009 Rank 48 Rank 47 Macy’s Anthropologie 472 $M 2009 Rank 50 Rank 50 The Most Valuable U.S. Retail Brands 2010 | 7
  • 10. 1154.144 $B 19%WalmartAlthough Walmart was already the most valuable continue to solidify its brand proposition. Additionally,retail brand in the U.S., the economic downturn made the marketing efforts that deliver the “save money,it relevant to an even greater number of shoppers. live better” message have become increasingly moreIts store remodel program Project Impact — less efficient and effective. In keeping with what matters toinventory, wider aisles, lack of in-aisle displays — paid its shoppers, Walmart has committed to a long-range,off in high same-store sales. The company’s revamped environmental labeling program and added one million5,000-item Great Value grocery brand line and the items to its online assortment.nation’s cheapest prepaid wireless plan, Straight Talk,225.500 $B 49%TargetTarget’s enduring blend of style and mass discount Farms grocery brand introduced a new budget nutritionproves that value and hip are not mutually exclusive. line, which should only bode well for the brand. TheAlthough traffic and same-store sales slid this year, the company will invest US $1 billion in its P-fresh food-company improved its financial operations and market oriented concept, renovating stores to drive frequency.forecasts are positive. While the shopper experience Target continues to differentiate and create excitementis not completely brand integrated, the new up & up with limited-edition soft goods from an ever-changingprivate label is strongly on-brand, as is the purchase roster of high fashion designers.of the Smith & Hawken name. Additionally, its Archer317.806 $B -19%Best BuyThe consumer electronics industry saw revenue decline promotions on the thousands of TVs, PCs, and cell phoneslast year. For Best Buy, revenue rose while same-store in its store. In addition to offering an electric motorcycle,sales dipped. Sales of its private label electronics soared the store also helps shoppers sustainably dispose of their40 percent. It now offers free financing for shopping carts old electronics. In the highly competitive gadget market,full of items versus one product at a time. The company the chain has plenty of clout.influences which products come to market by workingwith suppliers; it has even set up its own venture capitalfund. Best Buy is also creating a media network to run8 | Interbrand Design Forum
  • 11. 417.043 $B -18% 5 14.319 $B 28%The Home Depot WalgreensDespite a few signs of recovery, the collapse in the home By encouraging the adoption of e-prescriptions, Walgreensimprovement category will depress The Home Depot’s filled more than 45 million electronic prescriptions in 2009business until the housing market picks up again. As a compared with 15 million in 2008. Yet, it’s not imperviousresult, it continues to control expenses to help offset a to downturns. Hit with more competition, greater low-decline in sales, as consumers pare back on big ticket price demand, and less prescription traffic, Walgreen’spurchases and contractors stand by. Despite these pharmacy commanded lower margins. The company issetbacks, The Home Depot’s strength has been its ability slowing its expansion rate while improving its pharmacy,to quickly cut losses and preserve capital; it shuttered its health, photo, and mobile options. The brand alsohigh-end decor EXPO business. enhanced online shopping for its 13 million monthly visitors.614.122 $B 12% 7 10.540 $B 11%CVS Sam’s ClubIt was a good year for CVS. Although it slowed the Sam’s Club wants to steal customers from its warehouseroll out of its in-store, nurse staffed MinuteClinics, rivals and grocery stores by offering more variety. Thisthe company’s integration of Caremark is going well. includes private label spirits, and more brands thatCaremark, a pharmacy benefits manager business that have higher sales and returns. Revamped stores will cuthandles drug coverage for large employers and health costs. Business membership requirements have beenplans, is a game-changer, enabling CVS to capture the simplified, and free technical support is now offeredbusiness of Caremark members. The remodeled stores for consumer electronics purchases. The company iscontinue to offer a pleasant shopping experience, and expanding its membership base through Más Club,its loyalty program is driving front-end business. which targets the Hispanic market.810.291 $B -12% 9 8.887 $B -2%Dell CoachIn the first quarter of 2009, HP dethroned Dell as market The launch of its Poppy collection may help Coachshare leader. This was due partly to Dell’s lack of speed recover from last year’s poor performance. The youthfullyin adopting netbooks as a flagship product. The role designed handbags, priced as an entry point to the brand,of brand is falling in this sector as well, as consumers helped boost store traffic and drive gain. On the higherdemand functionality, but focus on price. Still, the end, the brand announced plans to extend its reach bycompany’s track record of successful branding and its opening its first men’s only format next to its limited-effort to cater directly to customer needs have allowed edition Legacy store in NYC. The company’s pricing andit to maintain leadership. A drive to target students may expansion strategy, however, may dilute the Coach brand,help rally Dell’s position and prevent further losses. leaving it more aspirational than luxury. The Most Valuable U.S. Retail Brands 2010 | 9
  • 12. 107.858 $B 22%Amazon.comThe multi-department retailer confirms what everyone anywhere, have also contributed to its upward path.has been speculating — the advantage of not owning Additionally, Amazon will begin selling downloadablea retail footprint in a recession. The company has e-books for the iPhone and iPod touch. To reducebenefitted from the downturn, the exit of Circuit packaging, with an eye toward sustainability, AmazonCity, and the struggles of the Borders book chain — all entered partnerships with Fisher-Price, Mattel, Microsoft,driving traffic to Amazon.com. The Kindle and continued and electronics manufacturer, Transcend.improvement to its site, which now enables access from117.350 $B -8% 12 7.072 $B -34%eBay Lowe’sDespite predictions, eBay is not benefiting from the While retailers of home goods, furniture, and homerecession. It faces tough competition from Amazon.com. improvements are among the hardest hit by the recession,This is linked to the discretionary nature of much of its Lowe’s cites improved sequential quarterly gains and marketsellers’ inventory. Lawsuits from luxury brands, which cost share growth, although low sales of big-ticket items indicateeBay US $32 million to settle, have cemented its image recovery is still far off. Meanwhile, the brand has upgradedas a channel that could benefit from more regulation as and improved its website