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Top 25 Retail Brands - Kantar Retail


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This report helps illuminate the radical …

This report helps illuminate the radical
changes reshaping retail as shoppers,
chastened by the recession and empowered with technology, think differently about what
and how they purchase. Here are just three
of many critical considerations:
First, brand is a prerequisite of retail
success. How retailers build their brands
impacts all aspects of their business.

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  • 1. The Top 20 Most Valuable Global Retail Brands 2010 Powered by
  • 2. Welcome to this Kantar This report helps illuminate the radical changes reshaping retail as shoppers, chastened by the recession and empowered Third, retail is becoming even more competitive. In developing markets, retailers face tough competition both from traditional Retail analysis of the with technology, think differently about what and how they purchase. Here are just three of many critical considerations: outlets and the modern trade. In saturated “post-modern” markets, hyper competition for share of wallet has replaced expanding Top 20 Most Valuable First, brand is a prerequisite of retail success. How retailers build their brands square footage as the engine of growth. Suppliers play a critical role in helping retailers succeed amid the local Global Retail Brands impacts all aspects of their business. Brand is key to effective merchandising. It converts private label from a margin-building tactic competitive forces. This report elaborates on these to a strategic symbol of brand equity. Brand considerations and many others. It provides alone secures an enduring place in the mind the ingredients needed in order to thrive in of the consumer. It is fundamental to the this new retail environment: the best data, supplier-retailer relationship. original insights and compelling ideas that will drive our businesses forward. Second, retailers own the conversation with shoppers. Through their loyalty programs Kantar Retail is pleased to provide this and daily interactions with shoppers, report. We believe that it will help you retailers have the most authentic and think differently about your business, its perpetually updated understanding of challenges and opportunities. the shopper. This knowledge is critical to suppliers who need to engage with their Sincerely, retailer customers to actively participate in the conversation. Wayne Levings CEO Kantar Retail Analysis by Kantar Retail from Bryan Gildenberg and Ethan Sinick Design by Lambie-Nairn Writing by Ken Schept GLOBAL RETAiL BRANDS 2010 3
  • 3. CONTENTS Welcome 2 Introduction 6 Overview 10 Commentary 18 The Top 20 Profiles 22 The Top 20 Summary Chart 62 10 Key Takeaways 68 Methodology 70 About Kantar Retail 74 Directory 76 4 GLOBAL RETAiL BRANDS 2010 5
  • 4. iNTRODUCTiON in a turbulent economy, when flat was the new up, that performance signified the resilience of brands The report also corroborates the stability of retail brand value over time. In 2006, The BrandZ ranking of the Top 100 Most Valuable Global brands included 10 retail brands. And those 10 retail brands The overall brand value of the and their importance in comprised about 9 percent of the total brand value of the Top 100. In 2010, 9 helping to stabilize and retail category declined by just retail brands are among the Top 100, sustain a strong bond representing about 8 percent of the total value. The difficult economy primarily 1 percent last year. with customers, even as customers reset their accounts for the slight decline. In fact, the Top 10 most valuable global priorities and restrained retail brands remained quite consistent over spending. the past five years, although the relative ranking shifted somewhat. Two instances This key conclusion emerges from this of dramatic brand value growth – Amazon second annual report about the leading and ALDI – illuminate major trends. On global retail brands. The report combines the strength of a 359 percent increase in the broad retail knowledge and analytical brand value Amazon moved from Number skill of Kantar Retail with the definitive 8 to Number 2, indicating the revolutionary global top 100 most valuable global brands impact of e-commerce. ALDI’s 241 percent valuations produced annually by Millward increased in brand value signifies the Brown Optimor drawing on financial data consumer’s increased concern with price and the WPP proprietary BrandZ database. and embrace of private label. 6 GLOBAL RETAiL BRANDS 2010 7
  • 5. iNTRODUCTiON Especially during periods of economic Expanded report uncertainty, like the last several years, both 5-Year Review of Retail Brand Value This report examines these trends and consumers and businesses increasingly other dynamics that last year drove overall rely on strong brands for the reassurance retail industry brand value and the value of and reliability they represent. Knowing the # 2010 Rank 2010 Value 2006 2006 Value % Change individual retail brands. More than twice the value of this intangible asset, a brand, helps $US Bil. RANK $US Bil. in value size of the inaugural Most Valuable Global corporate leadership and stakeholders Retail Brands report, this edition includes: make more informed decisions. 1. Walmart $39.421 1 $37.567 5% 2. Amazon $ 27.459 8 $ 5.983 359% • An overview that interprets how post- To determine a brand’s value, WPP’s 3. Tesco $25.741 3 $15.532 66% recession consumer attitudes and Millward Brown Optimor relies on BrandZ, the most reliable and comprehensive 4. Carrefour $14.980 5 $10.803 39% emerging trends will reshape retailing. brand equity database available anywhere. 5. Target $12.148 7 $6.135 98% • Commentaries that explore the impact of Started 12 years ago, BrandZ contains 6. eBay $9.328 4 $13.191 -29% e-commerce and the enduring power and information from more than one million 7. Home Depot $8.971 2 $27.312 -67% profitability of brands. consumers in 30 countries. The brand value calculation combines the BrandZ consumer 8. ALDi $ 8.747 16 $ 2,566 241% • Profiles of the Top 20 most valuable global information with financial data from both 9. Auchan $7.848 9 $5.354 47% retail brands including analysis, forward- company and independent sources. For 10. Lowe’s $7.008 -- -- -- looking insights, statistical summaries and complete methodology details, please turn Sources: Millward Brown Optimor photographs illustrating current formats to page 70. and innovations. The growth of Amazon and Aldi respectively • Takeaways that recommend specific reveal the growth of e-commerce and the practical actions to help assure success in importance of value. The decline of eBay and the post-recession retail world. Home Depot reflect the difficult economy. Get the full BrandZ Top 100 report To access the complete BrandZ Top 100 Most Valuable Global Brands 2010 report, go to For a free download of any of the BrandZ 2010 smart phone apps, go to 8 GLOBAL RETAiL BRANDS 2010 9
  • 6. OVERViEW Retailing emerged from Indeed, the retail brand that grew most in value last year operated no stores. While the recession changed by the retail category as a whole declined 1 the consumer’s virtually percent in brand value, the value of the Amazon brand appreciated 29 percent to unrestricted access to Forget location, location, location. information and products $27.5 billion, moving it into second place behind Walmart, which does operate and a revised view of stores—8,000 of them worldwide—and has Retailing is becoming more spending and material a brand value of $39.4 billion. complicated. well-being. Factor in the dramatic rise in smart phones and data transmission and it becomes clear Having spent 18 months tightening that the future of retailing will emerge from budgets, consumers now seem ready the tension between location, location, to resume discretionary purchasing. But location and algorithm, algorithm, algorithm. they remain cautious. While excited to Success will require both merchants adept replenish wardrobes and replace durables, at massaging customer egos and analysts consumers are more considerate of the skilled at massaging customer data. impact that their purchases have on the earth and its people. And they’ve learned As brands heavily invested in bricks and to live with less. mortar seek ways to keep stores relevant, store size will shrink. Because of the costs They’ve also learned to shop and challenges of adding new stores, retailers will attempt to extract more cash differently. E-commerce has grown flow from their existing stores. These in just a few years from an ancillary initiatives could improve large stores, retailer revenue stream to a central which sometimes are inconvenient to shop, place in the shopper’s repertoire offering more selection than customers can of purchasing options, redefining process at the shelf but less than they can the role of stores themselves. It’s a find online. At the same time, retailers risk oversimplifying their stores and eroding the rapidly growing global phenomenon, shopper experience. best illustrated by the US, where online transactions account for Here’s the takeaway: Competitive around 6 percent of annual advantage in retailing no longer can be retail sales. accomplished simply by saturating markets with stores and attracting customers with a combination of range, price and service. Success requires a thoughtful portfolio of shopping venues—physical and virtual—that appeal to specific shopper segments. Every retail brand needs to find a proposition that makes visiting these retail spaces worth the shopper’s time. 10 GLOBAL RETAiL BRANDS 2010 11
  • 7. OVERViEW The e-commerce and mobile revolution Share of wallet Share of decision is a major opportunity for retailers that It’s always easier and more capital and In a multi-channel world, consumers have successfully reorganize their businesses cost efficient to sell more to an existing a lot of choice. Share of decision is about for a digital world. A large part of winning customer. That truism becomes a retail getting them to choose you. in this world is being the platform people imperative now. turn to when making purchasing decisions. When retailing was exclusively about Retailers need to become part of the And precisely understanding that opening and operating stores, retailers active conversation that goes on around customer becomes more important strongly influenced the shopper’s these purchases. Digital also poses an than understanding trading areas and understanding of price and assortment existential threat. Either retailers win their geographies. The era of growing the top in key categories. They mediated the share of decision or risk becoming simply line and market share by opening ever decision-making process. That mediation points of distribution and pickup. In the more stores is over. The primary strategy role is threatened as technology enables future, a retailer not engaged in the digital for building a retail business is shifting from consumers to enjoy almost unlimited access conversations impacting the business could growing market share to growing wallet to products and product information. be reduced to just a box of stuff with a share—from saturating a trading area with roof—a brand positioning to avoid. square feet of space to selling as much as With mobile commerce, customers possible to the shoppers loyal to the brand. are increasingly able to receive real- This shift can be explained in part by time information in their hands as demographics in developed markets. In the they shop. When a mobile phone US, for example, economic recovery will be empowers a shopper at the point moderated by high unemployment among of sale with as much information— the young, a dearth of people in their prime or more—than is available to the wealth-creation years and the bulge of baby retailer, the retailer’s role in that boomer with reduced net wealth nearing under-funded retirements. In Europe and transaction fundamentally changes. Japan, retailers face aging populations with Shoppers are less influenced by formats that may not be configured for the location, price messaging and childless households that will comprise store experience if, with the push most of the foot traffic. of a button, they can find a desired product at the best price. Some of the challenge is attitudinal. Consumers in developed markets remain The shopper’s immediate access concerned about the future. And while to this information neutralizes they still expect mass market prices, the retailer’s role as the arbiter they’re increasingly unsatisfied by mass of price and assortment. market products. In general, they prefer more personalized items, but without the premium that personalization implies. And consumers, of course, can obtain products through many channels other than stores. 12 GLOBAL RETAiL BRANDS 2010 13
  • 8. OVERViEW The Top 20 Most Valuable Global Retail Brands 2010 2010 # Position Brand Parent Company Brand Brand Brand Brand change Value Value Contribution Momentum from $US Bill Change These brands had few options except to Renewing the brand emphasize affordability and prepare for 2009 YOY But first steps first. Many retail brands post-recession spending. Retailer success 1. = US Wal-Mart Stores, Inc $39.421 -4% 2 8 adapted extremely promotional tactics to in that environment will require a more cope with the recession. As brands enter nuanced understanding of customer needs 2. 1 US, Inc $27.459 29% 4 9 the recovery, they’ll need to consolidate or and wants and an offering of products, modify some of those tactics. services and formats to match them. 3. -1 UK Tesco plc $25.741 12% 5 4 Especially in the early days of the recession, Leveraging the brand 4. = France Carrefour SA $14.980 0% 5 7 reflexive discounting and cautious buying reduced excessive inventory. Consumers To fortify their brands and leverage their 5. 1 US Target Corporation $12.148 -1% 4 7 enjoyed the savings and understood equity, retailers implemented private label the tactics, especially from brands that solutions while at the same time relying symbolized value in more normal times. on national brands to drive traffic, which 6. -1 US ebay Inc $9.328 -28% 3 7 Discounts by up-market or even luxury becomes even more important as shopping retailers delighted shoppers but risked trips decline. While much retailer private 7. 1 US The Home Depot, Inc $8.971 -3% 2 3 stretching brand credibility. label continued to depend on the reflective glow of adjacent national brands, retailers 8. 1 Germany ALDI Group $8.747 1% 1 6 For example, Sainsbury’s, the UK grocer, increasingly introduced incandescent uncharacteristically promoted value with private labels that emitted their own light 9. -2 France Auchan S.A. $7.848 -26% 4 7 campaigns like “Feed your family on a and power—with equity derived from the ‘fiver.’” Sainsbury’s success suggests that retailer’s brand. 10. 1 US Lowe’s Companies $7.008 10% 2 5 great retail brands do not retreat from value but rather integrate it into the brand as a IKEA and ALDI, the deep discount grocer, 11. 4 US Best Buy Co Inc $5.807 18% 3 8 strategic attribute rather than an expedient remained strong examples of retail brands tactic. It helped, of course, that Sainsbury’s that have become synonymous with the 12. -2 Sweden IKEA International A/S $5.710 -15% 3 8 was in the food business at a time when products they sell. Lidl, an ALDI competitor, consumers were focused almost exclusively continued to balance its strong private Marks and Spencer 13. -1 UK $5.699 -5% 5 3 label with national brands. Target, the US Group Plc on needs over wants. discount department store, adopted that 14. -1 UK Wal-Mart Stores, Inc $4.922 -9% 3 7 For brands selling wants during the hybrid approach in the rollout of its new up recession, the message hardly mattered. & up private label, which uses an upward 15. 2 US Kohl’s Corporation $4.371 12% 4 5 A steep decline in the brand value of pointing arrow as a logo signifying the eBay reflects how much the online retailer brand’s commitment to quality and price. Lidl & Schwartz Stiftung & 16. = Germany $4.102 -1% 1 5 depends on discretionary spending. The The UK’s Marks & Spencer began to offer Co KG evaporation of home equity and tightened selected national brands side-by-side with Costco Wholesale 17. -3 US $3.875 -26% 1 4 credit impacted sales—and brand value— its iconic St. Michael’s private label. Corporation for home furnishings and improvement 18. = US Wal-Mart Stores, Inc $3.255 -7% 1 6 leaders like IKEA, Home Depot and Lowe’s. 19. = US Sureway Inc $3.173 -8% 2 4 20. = UK J Sainsbury Plc $2.728 -4% 5 4 Sources: Kantar Retail, Millward Brown Optimor. See the At a glance charts for brand footnotes and see Methodology on page 70 for explanations of Brand Contribution and Brand Momentum. 14 GLOBAL RETAiL BRANDS 2010 15
  • 9. OVERViEW The changing consumer A global perspective Brands also need to acknowledge Finally, as retailing becomes more the shifting values of the post- complicated and challenging in developed markets, retail brands increasingly will recession consumer. Concerned seek growth in BRIC and other emerging about the impact that their material economies. well-being has on the planet and on people at every stage of the supply They will find consumers more eager to chain, consumers are moderating spend money. But they’ll also encounter indulgence and excess with a increasingly powerful local competitors that have recognized the same opportunities. binary view of spending that pairs However, because Brazil, Russia, India and entitlement with responsibility and China are in such different places in their individuality with community. retail evolution, their conflation into the acronym BRIC adds confusion rather Retailers respond to these consumer than insight. concerns for a variety of reasons: because sustainability improvements reduce costs; It’s more illuminating to consider how each because good citizenship strengthens the country sits along a continuum of retail customer bond and drives shareholder market evolution. The continuum begins value; or because of genuine commitment. when pioneer brands arrive to organize Whatever the reason, retailers must an informal and fragmented market of respond. And their commitment needs to family-owned businesses. It stretches until be credible and consistent with their brand’s consumers shop at both the informal trade overall ethos. and in a well established organized trade that consists of modern stores serving European retail brands may be somewhat many product sectors. more responsive to these consumer concerns, particularly sustainability. But In this context, the Brazilian market already sustainability has become a bit more is intensely concentrated into three modern mainstream everywhere and the notion that retailers: Carrefour, Casino’s CBD Group it commands a price premium is beginning and Walmart. China remains fragmented to disappear. Being in touch with these but is rapidly moving toward concentration, long-term shifts is part of understanding the particularly in the coastal cities. The Russian post-recession world. And retailers who get market is intensely influenced by “disruptive that right are most likely to flourish. factors” (government and the lack thereof) that drive a unique pattern of concentration. Similarly, regulation has kept India a nation of shopkeepers with only 3 percent of retail coming from the organized trade. 16 GLOBAL RETAiL BRANDS 2010 17