as a source of information andopposed to a managed retail environment. Still, due to its inspiration. This positioning will be further reinforcedoffer of wide distribution at a low price with high visibility, it through its partnership with HGTV and the 2010 launchremains the most popular option in the start-up B2B world. of its magazine, Lowe’s Creative Ideas.136.753 $B 0% 14 5.805 $B -20%Nordstrom StaplesThis luxury department store chain continues to be a model The best operator in the big-box office supply categoryof brand clarity, consistency, engagement, and innovation. got hit by a category-wide drop in demand. Staples offersAlthough Nordstrom saw full line, same-store sales drop the right levels of product and maintains healthy margins.in the third quarter of 2009, its online channel increased. This year’s successes include its rebrand of B2B supplierIts commitment to connect better with customers has Corporate Express (which it acquired in 2008). Now knownsince boosted sales. Nordstrom shoppers trust the brand online as Staples Advantage, it serves Staples’ small- toto give them a compelling reason to shop, and it works to medium- sized business customers. Online, Staples ranksearn their confidence through services — for example, its second to Amazon.com; however, its brick and mortarrecent addition of international online shopping. shopping experience offers opportunity for improvement.10 | Interbrand Design Forum
  • 13. 155.488 $B -4% 16 4.917 $B -7%Costco AvonCostco managed to hold its own, even as it lost revenue Product line simplification is pushing Avon into a lessafter slicing margins on some goods to please price is more proposition, as it struggles to innovate and gainfocused shoppers. Although Costco doesn’t target new share. The company has increased advertising spend onmembers and advertises very little, more customers its “smart value” positioning, while relying on celebrityjoined its club. Support for the brand happens primarily endorsement to support product launches and charitablein the store. Costco’s online offering is fully integrated and causes. Avon’s new hero product, Mark, is taking thegets a high satisfaction rating from its customers. Last brand digital, with e-boutiques, iPhone apps, and a newyear, the company announced plans to add 16 to 18 more Facebook e-shop, one of the beauty industry’s first.facilities to its 566-store fleet.174.729 $B -7% 18 4.679 $B NEWGameStop Dollar GeneralThe world’s largest video game retailer felt the impact One of the few IPOs in 2009, Dollar General had aof the weak economy, the lack of new hit games, and a very strong year thanks to the increase in consumershortage of the most popular consoles, such as penny-pinching and improved store operations. Same-PlayStation 3. Same-store sales decreased and the store sales rose 9.2 percent. It plans to remodel 500 ofcompany did not expand as planned. Yet, GameStop its 8,700 stores and add 600 more this year. The companygained market share. It continues to offer a great is adding more national brands, pushing into proprietaryexperience to its devoted hardcore gamers. Plans are brands, especially in non-consumables, and becomingafoot to test the sale of add-on digital downloads. more trend relevant—all activities that could make it an attractive place to shop even after the recession.194.580 $B 40%Kohl’sKohl’s hit the sweet spot of value, quality, relevance, and savings, layered discounts, and special sales events.exclusivity. Smarter advertising allowed the discount Kohl’s continued its Stardoll online community, grewdepartment store to enhance its media presence across its shopper email data-base by 50 percent, andbroadcast, print, online, digital and social media with a invested in marketing efforts to Latino consumers.pitch-perfect message. Kohl’s offers “power strategies”to customers who take shopping seriously: stackable The Most Valuable U.S. Retail Brands 2010 | 11
  • 14. 204.055 $B 44% 21 4.000 $B -5%AutoZone Tiffany & Co.The vehicle parts vendor is thriving in a tight economy as Tiffany’s sales declined most significantly in its U.S.more people learn to repair their own cars. AutoZone is stores. In response, the glittering brand cut costs andattracting a wealthier customer, more women, and first- trimmed inventory rather than discount. It continues totime DIYers. Customers have learned to turn to the brand for be bolstered by new store openings worldwide. Fourteenadvice. Economic factors that have played into AutoZone’s were added last year for a total of 220. The brand appearsfavor include less car leasing—people do more maintenance to be moving away from affordable luxury to its roots ason cars they own— and lower gas prices, which has left a premium retailer. If so, it may see positive results. U.S.people driving more and in need of more repairs. They are fourth quarter 2009 comp sales increased 12 percent, analso controlling costs, and managing inventory. indication that the high end is on the mend.223.992 $B -30% 23 3.922 $B -10%Victoria’s Secret GapThe iconic lingerie brand continues marketing Victoria’s Economic conditions have forced Gap to make storeSecret fantasies with its viral videos. Its college brand, Pink, closings and serious price concessions. Gap’s cheap chic isowes its growing popularity to playful, social media romps. not cheap enough, especially in comparison to Target orTo lure business in a tough year, the brand resorted to in- Walmart. Meanwhile, the brand continues to lose groundstore events, sales, giveaways, new product introductions, to those with bigger ideas. Gap’s brand architecture is alsoand a New York flagship store. Six 1,000-square-foot shops dissolving as functional benefits begin to outweigh brandopened in airports. The smaller format has high traffic and benefits. 2008’s launch of a universal website for Gap, Oldhigher profitability; more are planned. Navy, Banana Republic, Piperlime, and Athleta has diluted some of the brand experience.243.094 $B -26%Polo Ralph LaurenThe brand’s lifestyle appeal continues to allow it to build its image globally. This year also saw the launch of andevelop and expand products across price tiers and iPhone application that lets users experience the glamourmarkets without dilution. Although some may of the Ralph Lauren Collection by allowing viewers to lookdeem the brand’s role as the official outfitter of the behind the scenes with its backstage pass photo gallery.U.S. Olympic team as more elitist than athletic,sponsorships such as this and Wimbledon help to12 | Interbrand Design Forum