  • 10. COMMENTARY 1. Thinking differently about problem solving. Bricks and mortar problems often are easy to identify but difficult to fix. Knowing that comp sales are down in five E-commerce is no longer just stores may isolate a management problem. Fixing it is something else. In e-commerce a nice way to top-up sales. the opposite is true. The overwhelming by Michael Ross amount of data about customers, orders, clicks, and fulfilment can obscure the problem. When the problem is isolated, Organizations that still however, the solution can often be easy. regard e-commerce as a Example: You may discover that a large bolt-on are squandering a volume of customers is being directed to major opportunity to gain an out-of-stock product. That should be a insight and grow revenue two-minute fix. and profit. And they’re 2. Thinking differently about decision- placing themselves at a making. In a physical store it’s not easy to dangerous disadvantage. know exactly what products customers are looking at. In e-commerce you know Moreover, in today’s exactly what every customers views, adds slow-growth economy, to cart and buys. More precise information is powerful. It enables you to determine e-commerce needs to be whether a product isn’t moving because an integral part of any retail people aren’t looking at it or because enterprise. But success people are looking at it but not buying. An accurate diagnosis leads to a fast and requires thinking differently effective solution. in many ways: Example: Without accurate information, you’re left with a trial and error response. Discounting, the default response, can waste a lot of time and produce no extra turns if shoppers aren’t looking at the merchandise. 18 GLOBAL RETAiL BRANDS 2010 19
  • 11. COMMENTARY 3. Thinking differently about business Even more important, e-commerce analysts who can sift data to discern why organization. Retailers typically structure will change retailing. The stores of the Not the end of shops a product turns—or not. Such unions will management according to traditional (near) future will be much changed from The rise of e-commerce does not presume require wisdom and humility. But they will functions such as marketing, merchandising today’s shelf-lined boxes stuffed with the end of shops. People like shops. We produce remarkable competitive advantage. and finance. In e-commerce that’s expensive inventory. We’ll see fewer and love to touch the merchandise. But it does often sub-optimal. While the traditional smaller stores. Ultimately, stores may Michael Ross is director and co-founder mean that the most successful retailers management structure maps neatly onto become experiential showrooms. Such a of Ecommera, a leading e-commerce will be those who understand both the an existing retail organization structure, development would completely change the solution provider delivering technology physical and virtual channels profoundly and it often makes it hard to make rapid economics of retailing, as the merchant and insight. learn the lessons from each to build and trading decisions. wouldn’t need to have stock sitting in operate a solid and integrated multi-channel hundreds of different locations. presence. Brilliant merchants always will Ecommera is a WPP Digital Partner Example: Sales of a particular product are Company have an important place, but they’ll need underperforming. Do I spend more on a Retailers heavily invested in bricks and to marry their intuitive feel for buying and search engine? Do I discount the product? mortar real estate might fairly argue that selling with the technical knowledge of Do I discount delivery? When each function it’s difficult to turn the battleship around. has a different budget and reporting line, I would agree. But I’d add that if you’re the lengthy decision-making process often not looking at the horizon, you won’t have results in lost opportunity. a battleship to turn around. Consider the e-commerce implications for brands. In the implications for retailers past, brands relied on retailers for national distribution. With a few flagship stores and and brands a wholesale program brand marketers could cover the whole country, even the world. As you can see from the preceding E-commerce enables brands to sell directly examples, even thinking like an e-commerce to consumers, make higher margins, have merchant will sharpen your business. You’ll more control and no longer need to deal ask better questions and expect faster and with a lot of stores. Brands can radically more useful answers. reshape their distribution strategies. And retailers who make money today selling And you’ll have a more accurate handle these brands will need to rethink their role on performance. In the bricks and mortar in the retail landscape or risk waking up one world, profit per square foot is a key day to find they have no products to sell. performance indicator. That’s not the case in e-commerce. E-commerce retailers need to understand the trade-off between profit-per-order and volume of orders. This allows them to understand whether the next dollar should be invested in retail prices, marketing, discounting delivery or a promotion. 20 GLOBAL RETAiL BRANDS 2010 21
  • 12. ThE TOP 20 1.WALMART Plus, shopper attitude changed a bit last year. While shoppers continued to spend cautiously because of the economy, they’d passed their initial panic and fear. Less dependent on Walmart’s low prices, Meanwhile, Walmart invested in the brand’s online presence because its greatest threat comes not from bricks and mortar competitors but from online operators, specifically Amazon. Scale and global reach shoppers probably felt less grateful. At should help. Though the Walmart brand Wal-Mart relaunched its brand the same time, assortment changes may have confused or alienated some shoppers value declined slightly, last year the Walmart Corporation posted sales of over $400 as Walmart last year. looking for a more complete grocery trip. Walmart remained the consumer’s billion from over 8,000 stores, in 12 formats, operating in 15 countries. And 25 percent of advocate, however, as it continued to its sales came from outside the US. convert operational cost savings into price reductions. And with well publicized reform of its labor practices, commitment to sustainability and advocacy for health reform Walmart continued to repair the broader pillars of its brand. The subtle spelling revision signified shifts in brand positioning and store execution that may have provoked At a glance shopper confusion, as brand value $39.4 billion Brand Value declined slightly. Brand Value Ch ange YOY% -4% Sales $406.4 billion Total Company Expansion slowed and sales grew modestly. Stores 8,051 Total Company But the discount superstore chain, which The new Walmart logo, intro d Sales $294.6 billion duced last year, appears here on a store in Mt. Prospe WALMART Bran operates about 4,500 stores worldwide ct, Illinois, a northern d Stores 4,577 suburb of Chicago. WALMART Bran under the Walmart banner, posted strong eration 15 Countries of Op art, Walmart Supe rcenters, profit. The results reflected both effective es include Walm Optimor Walmart brand sal tai l, Millward Brown urces: Kantar Re So management of the business and a tangible Throughout the store, Walmart reassessed benefit of a brand that enriched its core ct store in North Bergen, New Jerse y, the entire categories and departments, At a Project Impa and improved fas hion reflects the proposition from “Low Prices, Always” to price combination of low “Save money. Live better.” designating them as win, play or show, new Walmart tag line, “Save Money. Live Better.” depending on their growth potential, and assigning appropriate space and Walmart continued to implement its “Project merchandising investment. The store Impact” initiative aimed at simplifying program helped clarify the evolution of in-store execution to produce a more Walmart from its roots as a hardlines consistent brand expression. The specific insights & implications discount store to its next phase as a general goals included: removing clutter and merchandise retailer selling groceries to • Walmart’s influence is weakened as shoppers become less reliant on the brand for price and product improving signage to make shopping easier; information that they increasingly access on their computers and mobile devices. its current iteration as a grocery retailer reducing labor, stock keeping units, and with a large general merchandise range. • Walmart needs to achieve the right balance between two somewhat conflicting imperatives: removing inventory to lower costs; and increasing items from the assortment to gain store efficiency and operational savings; and adding items to the However, Walmart’s decentralized culture, private label to improve earnings. assortment to satisfy customer needs and expectations. which thrives on local entrepreneurship, can produce store-to-store inconsistencies and • As Walmart broadens its brand beyond price, the company needs to be clear that price remains sometimes shopper confusion. a core aspect of the proposition. 22 GLOBAL RETAiL BRANDS 2010 23
  • 13. ThE TOP 20 2. AMAZON Amazon and Zappos share a problem- solving ethos. The formation of each company depended on asking – and answering – the same question: what’s hard about buying this product? For Amazon As consumers slowed spending last year, Amazon also benefited from its many revenue streams other than retail sales, which include: advertising, third-party licensing arrangement, rebates, Prime the product was books. The physical Membership dues, Kindle sales and Amazon grew 29 percent in brand layout of a library or bookstore prevented books relevant to the individual patron from royalties from electronic book sales. value last year making it one of being in convenient proximity. The problem with purchasing shoes online was that the fastest growing global brands the product often did not fit, a customer concern until Zappos offered unlimited free returns. Both companies provided digital across all categories. interface solutions. At a glance $27.4 billion With improvements in price, Brand Value nge YOY% +29% selection and service Amazon Brand Value Cha $24.5 billion Sales Total Company achieved a retailing trifecta. Total Company Stores 0 $23.5 billion By combining its online data into This Amazon home page prom AM AZON Brand Sa les 0 Stores complex algorithms Amazon AMAZON Brand otes the Kindle while showing the brand’s broad product category range. ration 7 ascertained the bottom of the Countries of Ope azon.c om/ca/ /de/fr. les include am Amazon brand sa wn Optimor market faster than most retailers So urces: Kantar Re tail, Millward Bro and priced accordingly. Unparalleled selection also helped Amazon Amazon continues to revolutionize the book category wh ere the dominate the holiday season. brand began. Easier to open packaging and Amazon’s brand value growth last year free two-day shipping for its Prime also resulted from the introduction of Membership subscribers improved Kindle 2 and the acquisition of Zappos, the service experience. developments that fortified the company’s market position. With the Kindle 2, Amazon Having invented a better idea, Amazon leveraged the consumer trust earned as a insights & implications has invested heavily in the technology book merchant to expand into electronic • Amazon has an opportunity to expand its model into other aspects of people’s lives by offering more and distribution required to sustain it. reading devices. Amazon has defined the product categories and venturing into services. It could add a bricks and mortar presence. The brand now looms as a revolutionary distribution medium for electronic books • The company’s success will draw more intense competition from highly efficient retail competitors that force of engineers and mathematicians in the way Apple’s iTunes impacted music. understand complicated distribution and technology, such as Walmart. posing an existential threat to traditional Although Zappos still trades under the Zappos name, acquisition of the online • Since Amazon operates only in six countries, it has a tremendous international expansion opportunity. retailers invested in bricks and mortar and still depending on the mantra of location, shoe and apparel retailer strengthened the location, location for competitive advantage. Amazon brand at least indirectly. 24 GLOBAL RETAiL BRANDS 2010 25
  • 14. ThE TOP 20 3. TESCO The exceptions to the company’s strategy of branding all business Tesco occur during international expansion when acquisition of a strong local brand facilitates market entry. Ironically, the Tesco brand is absent With the rise of food discounters, like ALDI and Lidl, Tesco returned to its discount roots while at the same time keeping the broad brand approach. It launched a discount own label brand in the UK. from its most successful international However, in central and eastern Europe, The Tesco brand appreciated market, Korea, where the company trades as Homeplus. Tesco decided to establish a where the discount brands are strong, Tesco operates many large hypermarkets. in value last year despite the new brand when it launched Fresh & Easy, a food discount operation, in the US. In the US, Tesco’s Fresh & Easy is modelled after low-priced Trader Joe’s, which is difficult economy. owned by ALDI. In 2009, Tesco operated about half of its over 4,500 stores outside the UK in 14 other countries. That performance reflected the At a glance strength of the brand, particularly $25.7 billion Brand Value +12% in the UK, Tesco’s home market, Brand Value Ch ange YOY% $89,7 billion Sales where consumers view the grocer Total Company 4,768 Stores Total Company as the place to fulfil a wide range les $77.3 billion The Tesco loyalty card, used with 60 TESCO Brand Sa transactions, provid -to-80 percent of UK of monthly household shopping es valuable custom ores 3,396 advantage. er data and compe TESCO Brand St titive 15 needs. The UK contributes about Countries of Op eration pess/Espres/E xpressz, Tesco include Tesco Ex er demand, 75 percent of Tesco’s total turnover. Tesco brand sales Tesco Metro, tes Pressured by competitors and consum roots during th e recession while its discount approach. returned to its broad brand maintaining Last year’s performance also was indicative of Tesco’s ability to formulate a broad master brand, encompassing both food and non-food and priced from discount to premium, that appeals to consumers at all income levels. In the UK, where shape the own-brand strategy. Outside of Tesco operated 2,440 stores last year, the UK, with weaker brand heritage, own- the brand appears in a variety in formats, label business is harder to develop. insights & implications primarily supermarkets, hypermarkets and • With further investment in the supply chain, Tesco could experience in non-food categories the convenience outlets, while maintaining Founded as a discount food merchant in e-commerce success it enjoys in grocery. brand consistency and purchasing and 1919, Tesco expanded into various grocer • Because of Tesco’s dominance as a grocer in UK, growth requires leveraging the brand into new distribution efficiency. formats and non-food businesses that now formats for selling non-food products and offering services such as banking. include financial services and mobile phone Tesco offers an own-label option on about • As Tesco expands beyond its core business, it needs to narrow the brand proposition because the operations. After forming Tesco Financial company lacks the fundamental competitive advantages. 40 percent of the grocery range and at Services in a joint venture with RBS (Royal every price point, including premium, in the Bank of Scotland) in 1997, Tesco bought UK. Tesco loyalty cards, used on 60-to-80 the RBS share during the financial crisis and percent of UK transactions, provide data to rebranded the entity Tesco Bank. 26 GLOBAL RETAiL BRANDS 2010 27
  • 15. ThE TOP 20 4.CARREFOUR In Europe, the Carrefour brand remains strong in France and Spain and somewhat weaker in Belgium and Italy. Although the company operates some of its largest stores in Eastern Europe, the brand makes should enable Carrefour to leverage marketing and advertising spending and develop private label. Being managed for short-term objectives less impression there. In contrast, the brand will place Carrefour at a competitive The value of the Carrefour brand is well established in certain emerging markets including China, Argentina and disadvantage against is peer operators, however, as retailers like Walmart and Tesco remained flat last year. Brazil, where a recent acquisition produces some the company’s fastest growth. continue to grow with long-term vision. If pieces of Carrefour were sold eventually, they would be logical buyers. Eventually, consolidating the various businesses under the Carrefour brand may facilitate the sale of all or parts of the company. Meanwhile, a unified brand At a glance $14.9 billion Brand Value ange YOY% 0% Brand Value Ch Sales $131.5 billion Total Company Stores 14,299 In the midst of a deep global Total Company $98.9 billion CARREFOUR Brand Sales recession, protecting value was and Stores 3,489 CARREFOUR Br a significant accomplishment for Countries of Op eration 41 rrefour City, rrefour Bairro, Ca the world’s second largest Carrefour brand sales include Ca Carrefour Marke t, Carrefour Marke t Urbain, tail, Carrefour Express, urces: Kantar Re retailer in annual sales. And The Carrefour brand remains strong in France, its Carrefour Mini an d Optimor . So home market. Millward Brown it was not accidental. The company is unifying many of 40 country nd in many of its to leverage the bra its disparate retail holdings under the Carre four is attempting France, such as Po land sho wn here. markets outside of Carrefour banner. The branding is part of an effort to increase asset value implemented by Blue Capital, a private equity group that has controlled Carrefour for the last several years. Through acquisitions made over 40 insights & implications years, Carrefour evolved from a French • The ongoing effort to unify the brand across country markets should leverage marketing investment Until just over a decade ago, Carrefour was hypermarket to a presence in 41 countries and strengthen brand awareness. known as a premium retailer with first-rate operating a conglomeration of almost • The company operates with a short-term mentality at a time when major structural changes happening locations and competitive prices facilitated 15,000 stores under various fascias. in retailing demand long-term vision. by world-class buying. The focus began to Historically, about 60 percent of revenue • The need to build and sustain a credible presence in e-commerce and the BRIC markets requires change after the 1999 merger with French has come from the hypermarket segment significant investment. Reluctance to invest would put Carrefour at a disadvantage. retailer Promodès and the subsequent of the business, which is almost entirely death of one of the principals. branded Carrefour. 28 GLOBAL RETAiL BRANDS 2010 29