  • 15. 253.045 $B 19% 26 2.303 $B 82%Bed Bath & Beyond NetflixEven though Bed Bath & Beyond does not win on price To the “always online generation,” Netflix has becomecompared to mass market and discount stores, the brand the definition of movie delivery. The changes it made toheld onto its customers and picked up many new ones, its business model starting in 2008 paid off this year. Thefollowing the demise of Linens ‘N Things. Without format “Watch Instantly” streaming service, new content, onlinereinvention, experience diversification, or marketing community features, and rollouts on multiple devices likeinitiatives to concrete its position, it capitalizes on its Xbox LIVE and Roku resulted in a 70 percent surge in profits,market presence and consumer desire to shop in a specialty more site visits, and record breaking growth. Inspired by aenvironment. The company carries no debt, enabling it to million dollar prize, subscribers improved the accuracy ofself-finance a planned expansion. Netflix’s movie recommendations by 10 percent.271.981 $B 24% 28 1.928 $B -36%Old Navy Sherwin-WilliamsTwo years ago the brand lost its way in pursuit of fast Even though business is down along with the housingfashion. Sales were sliding until the end of last year. Old market, Sherwin-Williams remains resilient and stableNavy returned to its bold, off beat brand beginnings in with a dominating network of paint stores. As a partnercolorful fashion basics with quirky new ads that deliver the in the U.S. EPA Climate Leaders program, the companyvalue message with humor. Focus is back on delivering a remains committed to sustainable practices. However,fun experience to the young, budget-minded mom. The the lower-priced big-box home improvement storescampaign uses new and old media, with webisodes on a are stifling its trade. If the company doesn’t invest in itsdedicated microsite, as well as the trusty Sunday circular. brand or create new service proposition drivers, it may lose market share.291.686 $B 9% 30 1.439 $B 15%Banana Republic RadioShackAlthough it reacted to the downturn by adjusting its After spending the last three years cutting costs andproduct mix and offering its share of sales and promotions, closing stores, RadioShack reintroduced itself toit wasn’t all recessionary tactics for Banana Republic. It consumers with its friendly new nickname, “The Shack.”evolved the open plan shopping experience with a new The company spent most of its US $200 million adprototype featuring small sales areas for specific wardrobe budget on the campaign which received some ridiculeneeds. A line of clothing inspired by the TV show “Mad in the press. Although the brand has become largely aMen” with an accompanying style guide gave the brand “phone store,” there’s still value in selling products thatnew resonance. It also announced plans to test a 1,200 can’t be found anywhere else. However, stores need tosquare foot spin-off store for women’s accessories, which be brightened and contemporized as well.it named “Edition by Banana Republic.” The Most Valuable U.S. Retail Brands 2010 | 13
  • 16. 311.317 $B -14% 32 1.224 $B 28%PetSmart J. CrewThe brand continues to be very clever about serving Thanks to a strong identity, exclusivity, service,its “pet parent” niche with hotels, hospitals, Halloween differentiation, and innovative offerings, all the brandcostumes, and pet photo credit cards. Same-store sales planets aligned for J. Crew in 2009. Gross marginsare essentially flat, capital expenditures are down 50 improved. Revenue, same-store sales, and directpercent, and store growth has slowed while the retailer sales rose as well. J. Crew is known for its creativelooks to increase productivity. In response to competition environments and regularly breaking out new formatsfrom Walmart, PetSmart plans to differentiate by like its recent men’s stores. A laser-like focus on refiningexploring in-home services and boosting its private label. its brand idea continues to win the devotion of fans,It’s also considering a smaller urban format. including the First Lady and many adoring bloggers.331.185 $B 7%MarshallsThe sluggish economy has made this off-price retailer minute web videos to promote the “Shopportunity.”even more relevant. Merchandise is in season. It is also Additionally, Twitter alerts announce new merchandisemoving slightly upscale, as both vendors and retailers have arrivals. While the store experience is still a hunt throughso much inventory to unload. The designer-invigorated mix endless merchandise, the online experience is cleanis tempting frugal shoppers to troll the racks. Marshalls and contemporary and encourages brand fans tocontinues pushing its teen trends message, using four- share their finds.341.154 $B 4% 35 1.036 $B 132%T.J. Maxx AéropostaleT.J. Maxx has trimmed costs, restructured to improve This hot mall destination for 14 to 17 year-olds sawefficiency, and plans to open more stores while expanding its brand value skyrocket this year and its top line riseits vendor base. Same-store sales are up six percent. To by double digits. While some credit can be given tocapture newly frugal shoppers, it created an ad campaign the recession, the brand’s success is born of its skill asexplaining the off-price concept. The brand would do well a retailer. Its deceptively simple brand promise is toto find a way to improve the cluttered shopping experience give teens what they want and can afford. Unlike fastwhile still exciting customers with a treasure hunt. There is fashion retailers, which bring the looks on the runwaysome concern that new customers will return to higher end straight to stores, Aéropostale stays a little behind toretailers and/or that manufacturers will have fewer goods to be right for the customer, which it clearly studies andsell as the economy recovers. understands. The stores are bright, fun, and lively.14 | Interbrand Design Forum
  • 17. 361.021 $B -34%American Eagle OutfittersAmerican Eagle Outfitters may fly a little higher next Additionally, an aggressive marketing strategy extends toyear, having recovered momentum lost to the recession mobile commerce. A strong emotional connection to theand some merchandise missteps. Comparable stores brand is nurtured through its 18-million-member loyaltysales dipped five percent which is up from the previous programs. And for added glamour, a new Times Squareyear. Stores now carry clothing for ages two through flagship location projects photos of customers onto10 in addition to its core teen demographic. Its online 25-story high LED screens outside the store.experience continues to sell the AE lifestyle with uniqueentertainment, shopping, and sharing.37935 $M -18% 38 926 $M 87%Urban Outfitters Whole Foods MarketA rich shopping experience is paramount to Urban When the recession hit, Whole Foods started losingOutfitters. Each store offers a unique sensory experience customers earlier than most but stabilized earlier too.that tells a story, enhanced by employees, who create Its core customer is sticking with it and more shopperstheir own displays. While sales were down, the company are cautiously returning. Business and earnings are up.negotiated lower rents for its 143 stores, typically found