  • 16. ThE TOP 20 5. TARGET This initiative seemed promising and an important step for Target to brand itself beyond “want” categories, such as apparel and home décor, where Target has exhibited great skill at specializing brands, with packaging designed to mirror the national brand’s packaging. Last year, Target shifted from this “reflective” approach to an “incandescent” private label philosophy. Its new up & up brand in products that closely match its brand emphasizes the intrinsic price and quality Target experienced a challenging proposition—“Expect more. Pay less.” The question outstanding is whether Target value of Target own-label products rather than positioning them as cheaper imitations 2009, before seeing results begin to can translate this sourcing and marketing expertise from products unique to Target of national brands. This matches to some degree Target’s private label strategy in rebound during the holiday season. to merchandise that the consumer can food, where the retailer has always sought find anyplace. premium positioning in line with the its overall proposition. To further that aim, Target also revised its approach to private label. Until now, the chain offered its own-brand merchandise for a lower price than the adjacent national As sales revived against soft 2008 holiday numbers, profit strengthened considerably because Target At a glance $12.1 billion improved its inventory management Brand Value ange YOY% -1% Brand Value Ch and handling of markdowns. Total Company Sales $63.4 billion Stores 1,740 Total Company At the same time, the brand’s attempts Sales $63.4 billion TARGET Brand to be more relevant for recession-weary Stores 1,740 TARGET Brand 1 shoppers began to gain traction. While Countries of Operation t and slowing expansion, the 1,740-store To reach cautious post-reces es include Targe sion shoppers, Target is Target brand sal Brown Optimor attempting to broaden the Sources: Kanta r Retail, Millward value message of its bran discount general merchant began d. remodelling its existing locations to include d designer d for its value-price chain. Target is renowne an increased presentation of grocery and merchandise create d espe cially for the fresh foods. Known internally as the Pfresh campaign, message and broaden its value proposition the expansion of food addressed Target’s by packaging some merchandise in strategic dilemma: the chain remains on the bulk, replicating the value proposition of wrong end of the needs-wants spectrum. warehouse clubs like Costco and Sam’s. insights & implications Worried about unemployment and overdue Target also attempted to extend the • During the recession, Target’s biggest competitor was the couch, as shoppers increasingly went online mortgage payments, consumers spent emotional and differentiated power of its to purchase apparel and other merchandise that typically drive trips for Target. on basics last year and retreated from the brand to other attributes and into other • Target needs to establish a compelling reason for shoppers to return to the store. fashion and design offerings that drive categories, specifically pharmacy. In its Target’s margins and signify its brand. pharmacy TV campaigns, Target positioned • The open question for Target is whether the brand can bring a Target value proposition to food as it grows its presence in grocery. the brand as knowledgeable, curious In an effort launched in early in 2010, and friendly rather than fashionable, the Target attempted to fortify its low-price traditional Target message. 30 GLOBAL RETAiL BRANDS 2010 31
  • 17. ThE TOP 20 6. EBAY Not all of eBay’s business is about selling items, however. The company also owns PayPal, the service that facilitates secure online payment for goods and services. PayPal complements the eBay business communications company that it purchased in 2005. Compared with PayPal and StubHub, Skype was less closely aligned with eBay’s core proposition. and enables the company to broaden its The PayPal and StubHub businesses are EBay depends on discretionary reach to merchants without credit card processing capability and to consumers that not calculated into the value of the eBay brand since they trade under other names. spending, which was not a growth prefer not to pay with credit cards. Much of the core business also is excluded from the brand valuation because, although area last year. In addition, eBay owns StubHub, a reseller eBay is present in 30 countries, the of tickets for concerts and sporting events. company often operates under the name Last year, eBay sold Skype, the online line of strong local brands it has acquired. At a glance $9.3 billion Brand Value -28% nge YOY% Brand Value Cha $57.2 billion Sales Total Company 0 Stores Total Company $30.3 billion Sales results slowed and brand EBAY Brand Sa les 0 value declined as recession-wary EBAY Brand Stores 39 ration consumers shopped for needs Countries of Ope d gross merchan dise The home page lists the wid ure is the estimate country count e variety of categories, The eBay sales fig in 2009. The eBay over wants. even cars, available on eBa y, volume sold by the brand online auction op eration. includes only the ard Brown Optim or Sources: Ka ntar Retail, Millw The process of refocusing the brand also hindered growth. Although launched in 1995, as an innovative online auction to join disparate buyers and sellers, eBay About half of the sales come not from od for one day on ly, drives traffic. The daily deal, go discovered that the most sustainable aspect auction, however, but from fixed-price sales, of its proposition is not the auction, but the reflecting eBay’s evolution from a somewhat trusted access it provides. anarchic connector of individual buyers and sellers to a more organized and efficient For buyers, eBay offers access to a wide marketplace. The repositioning moved eBay insights & implications variety of interesting items often at eye- into a more crowded space where it faces • As the brand shifts from the auction business to more fixed-price transactions, it moves into direct popping prices. The small-to-medium size a growing competitive threat from other competition with Amazon and other trusted e-commerce brands. resellers that populate eBay enjoy access to trusted e-commerce brands, like Amazon • EBay benefits from the mainstreaming of its brand. The fact that people increasingly regard eBay those 90 million eBay active users. Business and Google, that also provide access to as an option when considering a product purchase confers legitimacy that allows the brand to often is good. millions of shoppers and small resellers. enter other product areas. • The eBay business model, not overly proprietary, is open to imitation, especially from competitors that may develop specialized markets for catering to niches of eBay’s audience. 32 GLOBAL RETAiL BRANDS 2010 33
  • 18. ThE TOP 20 7. hOME DEPOT To fill some operational gaps, legacies of the chain’s torrid and entrepreneurial growth, Home Depot installed more information technology and improved its supply chain with the construction of new distribution In general, the company returned to its core business and brand principles. It closed some ancillary businesses, like its Expo Design stores, although it continued to develop its installation business and its centers aimed at reducing costs and better Web site. Home Depot’s market position regulating the flow of merchandise. If there was a bright side to 2009 for Home last year was about as challenging Home Depot continued to balance the expectations of its contractor customers Depot, it was that the economic slowdown provided a breather, enabling the company as it gets. with the appeal of its stores to women to address some nagging problems and shoppers. Men comprise 55 percent to emerge potentially with a brand that’s of home improvement shoppers, but recovered some of its authority in price, women have a major say in 80 percent selection and service. of the purchasing decisions. And many women feel uncomfortable in the busy and sometimes chaotic environment of Home Depot’s 2,244 warehouse stores. At a glance $8.9 billion Brand Value % ange YOY% -3 Brand Value Ch Sales $65.9 billion Total Company Stores 2,244 Total Company 5.9 billion and Sales $6 HOME DEPOT Br 4 and Stores 2,24 HOME DEPOT Br eration 7 Countries of Op The home improvement chain Home Depot bra e Home Depot nd sales includ . Sources: Kanta r Retail, Millward d sought to grow business during a an Brown Optimor the front mortgage crisis that destroyed much Home De pot often pr omotes seas onal items at of the home equity that pays for of the store. improvements. Plus, compared with The warehouse for mat draws both pro s and DIY shoppers . its competition, Home Depot was much more dependent on sales to contractors at time when housing starts reached record lows. Home Depot focused on three priorities to insights & implications Timing was not great for other reasons, too. rehabilitate its brand despite the economic • The anticipated recovery in the US housing market will drive increased sales. The recession hit just when Home Depot difficulties: improving customer service, was about to switch gears, away from reasserting product authority and continuing • Reinvigorated customer service would help Home Depot regain its strongest point of competitive differentiation. five years of cutting costs and looking for to improve productivity and efficiency. efficiencies and back to offering expertise Customer service levels, which depend • The brand also would benefit from improving the shopping experience for both its DIY and contractor customers. and customer service, among the brand’s on knowledgeable and engaged store core attributes when it was established 30 associates, may have benefited from the years earlier. availability of contractors during lean times. 34 GLOBAL RETAiL BRANDS 2010 35
  • 19. ThE TOP 20 8. ALDi Both ALDI organizations face the predictable challenge to proven success—imitation. Germany’s Lidl entered the deep discount segment in the mid-1970s, and today ALDI and Lidl share 60 to 70 percent customer in Germany and Austria, for weekly promotions of selected consumer electronic items, computers for example, at virtually unbeatable prices. Today, consumers find wide selection and lower prices overlap in Germany. Beyond Lidl, however, for consumer electronics online. ALDI’s In a tough year for retailing, the and in many country markets, more competitors are adopting a discount strategy more recent promotion tactics, mobile phone offers and travel packages, lacked ALDI brand appreciated slightly. to draw price-conscious consumers. equivalent impact. At the same time, ALDI is losing a signature traffic-driving strategy. During the end of the 1990s and the early part of the next decade ALDI was known, especially At a glance $8.7 billion Brand Value nge YOY% 1% Brand Value Cha $65.8 billion s Tota l Company Sale Stores 9,396 Total Company $59.2 billion AL DI Brand Sales 8,957 es ALDI Brand Stor With less money to spend, more ration 20 Countries of Ope shoppers seemed drawn to the ALDI brands sales Re include Aldi and ald tail, Millward Bro wn Optimor Sources: Kantar deep discounter’s proposition of sharp pricing on a limited range of ALDI reinforces the quality groceries. ALDI stores offer brand’s key messa ge—low prices and no frills. about 800 items, mostly own-label, n is basic, AL DI presentatio in only 15,000 square feet of space. Although the produce project qual ity as well as price. attempts to Coming out of the recession ALDI has Germany as well as Benelux, France, Spain some work to do, however, as it faces more Portugal and Poland. ALDI North also owns imitators and a shifting marketplace with Trader Joe’s in the US. consumers increasingly completing some of their food shopping online. ALDI has moved ALDI South is somewhat more premium insights & implications into that space, but slowly. and has enjoyed success targeting mid-and • ALDI will continue to benefit from high consumer regard for a store and private label brand that up-market shoppers. Along with stores in consistently delivers both low prices and quality. The German-based brand actually operates southern Germany, ALDI South operates • ALDI should do well in the US and Australia because of limited direct competition in those markets. as two separate organizations – ALDI the ALDI brand in UK, Ireland, Greece, North and ALDI South – controlled by two Hungary, Slovenia, Switzerland and outside • ALDI may struggle in certain European countries because market saturation is expected to slow expansion. brothers. ALDI North takes an austere of Europe in the US, with more than 1,000 approach and appeals to more price- stores, and Australia. It operates in Austria sensitive shoppers in northern and eastern under the Hofer brand. 36 GLOBAL RETAiL BRANDS 2010 37
  • 20. ThE TOP 20 9. AUChAN Similarly, few businesses are branded Auchan in Italy, the company’s largest European market outside of France. Inside France, government regulations added further challenges with a move to change grants tremendous autonomy to each store and fosters loyalty among employees. And it drives initiatives to creatively develop its presence at the intersection of online and in-store shopping. certain retail accounting practices in an Auchan’s strength in Russia and effort to stimulate lower prices. While the entrepreneurial approach helps assure the right products, prices and China helped the brand navigate A family-controlled enterprise, Auchan assigns a higher priority to serving existing locations, decentralization sometimes slows reaction time, inhibits coordination successfully through the recession. markets well over expanding into new of marketing efforts and makes it harder to markets. Cash flow and limited debt cultivate a unified brand image. also regulate the rate of expansion. The company’s entrepreneurial operating style At a glance $7.8 billion Brand Value -26% The economic slowdown Brand Value Cha nge YOY% $63.2 billion Sales compounded a key challenge for Total Company 2,624 Stores the French hypermarket however, Total Company $37.1 billion Sales AUCHAN Brand which is leveraging its global AUCHAN Brand Stores 323 13 presence without the benefit of Countries of Ope ration m. an and les include Auch a unifying brand. Auchan brand sa Sources: Ka ntar Retail, Millw ard Brown Optim or Auchan remains strong in France but developing mar are driving growth. kets In Russia, which is Auchan’s flagship market, the company operated 68 stores at the end of last year, 38 under the Auchan ts. brand. In China, Auchan ran 16 Auchan ’s strongest marke are among Auchan Russia and China locations along with 68 hypermarkets branded RT Mart, a joint venture with a Taiwanese company. Relatively slow to expand internationally, Auchan did not open stores outside of In both countries, Auchan emphasizes the France until the 1980s when it entered insights & implications same brand core values of lowest prices Spain and also opened a few unsuccessful • Auchan would benefit from a more unified brand presence globally. and widest assortment, perhaps with a stores in the US. Auchan entered Spain slightly more premium perception in China though acquisition and retained the • Auchan’s strong market position in two key BRIC countries, China and Russia, should continue to shape its international business. where Auchan stores often are located in existing store fascias for it hypermarkets. attractive shopping malls. Stores in both The Spanish stores are called Alcampo, a • Market saturation and government regulation will impede Auchan’s domestic growth in France. Russia and China offer both food and non- rough translation for Auchan, which means food, although the Chinese stores may be high field. No retail operation in Spain is a bit more food oriented. branded Auchan. 38 GLOBAL RETAiL BRANDS 2010 39
  • 21. ThE TOP 20 10. LOWE’S had going into the recession, and it did not adjust significantly during the past 18 months. Its warehouse stores continued to offer merchandise breadth and depth, but with a relatively disciplined presentation that of its original core markets in the South. The company is testing several smaller store alternatives by fine-tuning its existing format. Because of the troubled economy, the rollout may happen more slowly. may appeal especially to women shoppers Lowe’s struggled effectively against whose decision-making role is important for the large remodelling projects that drive big Internationally, Lowe’s continued its expansion in Canada, prepared to enter the housing downturn. box DIY sales volume. Mexico and, in its first expansion out of North America, negotiated an arrangement Lowe’s slowed its store expansion at with Woolworths in Australia to open Lowe’s least temporarily, but still anticipates stores in that country. increasing the store count in the US by as much as 50 percent over time. Although Lowe’s operates in all 50 states, it has an opportunity to increase density outside At a glance $7.0 billion Brand Value 0% ange YOY% +1 Brand Value Ch Sales $47.2 billion Total Company Stores 1,709 Total Company But if the 1,709-unit warehouse les $47.2 billion LOWES Brand Sa 1,709 home center chain excelled at LOWES Brand St ores 2 eration controlling its operations, it could not Countries of Op and es include Lowe ’s and Lowe’s brand sal llward Brown Op timor g, messaging control the economy. Sources : Kantar Retail, Mi Lowe’s aim s its merchan DIYers. disin hous ekeeping at As housing starts, mortgage applications and home remodelling declined, Lowe’s sales followed the same downward trend. Lowe’s operates in The chain could take some comfort that and cross-border all 50 states but has expansion in Canad room for fill-in US stores a and Mexico. compared with Home Depot, the chief competitor, its business is more consumer- focused and less reliant on contractors. Ace and True Value, or at discount or food insights & implications That difference may be reflected in the stores. And as a major contender in the • Business should pick up for Lowe’s as housing recovers and consumers undertake major home relative resilience of Lowe’s brand value. appliance business, which was hurt by the improvement projects. In the meantime, consumers may shop for maintenance or repair items at recession, Lowe’s experienced additional more convenient locations. The slow-down in home improvement financial exposure. • The company will face reinvigorated competition from Home Depot as Lowe’s chief competitor had several consequences. The chain’s improves its store experience and service. 117,000-square-foot prototype stores, Meanwhile, Lowe’s continued to do a good • Lowe’s could benefit by helping women undertake the full range of DIY activities to dispel any designed for major project completion, are job protecting its margins with private label gender preconception that limits the DIY interest of women shoppers to décor categories. not the most convenient place to make item and supplementing its in-store selection purchases, which consumers sometimes with its Web site. The company derived fulfilled at hardware store competitors, like confidence from the strength its business 40 GLOBAL RETAiL BRANDS 2010 41
  • 22. ThE TOP 20 11. BEST BUY not only impacts Best Buy’s entertainment software business, which is 17 percent of sales, but it threatens a critical traffic driver. Along with entertainment, Best Buy’s consumers. Geeks can sell a solution rather than simply a product. Service contracts bought at the time of product purchase are an important profit component. current range consists of home office Best Buy expanded its mobile phone The Best Buy brand appreciated in (34 percent of sales), consumer electronics (36 percent), services (7 percent) and business, which exists as in-store departments and as branded stand-alone value by 18 percent last year. appliances (6 percent). Best Buy added musical instruments, such as guitars and locations. Best Buy was expected to gain knowledge from Carphone Warehouse, a keyboards. Still a relatively fragmented UK mobile phone retailer acquired at the category, it appeals to the chain’s youthful end of 2008. The acquisition reflects the customer base. chain’s global aspirations, which include opening the first Best Buy store in Mexico The brand also worked on service at the end of 2008, and in Turkey in 2009. improvements. Best Buy’s Geek Squad of The company also has stores in China and young techie advisors adds to revenue, will expand further into Europe. The first UK At a glance signals a nerdy competence and helps make technology more accessible to store opened early in 2010. $5.8 billion Brand Value +18% nge YOY% Brand Value Cha $48.8 billion Sales Total Company 4,037 Stores Total Company $38.5 billion BEST BUY Br and Sales d Stores 1,222 BEST BUY Bran The result indicates the US chain’s ration 14 Countries of Ope st Buy, Best Buy Mobile and strong growth prospects following Best Buy brand sales include Be urces: Kantar Re tail, Millward Brown Optimor So the collapse of its main head-to- head competitor, Circuit City, which left Best Buy as the only national Best Buy y categories, big box specialist in the home In its at tempt to do minate