in The grocer widened profits by cutting costs and slicingrenovated buildings in urban settings, while it continued new store growth in half. Its grocery experience stillto sell inventory at full price. Considering its core customer, outpaces national supermarkets, while it continuesthe brand may be a little slow to extend its lifestyle to help local and global food economies and promoteexperience into the mobile world. natural organic eating.39923 $M -68% 40 868 $M 41%JCPenney Rent-A-Center Despite compelling prices, effective inventory management, Owner of a third of the rent-to-own appliance and furniture and low unprofitable discounting, Penney’s same-store market, Rent-A-Center saw a 22 percent profit increase and sales slid 6.5 percent. The retailer was also weighed down a slight rise in the average income of its typically low-income by qualified pension plan expenses. Shoppers didn’t respond customers. The retailer deployed a new layout in every store to the “American Living” lines from Polo Ralph Lauren, and for better visibility and optimized merchandise mix. On the home furnishing sales were sluggish. Although the company downside, the brand received bad press for alleged predatory will no longer print the 1,000-page Big Book, Internet sales business practices. The brand plans to add financial services, remain robust as the brand continues to improve an already such as short-term loans and debit cards, to more of its stores well-executed e-commerce site that has received many and add 25 stores to its base of 3,000.“best in industry” awards. The Most Valuable U.S. Retail Brands 2010 | 15
  • 18. 41868 $M -19% 42 843 $M -25%Dick’s Bath & Body WorksDespite the merger costs and low sales that brought its Bath & Body Works’ five-year plan for redesigning products,numbers down, Dick’s is still the clear leader in sporting packaging, marketing, and in-store experience culminatedgoods, with plans to expand, albeit more slowly, in the with a reinvigorated fragrance line. It initiated partnershipsfuture. It kept inventory lean and overhead low, and with Wyndham Hotels and Holiday Inn to introduce itsbenefited from lack of competition. Once considered an signature lines in guest rooms. The brand is now competinginnovator in its category, this year the brand sat on the better against department stores, drug stores, and a slewsidelines, offering nothing new to its experience to help of specialty retailers. Following two years of flat same-storeoffset top-line difficulties. sales, the brand recently posted gains.43825 $M 37%Big LotsLast year the retailer closed underperforming stores to wider aisles, improved presentations, enhanced lighting,improve profitability, found new vendors to improve its and new signage continue to test well. The brand alsoproduct assortments, and added more food and other launched a loyalty program to acquire new customersconsumables which helped grow its bottom line. Eight and build engagement. Big Lots plans to open 50 storesof the 40 stores Big Lots opened this year went into next year.A-level locations and are achieving sales 15 percenthigher than the store norm. A new prototype with44631 $M 15% 45 624 $M NEWTractor Supply Co. BuckleTractor Supply prides itself on its highly relevant array of The low-profile Buckle turned in one of the best performancesproducts for hobby farmers in its small-town, rural niche in retail this year with same-store sales climbing as high aswhere big boxes don’t compete. This year it expanded its 13.5 percent, although men’s sales are lagging. Rather than800-plus store base by 58. Taking a cue from its customer, advertise, the company relies on word of mouth to promotethe brand focused on basic needs rather than discretionary a mix of brand names highly desirable to its youthful target.items. Same-store sales rose. Premium feed brands Purina The store also tests new brands. Add to that top-notch service,and Nutrena have been added alongside its well supported free alterations, a great shopping environment, and clerksprivate label brands to help attract customers. A new who are helpful about fit, style, and brand. Buckle continuesmarketing team will promote the brand as a lifestyle to expand cautiously.concept while it continues its expansion strategy.16 | Interbrand Design Forum
  • 19. 46620 $M NEW 47 561 $M NEWFamily Dollar Advance Auto PartsAlthough its main competitor is Walmart and its core Advance Auto Parts, with 3,400 stores and expansioncustomer is spending less, Family Dollar had a good year. plans, is working on being a better business, with aThis fast-growing discount chain of 6,700 stores now new e-commerce site, inventory upgrades, improvedtargets shoppers with household incomes of up to productivity, increased efficiency and lowerUS $40,000. It’s investing in technology to make it easier distribution expenses. It’s working to increase theto use food stamps and credit cards, while pushing into commercial side of its business, while improvingprint advertising to convince new shoppers that its many the retail side by taking the intimidation out of thename brand products are equal to those at the local shopping experience. The company’s challenge is togrocery. The brand has aggressive expansion plans. differentiate itself from competitors.48534 $M -17% 49 484 $M -81%American Girl Abercrombie & FitchIf flat is the new up, American Girl had a successful year. The brand known for preppy clothes and bare-chestedSales of the award winning toy dolls saw no growth. The models suffered double-digit sales declines as teens’shopping experience around doll characters, books, and allegiance shifted to value. The store’s sexy nightclubfilms designed to make history accessible for girls age 8 atmosphere couldn’t save it from an offering thatto 12 is still a delightful high-end playground. However, neither fit into the cheap and cool category or the highthe 2009 release of the brand’s “homeless” doll that sold quality and worth-it category. Unable to defendfor US $95 inspired some controversy. its prices, the brand succumbed to discounting like everyone else. The company may shed some of its store base over the next two years.50472 $M NEWMacy’sThree years ago, Macy’s was “debranding” by acquiring store sales were down slightly, its online sales grewand renaming regional department stores. The real estate and customer satisfaction saw a huge improvement. Itsplay that began then is paying off now, and the results ongoing initiative to tailor local assortments and shoppingare showing up in organic sales growth in its 850 stores. experiences has it poised to build sales and loyalty.By holding steady to its strategic direction, Macy’s hasthe clarity and power of a national brand. Although same- The Most Valuable U.S. Retail Brands 2010 | 17
  • 20. Strong BrandsGet StrongerAs a company refines its idea of brand, it unlockspockets of value creation. Expressing the brandidea through seemingly small things can leadto big impact.It’s human nature to appreciate small thoughtful gestures. brand, Target. The company that began as an old-schoolOften they mean the most and are long remembered, discount store has grown to think of itself as a brand —whether they come from a friend or a retail brand. A with the idea that you can live better while still spendingretailer’s meaningful actions, however, have a far-reaching within your means.impact due to increasing returns to scale. These pocketsof value creation can be found within four brand That Walmart is today an even smarter brand managerfundamentals: clarity of purpose, a relevant experience, can be seen in its product choices and communications.delivery of the brand promise, and consistency. Its narrow, cluttered, and highly promotional “action alleys” have been replaced with the aptly namedSurround the purchase with a remodeling program, “Project Impact.” Instead ofrelevant experience dodging in-aisle displays, shoppers enjoy wider aisles, less inventory, and better merchandising in the faster-Walmart pulled even farther ahead of the pack this year. growing categories. Shoppers are noticing more of theWith a brand value of US $154 billion, it’s worth over six store they once overlooked.times as much as the second most valuable retail
  • 21. Walmart has also gotten better at communicating low Buckle: A study in consistencyprices by improving its media voice. Recent televisionads have generated positive online buzz and viewership While a store like Buckle doesn’t immediately springon YouTube.com. Aware that with recession comes to mind in a discussion about strong brands, it is anthe need to work harder to build an emotional bond with excellent example of leadership within the categorycustomers, the retailer has invested heavily in market of specialty apparel, where brands are conceivedresearch and continues to build a pool of marketing talent. from a central brand vision rather than folded into the business model over time.Delivery of brand promise, clarity, relevance The teen apparel store has been cautiously butLast year, we noted that Macy’s, the brand many consider steadily expanding while keeping its brand valuesto be a true piece of Americana, was conspicuously intact. It arrives on the Most Valuable Retail Brandsabsent from the Top 50 list. Despite its considerable brand in 45th place — without advertising. The companystrength, its financial forecast kept it out of contention. relies on word of mouth to promote a mix of brandAlthough it debuts this year in 50th position, according names that are highly desirable to its youthfulto Interbrand’s valuation this represents a virtuoso target, such as Affliction, Obey, Rampage andperformance in brand and is a cause for celebration. Silver. Its focus is on a great shopping experience and earning potential for their helpful but notThree years ago, Macy’s declared its intent to become pushy store associates who earn a three percenta national brand — a daunting task, met with much commission. The brand believes “its customerskepticism by retail analysts. By definition, a department experience is the best marketing.” Buckle makesstore has a high level of departmentalization, which shoppers feel good.immediately presents a challenge to the brand experience.Multiply that by 330 regional stores operating under ten Buckle’s ongoing challenge is to stay on top ofdifferent banners, and you’ll understand the challenge the hot labels its customers desire, especially into develop any kind of clarity and delivery around your denim. The store tests new clothing brands, andbrand promise. has some of its vendor brands customized. A wide and shallow inventory of fast-turning itemsAgainst those odds, Macy’s has succeeded in capitalizing reduces risk; and inventory varies by location.on its brand to improve its financials, and the results are Stores are located in smaller regional malls whereshowing up in organic sales growth in its 850 stores. By there is less direct competition (400 stores in 39holding steady to its strategic direction, Macy’s has the states). This year, prices increased slightly andclarity and power of a national brand. same-store sales climbed double digits.Two critical elements that have heightened its relevancy Going forward, Buckle will need to keep its brandare reaping results faster than anticipated. The “My Macy’s” personal and agile so the company can continue toinitiative has localized merchandising teams to better operate at peak margins. The key to its success isadapt assortment to local tastes. And according to Macy’s an ongoing exercise in brand building.CEO Terry Lundgren, the plan going forward is to winbusiness based on execution of brand and merchandising,with the diligence and finesse that marks the Macy’sbrand as a leader.When asked if Macy’s would consider followingBloomingdale’s into outlet malls, Lundgren repliedthat although the company has no formal plan to doso, he sees outlet stores as having potential. As withBloomingdale’s, adding a value message to theMacy’s experience could risk dilution of the brand. The Most Valuable U.S. Retail Brands 2010 | 19
  • 22. 2010: The yearof optimizationLast year, store expansion slowed nearly to a halt.Forced to focus on the resources at hand, brand-ledcompanies will continue to streamline their assetsaccording to what matters most to customers.Before the recession, when retailers were growing their Target up 49 percent; Whole Foods up 87 percent. Bothstore bases and consumer spending was continually on the retailers improved performance in the face of reducedrise, profit was enhanced by the net gain of each unit added. growth without compromising brand.Today it’s a different story. How do companies hit growthtargets when customers are cutting back? To keep sales How did they do it? First and foremost, these brandsfrom stalling, top brands turned their attention to lever- understand what they are trying to be. They constantlyaging their growing skills in brand management. drive insights that lead to the things that matter before they decide what to do and what to say. Smart companiesOf the 21 Most Valuable Retail Brands that increased in heighten the focus on brand value because they possessvalue this year, two are notable for having become a detailed understanding of brand mechanics — that is,better operators than they were two years ago, even how operational actions influence customer behaviorwith slowed expansion. and choice. The clarifying perspective it provides helps retailers get the most out of the existing store base,Although retail analysts warned that Target and Whole edit assortments and evaluate categories, trimFoods Market were going to lose share because of price brand portfolios, and maximize the return onperceptions, their brand values increased substantially — advertising investments.