in ke parture of its main compe titor last year . m the de electronics category. benefited fro Most Best Buy sto res have the same one in Polaris Mall, distinctive exterior Columbus, Ohio. as this Best Buy enjoyed a sales benefit from merchandising attention devoted to the the disappearance of $10 billion Circuit category. Best Buy strengthened its multi- City, which enabled the company to channel presence by assuring that its better weather the downturn in consumer brand appears high in online searches and spending. The real estate opportunity with initiatives like Twelp Force, its Twitter insights & implications from Circuit City was less significant conversation about service issues. • Best Buy has a major opportunity to capitalize on the disappearance of a key competitor at a time because the locations of the two chains when the consumer appetite for mid-market electronics is growing. often overlapped. Perhaps the greatest threat to Best Buy • Squeezed between Walmart (price and efficiency) and (Amazon (price and assortment), Best Buy comes from an unlikely but powerful needs to establish a third way. Best Buy still faced formidable competition competitor, Apple’s iTunes. With digitized • Best Buy has room for global growth as both a bricks and mortar and online brand. from and bricks and mortar music conveniently available online, merchants selling electronics, especially consumers have less incentive to purchase Walmart, which expanded the space and CDs in a physical store. That development 42 GLOBAL RETAiL BRANDS 2010 43
  • 23. ThE TOP 20 12. iKEA incremental improvements to its Family Card, a loyalty program that promotes the IKEA value proposition by rewarding purchasing with selected discounts. IKEA has succeeded in becoming a family destination, a place where parents and children collectively select the furniture and accessories that will surround their lives. And when the process becomes too much Renowned for its efficient sourcing, IKEA to bear, the kids go the play area until its Last year people stopped spending, already had achieved high per-shopper spending because of its annoying but time to gather in the IKEA restaurant for a family meal. stopped moving and stopped effective labyrinthine layouts that drive shoppers passed merchandise they need The consumers’ ongoing love-hate shopping at IKEA. and items they didn’t know they wanted. relationship with IKEA did not cool last year, Navigating the layout, and kvetching every but it assumed a lower priority, at least step of the way, is part of a repertoire of temporarily. Sooner rather than later the IKEA shopping rituals that defines the brand chain is likely to benefit from a lot of pent- and sets it apart from any other retailer. up demand. At a glance $5.7 billion It was challenging to be the world’s Brand Value 5% ange YOY% -1 largest home furnishing retailer Brand Value Ch Sales $29.9 billion Total Company during a global economic crisis Total Company Stores 309 $29.9 billion precipitated by risky mortgage IKEA Brand Sale s 309 products that produced record IKEA Brand Stor es 38 eration foreclosures and steep drops in the Countries of Op and This high-traffic IKEA is loca include IKEA ted in Croydon, a UK shoppin IKEA brand sales Optimor l, Millward Brown sale of new and existing homes. destination south of London . g Sourc es: Kantar Retai The brand declined in value. A’s 300- same in all of IKE ys look much the Because customers weren’t visiting the Merch andise and displa ing this one in We stcheste r, Ohio. plus stores, includ stores to buy furniture, they were not patronizing IKEA’s restaurants. That axiomatic point is important because, outside the checkout area actually turn with over 300 IKEA stores in 38 countries, substantial profit. those Swedish meatballs add up quickly, insights & implications making IKEA one of the world’s largest In more normal times, IKEA prospered • Although IKEA has a few imitators, its combination of affordability, family-friendly store experience and restaurant chains. in Europe, the US, and from growth in global scale make it unique and relatively protected from direct competition. former Soviet countries. And its global • The business model relies on getting households into the store to experience IKEA and then motivating The in-store restaurants, with low-priced reach protected the company from regional return visits. The company has an opportunity to expand further into traffic-driving categories like food menu items and a place to sit, relax and fluctuations. Last year it could find no or housewares. contemplate potential purchases, reinforce shelter. There was little IKEA could do • E-commerce will need to become a bigger apart of the IKEA offer. the brand’s value proposition. The fast food aside from closing a few underperforming and Swedish delicacy kiosks located just locations. The company also made 44 GLOBAL RETAiL BRANDS 2010 45
  • 24. ThE TOP 20 13. MARKS & specialists like Zara, H&M, New Look, Next and Primark offering “fast fashion” at affordable prices. M&S felt pressure from international presence, which included another 245 stores in 27 countries. The competitive challenge is in some ways SPENCER its department store competitors as well, tougher outside the UK, where three such as John Lewis, which is owned by quarters of annual turnover depends the same company as Waitrose. M&S has on non-food and the M&S brand is not experimented with the premium end of regarded as a national institution. men’s and women’s mid-market apparel. The efforts highlighted the challenge of Still, M&S remains an enormously profitable The Marks & Spencer brand selling both food and non-food. When the business with a remarkably strong company correctly identifies and promotes brand that may benefit from the recent youthful fashion trends in apparel, it risks appointment of a new CEO who proved more resilient than losing its core food customer. ran Morrison’s, the fourth largest and fastest-growing UK supermarket. the M&S business last year. Given these challenges in its home market, where M&S operated 684 stores in 2009, the company also looked to increase its A British heritage brand established in 1884, Marks & Spencer is one of At a glance world’s iconic retailers. That stature $5.6 billion didn’t protect the organization from Brand Value -5% ange YOY% the recession. But it mitigated the Brand Value Ch Sales $15.0 billion Total Company consequences somewhat, at least Stores 929 Total Company Brand Sales in the UK. MARKS & SPEN CER $15.0 billion CER Brand Stores Just over half of the company’s annual MARKS & SPEN 929 turnover in the UK comes from food, which M&S emphasizes its private labels, like Autograph, but eration 27 Countries of Op increasingly includes nationa l brands in its merchandis encer and M&S sells in its department stores and e mix. r brand sales inc lude Marks & Sp Marks & Spence in the Simply Food convenience outlets company’s annual tur nover in the UK marksandspencer. com. Brown Optimor Just over half of the Sources: Kanta r Retail, Millward that it operates in the UK and Ireland. As comes from food. consumers shifted spending from wants an up-market grocery serving a similar to needs, food was not a bad place to be, customer, M&S last year accelerated the although because of its many high street introduction of national brands. Meanwhile, locations, M&S sales were impacted by the as merchants competed for share of decline in office workers. reduced consumer spending on food, the market became more promotional, an insights & implications Along with the spending slowdown, M&S attitude that didn’t quite match the upscale • M&S’s food business faces intensified competition as Waitrose expands across the UK and moves into faced two other challenges to its food positioning of M&S. the convenience sector. business: a more promotional market • Closer alignment between the apparel and food sides of the business could result in a more productive and tougher competition. Until recently, a The recession also intensified the store where the somewhat younger shoppers who may stop at M&S for lunch might shop there for food range respected for its quality and company’s struggle in non-food in the apparel. innovation enabled M&S to offer exclusively UK, where the M&S brand, known for • E-commerce threatens to take a larger share of M&S’s apparel sales. own-label food items. To compete more quality apparel basics, struggled to remain effectively, particularly against Waitrose, relevant in a market crowded with apparel 46 GLOBAL RETAiL BRANDS 2010 47
  • 25. ThE TOP 20 14. ASDA merchandise sold. The George brand, an affordable fashion initiative introduced in 1999, drives that success. ASDA operates the largest food stores The scale of the ASDA stores draws customers for bulk shopping trips, but the inconvenience of the large format combined with the relative lack of locations make ASDA less successful at capturing in the UK, but not enough of them. With fill-in trips. ASDA also is somewhat behind ASDA declined somewhat in brand less than 400 stores, and three formats, the chain suffers from having fewer grocery competitors in developing an online presence. But it is improving rapidly. value last year. locations than competitors like Tesco, the market leader, which operates more than 2,000 stores in the UK alone. ASDA also competes heavily against Costco, the warehouse club, and food deep discounters ALDI and Lidl. At a glance $4.9 billion Brand Value -9% nge YOY% Brand Value Cha $29.9 billion s Tota l Company Sale 371 Stores Total Company $29.9 billion AS DA Brand Sales 371 es ASDA Brand Stor 1 ration Countries of Ope lped ASDA become the UK’s Viewed as a price leader in food, Asda brand sales and include Asda tail, Millward Bro wn Optimor The Geo rge brand he rel retailer in units sold . urces: Kantar Re largest appa the brand operates only in the UK, So including Northern Ireland, and it’s the second largest UK retailer The “rollback” pri cing borrows a pro by turnover. parent Walmart. motion tactic of cor porate Ironically, the strength of the brand as a destination grocery merchant perhaps is best demonstrated by its performance Walmart has adopted practices learned in the Republic of Ireland where ASDA from ASDA, including the chain’s superior operates no stores but receives almost house keeping standards and its success 10 percent of grocery spending. merchandising apparel. ASDA sales have insights & implications contributed substantially to the growth of • To sustain its strong market position in the UK, ASDA needs to develop a viable convenience format This unusual phenomenon results because Walmart’s international business of $100 and supply chain. of crowds from the Republic of Ireland billion or about 25 percent of total • ASDA must continue to strengthen its online presence. shopping at a massive ASDA store located corporate turnover. on the northern side of the border. Their • With the departure of its CEO, in early 2010, organizing a smooth transition of ASDA senior management becomes a top priority. patronage makes that store Number 1 in Although 70 percent of ASDA sales are the world, by sales per square foot, for derived from food, the brand is the UK’s Walmart, which acquired ASDA in 1999. leading apparel retailer by units of 48 GLOBAL RETAiL BRANDS 2010 49