  • 23. Unlike other retailers who just reduce investment to RadioShack: Shacking things upgenerate profits, value creating retailers know whereto cut and what to emphasize. For example, business Inspired by the likes of Coca-Cola (Coke) and Chevroletand earnings are up at Whole Foods Market. The grocer (Chevy), RadioShack gave itself a friendly new nickname,attacked the inefficiencies in its business, and widened “The Shack.” Despite its teasing at the hands of the media,profits by cutting costs and slicing new store growth in Interbrand gives it credit for investing in brand by tryinghalf. But the brand has not abandoned any of its ideals. on a new personality to reintroduce itself to tech-savvy mobile consumers.Target continued to pursue differentiation and improvemargins by extending private label offerings with its new RadioShack also occupies a niche that makes itup & up core commodities, and its Archer Farms grocery unlikely that a brick-and-mortar competitor would copyname. Still, the store overall reduced net inventory. the concept. While the brand pushed phones to theSmart technologies that offer long-term cost reduction front of the store, such as AT&T, Sprint, T-Mobile andand enhance customer service are also part of many Nextel, there’s still value in selling products that can’t becompanies’ efforts to streamline. Checkout time found anywhere else — multiple kinds of speaker wire,at Target continues to be less than a minute, which connectors, and copper clad perfboard, much of whichkeeps customer satisfaction scores high. is private label.Of course, you can’t win strictly on being efficient. The Although the campaign still didn’t make it clear whattrick is not to lose the differentiated experience and RadioShack stands for as a brand, the quirky retailerthe right proposition for the core segment. continues to be surprisingly resilient. RadioShack spent the last three years becoming a better operator,Whether by choice or necessity, consumer frugality improving its balance sheet by cutting costs and closingis likely to linger. Brand can help clear the obstacles nearly 500 locations while pushing wireless front andthat might be in your way as you determine how to center in its 4,470 stores. However, the customer facingoperate differently than in the past. The key is to look assets are as worthy of investment as those behindat value creating levers such as real estate, marketing, the scenes. The Shack’s brand idea needs to be furthere-commerce and inventory management through a clarified while stores get brightened and contemporizedbrand lens before you act. along with the message. The Most Valuable U.S. Retail Brands 2010 | 21
  • 24. Back to BasicsWhile price matters more this year, brandstill has the ability to inspire confidenceand generate an emotional connection.Undifferentiated propositions kill value.As long as the shopper copes with fears of recession by Facing stiff competition from mass and big box,putting basic needs before ego-satisfying wants, the GameStop (17) clearly demonstrates the importancemarket will move to retailers who feature low price as of the creation of an experience around the brand inpart of their proposition. The discussion then becomes: terms of presentation with emotional content. GameStopis it the “price” shoppers attach to or the “brand?” understands the hardcore gamer it’s devoted to, as well as their need for a smoother and faster experience. It In the mind of the American consumer, the definition of strives to hire employees that are as obsessed with“value” is fluid. And price — despite all the deal seeking gaming as its customers. It offers plenty of interaction and coupon clipping — is only part of it. At the moment with demo kiosks and touch screens, and hosts special of transaction, they ask themselves, “what is this worth?” opening nights for popular game releases that frequently in terms of ease, time, effort, cost, past experience, attract celebrity gamers. Despite the overall decline in enjoyment, fashion, thrill of the hunt, and many video game sales, GameStop gained market share. other factors. Three brands consumers turned to this year for value-Shoppers need a reason — especially with much of the plus-reason were online giant Amazon.com (10) forsame product available at many stores, across many convenience, Old Navy (27) for its return to bright basiccategories. Many retailers have learned the hard way family fashions and teen clothier Aéropostale (35)that price-based competition is simply not sustainable. whose brand value leaped 132 percent.To survive, they need a balanced value propositionunique to the brand. Without it, the company has less The hot mall destination for ages 14 to 17, Aéropostale,power to defend margins and create demand. saw its top line rise by double digits with a deceptively simple brand promise: to give teens what they want andThis holds true even in the value and extreme-value can afford. Some have called it a “miniature Walmart.” Bysectors. While players in value are expected to have keeping close tabs on what its customers wear, the brandmargins smaller than those in other industries, strong is allowing them to basically co-create the products. Thebrands help maintain margins. A top example is company designs and sources its jeans and t-shirts,Walmart, which has had little change over the last holding production costs down while responding quicklyseveral years in EBIT margin percentage, while many to trends. The company not only bucked the recession,companies have seen persistent declines. but diversified its portfolio with a children’s format, P.S. from Aéropostale. There is much to be said for aHow to win friends and influence purchase brand-infused culture as well. The company is led by not one CEO but two, which is uncommon and hasThis year, retailers have been making headway in the a mixed track record.battle against “sameness” by negotiating exclusivefamous name brands, making sure their private labelsstand for something besides “cheaper,” and providinga shopping experience with emotional appeal.22 | Interbrand Design Forum
  • 25. Dollar General (18) arrived on the list this year thanks to year’s Most Valuable Retail Brands report, where A&Fscale and value proposition. However, aware that it needs occupied the 27th spot, the brand was already at risk:more than these to compete in its category and retain “if the recession brings frugality into vogue, it maythe new recession-sent customers, the retailer is bringing hasten the brand’s lifecycle.”its brand assets to bear, with store remodels, morenational brands and trend-right apparel. Neither Abercrombie & Fitch nor Hollister could defend their prices in the mind of the consumer. The inherentWhile it’s true the market moved to them, these retail quality and style of A&F’s prep and Hollister’s surfer-brands had the right format to begin with. Such is the inspired apparel didn’t provide enough distinction. Whilecase with Rent-A-Center (40) and AutoZone (20). Both stores like Aéropostale stole market share by offering prep,brands invested in improving their shopping experiences surfer, skater and graphic fashions at low price points, theto retain their newfound customers in the upswing. black-louvered store brought nothing new to the battle — finally resorting to price cuts.A lack of differentiation kills value Compare that to the performance of Coach (9), whichIt’s safe to say that particularly in apparel, overall Role bills itself as luxury, but does business more in theof Brand dropped this year. A retailer like Gap (23) owes manner of a premium brand. Without the launch of itsits ranking to scale, not to emotional associations with Poppy collection, “more affordable” handbags targetingthe brand which it continues to struggle to find. a younger segment, it would likely not have been able to hold onto its ranking. However, as a moderate-priceThe most dramatic plunge in brand value belongs to play Poppy marks a departure from Coach’s core stylepremium teen apparel store, Abercrombie & Fitch (49). and price. Both Coach and A&F will be interesting toWith the recession in full swing, the wayward sex watch in terms of ongoing brand strength.appeal that young people loved and parents didn’tquickly lost relevance. According to its profile in last
  • 26. Leaders Embrace Socialand Technology TrendsInternet savvy. Value-demanding. Sophisticated. As retailersare quickly finding out, today’s shopper doesn’t follow, but setsthe trends. This is as much due to progress in the technologysector, as it is to the recession.Even before the recession, technology was reshapingconsumer expectations. Wireless connectivity, smartphones, and social media created demand forconsumers to be tapped in at every second. As a result,we saw brands scramble to bolster their online andmobile presence, to build connections with shoppersoutside the store.Then came the downturn. Suddenly, not just youngergenerations, but all shoppers, were going online tocomparison shop and find the best deals. Less loyalshoppers meant that brands had to work harder todifferentiate themselves, whether through service orconnectivity. Combine this with reduced budgets andpredictions that this change in shopper behavior islikely permanent, and retail brands are feeling newpressures. By the end of 2010, 1.2 billion people willcarry handsets capable of m-commerce. Customerswill expect their favorite retailers to deliver acrossmobile, website and store.A seamless integration of mobile and arich shopper experience The brand excels at aggressively integrating multi-Although teen apparel brand American Eagle Outfitters channel marketing tactics into both its traditional andfell a bit in the ranking this year, having lost momentum digital campaigns. It connects at all the right touchpoints,to the recession and some merchandise missteps, it has which goes a long way towards achieving brand loyaltyput itself in a great position to recover. It’s target audience — something that brands are going to be challenged withfalls into the 16 to 34 age range, the shopper most going forward.focused on using technology.24 | Interbrand Design Forum
  • 27. This year, AE included a mobile field in its loyalty program, Building digital bondsand used mobile as a point of entry into sweepstakes aswell as an alerts program. Calls to action were posted on Before the world wide web, Amazon was a large riversocial networking sites such as Facebook and Twitter in in South America. CEO Jeff Bezos chose the name asthe form of banner ads, status updates, and tweets. something large and unstoppable, and 16 years later the brand has proved to be just that. It has not only The retailer was no slouch when it came to brick-and- changed consumer buying habits, Amazon.com may mortar either. Understanding that a differentiated and well become our largest retailer. Its sharp pricing could rich in-store experience, with a fully integrated online make even Walmart wince and its ability to find new and mobile shopping experience go hand-in-hand, the and better ways to sell yet more merchandise appears brand’s 25,000-square-foot Times Square flagship features to be unlimited. cheekily named departments like “Denim Library” and“Bra Conservatory.” Digital handheld POS check out sites, The introduction of Kindle, an online digital music and called “line-busters,” are available throughout the store. video store, the addition of online grocery, and its Customers will also be able to pose for a snapshot as purchase of Zappos allow the e-commerce giant to be they are leaving the store, which will be broadcast on relevant across categories. It’s even challenging Best the store’s 25-story Jumbotron within minutes. Buy in consumer electronics.Invite feedback and give the customer Though selling books and just about everything elsewhat they want on a vast scale, Amazon.com has tried never to forget the value of intimacy. Few e-tailers even come close toWhile today’s discriminating shopper creates numerous claiming the kind of digital bond the brand has with itschallenges, some retail brands have viewed them as customers, from its one-click ordering to its ability toopportunities. Movie provider Netflix (26), for example, become even more relevant with each visit. The resulthas become part and parcel of the digerati lifestyle. is a “barrier to exit” that other brands envy.As such, it uses customer feedback to make serviceand offering improvements. Netflix’s recent use of The success of Amazon and the fierce competitioncrowdsourcing generated abundant buzz as well as a brought by the recession put pressure on all of retailten percent improvement in its movie recommendations. to integrate the social and technological aspects ofThe million-dollar contest was a classic opportunity the shopping experience.for customers to interact positively and co-createwith the brand. In the future, both online and brick-and-mortar retailers will need to focus on consumer mobility as a way toNetflix also continues to rapidly anticipate and adapt connect intimately with customers. Luckily, the givingto customers’ shifting technological needs. It was a won’t be all one way. Amazon clearly demonstrates thatpioneer in streaming TV. With consumers demanding digital connections also provide the valuable informationone box to function in myriad ways, Netflix continues to that allows services and products to be personalized —invest heavily with the intention of leading the category. one of the crucial insights that help brands stay relevant. The Most Valuable U.S. Retail Brands 2010 | 25
  • 28. The Demandfor InnovationSome brands let their innovation engines stall. Withoutprofitable new ideas, companies cannot create enough liftto sustain the value of their brands. To ignore innovationis to lose altitude quickly.One reason a brand actually matters more in a down- Two top companies whose brand profiles indicate a needturn — to its owners if not its customers — is its ability for more innovation this year are Sherwin-Williams (28)to find opportunities for innovation that will set it and Victoria’s Secret (22). Even though Sherwin-Williamsapart from the competition. owns a dominating network of paint stores known for quality and the loyalty they inspire, unless the companyInnovation, which simply means doing things a new way, invests in its brand and creates new service propositiongives consumers even more reason to attach to a brand drivers, it risks continuing loss of market share toand can increase their perception of value. A valued lower-priced big box home improvement stores as thebrand is better able to defend its margins, and will need economy recovers.to discount less — even those brands in the value andoff-price retail categories. Victoria’s Secret again relied on its sexy lingerie fashion shows going viral, while resorting to giveaways andCreating new offerings can help put retailers in sync promotions to drive traffic this year. The brand is breakingwith the market, especially those that increase trust or out of the mall in the hopes of encountering the shopperinvolvement. Connecting store associates to the brand in a more open frame of mind via six 1,000-square-footexperience is crucial in a downturn. Meeting customers’ airport shops. Along those same lines, Bath & Body Worksservice and quality demands pays off in an emotional (42) teamed with both Wyndham Worldwide to featurereward for the brand. its True Blue spa line in the guest rooms of its hotels and resorts, and Holiday Inn to introduce its SignatureWhile Sam’s Club (7) is testing a revamped assortment Collection to the guest bathing experience.that pares down hard goods in favor of food, and healthand beauty, it has also made service changes. For the Best Buy, the brand that never stops innovating, has yetsmall business customer, Sam’s has simplified business to see results from its latest efforts, such as free financingmembership requirements by eliminating a dozen for shopping carts full of items versus one product at apreviously required documents, such as permits and time or helping shoppers with “green guilt” sustainablylicenses. It’s also offering free technical support for dispose of their old electronics. It continues to work onconsumer electronics purchases. Both efforts will product innovations with its suppliers and offer ventureopen the door to new shoppers while reconnecting capital funds to technology start ups. The media networkwith current members. Best Buy is developing that will run promotions on the thousands of TVs, PCs, and cell phones in the store could generate cash, but may also impact the shopper negatively if they feel bombarded by advertising noise.26 | Interbrand Design Forum
  • 29. Presenting the brand in a new light Brand partnerships ideally should be a “1+1=3” proposition for both participants. However, someEven though resources are limited and tension is work better than others. For example, Simply Verahigh, there are signs of creativity in the world of retail. Vera Wang works for Kohl’s, but American Living byBesides revamping stores for simplicity and convenience, Polo Ralph Lauren was not a success for JCPenney.companies are exploring ways to create communities Before rushing into a “brand mash-up,” brandaround their brands. In the era of social media, the store managers would be wise to examine the strengthsis becoming as much a relationship as it is a destination. and potential weaknesses of such collaborations inForward-thinking companies are giving their customers depth. Is it being done to attract new customers orthe opportunity to engage and co-create. enter new channels? Or is it because one brand is tired from lack of innovation and seeks to ride thePopular movies and TV shows have the ability to coattails of another?influence fashion trends. Such was the case withAMC’s hit TV show “Mad Men” set in 1960s New York. Retailers working from a focused brand strategy tendUpscale clothing brand Banana Republic (29) found to be more flexible than rigid, healthier and morea way to connect and engage more shoppers through resilient in the face of change, and more likely to seea partnership with the show. If you hadn’t thought increased ROI. When brand informs a company’sof Banana Republic as clean, modern “classic styling,” creative efforts, the result is imaginative leadershipyou probably do now thanks to the amount of buzz and innovative design — an aesthetic that strikes thegenerated by the partnership. right note with its customers and continues to delight them. Shoppers expect their favorite stores to speakAccording to Lowe’s (12) recent survey, its shoppers in a consistent voice, and brand can bring all theperceive their home values as having stabilized somewhat. components of the experience together — physical,While big-ticket purchases are still far off in the home sensorial, social, inspirational, and technological.improvement category, Lowe’s will help keep the “dream Prices can only be reduced so much, but there is nohome” alive. It has upgraded its website, redesigning it to ceiling on delivery of the brand experience.showcase the brand as a source of inspiration via idea-sharing images, how-to videos and project calculators.This positioning as a leader in inspiration will be furtherreinforced through its partnership with HGTV and thelaunch of its magazine, Lowe’s Creative Ideas. HGTV’spersonalities will provide exclusive content for thepublication and the online channel. The Most Valuable U.S. Retail Brands 2010 | 27
  • 30. Contributors CEO Lee Carpenter founded the business in 1978 to encourage As CMO/Executive Vice President Lynn Gonsior is responsible passionate dialogue among design, branding, research and for the positioning and marketing of the company’s architecture experts in the interest of serving a roster of comprehensive range of services. She also oversees strategy international clients. Today, Lee is considered one of the most development of the company’s global client base. Lynn influential people in retail. His position as CEO of Interbrand believes retailers and manufacturers receive the greatest North America reflects the new importance of retail brands and benefit when they combine strategy and consumer insight their value in the global competitive climate. A noted speaker, with creativity and innovation to help bring their brands he is frequently asked to address design, business, retail to life at retail. and automotive groups. Bruce Dybvad is the President of Interbrand Design Forum Bill Chidley has been working with global brands for over and Interbrand’s Cincinnati office. His global framework, twenty years, and as Senior Vice President of Shopper Sciences, retail experience and industry knowledge have resulted in he is responsible for developing in-store solutions. His shopper the creation and leadership of an exceptional creative process. sciences team uses the latest research and analytics tools He continues to refine, challenge and inspire world-class to create intelligent and inspired client programs. Bill sees teams of strategy, creative and architectural professionals, innovation as the process that marries insights with clear and help cross-fertilize the firm’s many disciplines. His expert objectives. “It’s about looking at challenges from new opinion is often sought by major publications. perspectives in order to change the game.” As Global Managing Director: Analytics and Valuation, the Chief Creative Officer Scott Jeffrey believes every retailer job of Greg Silverman and his team is to bend outputs to should have a distinctive, ownable personality, something give precise, measurable insight into innovation. He helped that can be “architecturalized” as a rich shopping experience develop Interbrand’s techniques for tracking studies that that connects emotionally with customers. His team does calibrate decisions against strategic objectives as well as the everything possible to support a client’s innovative thinking, proprietary measurement techniques that help put brand and his love of the creative process is infectious. Scott feels touchpoints in balance. Greg is a frequent lecturer on the that creativity, when applied against the idea of brand, leads subject of brand analytics. to competitive advantage. Problem definition and resolution is Sean Mead’s specialty. The expertise of Justin Wartell spans brand, strategy and As Director, Analytics, he concentrates on solution analytics. As Director, Brand Strategy, Justin helps to ensure architecture, analytics and project management, especially that everything we do for clients, from strategy to creative, in interdisciplinary engagements. He and his team are not only drives demand but builds brand value. His diverse uniquely positioned to ask and answer questions about the background helps him ask the right questions that lead to intersection of brand, space and finance. A key member of new solutions and opportunities for innovation. As a team the retail brand valuation team, Sean also manages the member, he helps evolve the relationship between research development of decision modeling techniques and services. and design that leads to the creation of exciting, dynamic retail environments.Contact UsGeneral Inquiries Media InquiriesLee Carpenter Beth LingCEO Interbrand Design Forum and Director of Public RelationsInterbrand North America Phone: +1 937 312 8803Phone: +1 937 439 4400 beth.ling@interbrand.comlee.carpenter@interbrand.com Additional information on retail brands:Lynn Gonsior www.interbranddesignforum.comExecutive Vice President/CMOInterbrand Design Forum For reprint permission of this reportPhone: +1 937 312 8806 or articles, please contact Beth Ling.lynn.gonsior@interbrand.com28 | Interbrand Design Forum
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