  • 26. ThE TOP 20 15. KOhL’S broad assortment at competitive prices. It’s particularly well known for its range of lingerie basics that women replace regularly. The chain continued to be intensely customers visited the stores. Kohl’s online revenue was up almost by 40 percent year- to-year in 2009, following a 48 percent increase in 2008. promotional in its stores, advertising and For an apparel-focused chain, these Despite the tough economy, the circulars. As competitors became more promotional, these tactics were business- accomplishments were especially significant in a year when most consumers brand value of Kohl’s increased by as-usual for Kohl’s. And customers may have felt emotionally closer to Kohl’s during dramatically reduced spending on the category and the measure of success for 12 percent last year. the recession. They relied on the brand to retailers was not about winning the most deliver on its price and discounting promise, but about losing the least. and it did. The traffic-driving merchandise strategy and promotional pricing led to a high level of trips completed without the need shop the competition for fill-in items. And not all At a glance $4.3 billion Brand Value 12% ange YOY% + Brand Value Ch Sales $17.1 billion Total Company Stores 1,058 Total Company 7.1 billion and Sales $1 HOME DEPOT Br 8 and Stores 1,05 HOME DEPOT Br eration 1 The US discount department store Countries of Op d include Kohl’s an Kohl’s brand sales llward Brown Op timor chain benefited from its unique Sources : Kantar Retail, Mi operating model. Unlike most of women shop pers with lic ensed The com pany draws g. as Vera Wan America’s department stores, Kohl’s designer br ands, such centralizes supply and distribution. Kohl’s usually locate locations near ma s its department sto jor malls. res in free-standin g During the economic downturn, these efficiencies and superior inventory control enabled Kohl’s to gaps, and a relatively strong balance sheet experiment with apparel trends and insights & implications enabled Kohl’s to acquire these licenses. • Kohl’s has a major opportunity to capture market share from less efficient retailers. Similarly, its find the sweet spot faster than expansion may benefit from real estate that becomes available if and when weaker retail brands exit the competition. Unlike the many apparel retailers hurt when the business. parents trimmed teenager allowances, • The challenge for Kohl’s is to efficiently scale a complicated business model, which depends on Kohl’s licensed and launched the Mudd the Kohl’s core customer is “mom.” She putting many items on promotion and changing prices in every store almost everyday. brand for young girls and enjoyed success views Kohl’s as reliable and convenient • Although Kohl’s is an excellent operator, the daily churn of business sometimes takes its toll on with the Hang Ten brand for young boys. To because the chain offers a broad selection housekeeping standards. In a recovering economy, some shoppers may prefer to purchase apparel reach women shoppers, Kohl’s licensed the of both fashion and basic items. Kohl’s in a more disciplined store environment, even it means paying more. Dana Buchman brand from Liz Claiborne. has turned apparel into a traffic driver by Kohl’s embraced these brands to fill market featuring some national brands along with 50 GLOBAL RETAiL BRANDS 2010 51
  • 27. ThE TOP 20 16. LiDL several hundred national brands, Lidl positioned the brand as a traditional but less expensive supermarket for completing most shopping. Establishment of the European Union and the absence of tariffs off some debt incurred during its period of rapid growth. And while expansion opportunities exist in Europe, they’re more limited as the continent becomes more heavily stored. Expansion outside of Europe facilitated Lidl’s cross-border expansion is compelling but difficult because the Lidl is closer than any other and propagation of the deep discount grocery concept. Growth remained organic Lidl system is set up for the EU. For now, Lidl is looking in places like Cyprus and retailer to being a pan-European until Lidl acquired the German-based Plus chain in Bulgaria and Rumania, Malta, small corners of Europe that remain generally underserved and where ALDI is grocery brand. in early 2010. not present. Lidl slowed its expansion somewhat for financial and strategic reasons. It’s paying At a glance $4.1 billion In good times that’s a powerful Brand Value % ange YOY% -1 Brand Value Ch position. Last year, with the Total Company Sales $53.0 billion continent in recession, having stores Stores 8,772 Total Company $53.0 billion in over 20 European countries LIDL’S Brand Sa les 8,772 ores seemed less desirable, especially LIDL’S Brand St eration 23 Countries of Op since the company operates its Lidl drives traffic with price and a limited assortment that Lidl brand sales cery stores. include the Lidl gro timor wide enough to complete ’s llward Brown Op : Kantar Retail, Mi almost 9,000 stores exclusively most shopping trips. Sources in Europe. of t the EU with stores erates throughou Despite the economic pressure and the The company op UK. h as this one in the modest size, suc limitations of its geography, the Lidl brand remained roughly even in value last year, probably because its core proposition – products for every country from the German food at a cheap price – resonated among buying office. While the stores initially a wider group of shoppers concerned reflected the German tastes of the buyers, insights & implications about making ends meet. the range has become more international as • Lidl’s discount grocery brand proposition positions the company well for serving cautious, value- it’s been informed by local knowledge. seeking post-recession consumers. And unlike some other retailers, Lidl has • The company’s success in quickly saturating the EU suggests that it will pursue another surge of store only one brand, which it reinforces on every Central control also enabled Lidl to expand growth once the current expansion is digested. store fascia and with aggressive marketing. rapidly after the launch of its current • Future growth will require expansion to countries and regions outside the EU and beyond Lidl’s existing That single-minded approach evinces format, 35 years ago, to challenge ALDI. infrastructure, which adds complexity. the company’s centralized approach to By carrying about 2,000 items, more that operations, which includes purchasing most double the ALDI range, and including 52 GLOBAL RETAiL BRANDS 2010 53
  • 28. ThE TOP 20 17. COSTCO But on the plus side, because Costco drove more trips, it was able to take some share from its food competition. Having Costco brand gas stations to drive traffic, literally, at many locations didn’t hurt. Costco also increased the range in health and wellness to serve a core of older customers who had depended on Costco to fill their pantries and closets during child raising years. Today, the median age of a Costco member is over 50, and for many of Costco felt the impact of the The company launched several new initiatives. It emphasized a monthly coupon those members Costco has become a sort of “empty-nester treat shop.” recession last year because of the program with a direct mail campaign to members to drive value and trips. While The chain was somewhat helped by its vicissitudes of its geography and sales and promotions cut against the international business, which includes eight club philosophy of controlling costs and countries and almost 20 percent of its margins, the coupon books generated roughly 560 stores. Costco opened its first business model. some excitement. store in Australia last year. At a glance $3.8 billion Brand Value -26% nge YOY% The Seattle-based chain operates Brand Value Cha $72.8 billion s Tota l Company Sale a large proportion of its stores on Total Company Stores 559 Shoppers find bulk stacks of both ess entials and treasu $72.8 billion items at the wareh re hunt ouse club. the West Coast, with 28 percent of CO STCO Brand Sa les Stores 559 its US sales coming from California, COSTCO Brand 9 Costco ration roughly 560 which was hard hit economically. Countries of Ope, costc, umbus, Ohi o, is one of . o, co les include Costc This store in Col countries Costco brand sa eight other the US and Customers in these markets and Costco Business Center. l, Millward Brown Optimor locations in Sourc es: Kantar Retai especially sought to fill needs more than wants. And they were determined to spend as little as possible to fill those needs. As a membership warehouse, Costco When the Costco system works, which insights & implications operates on a thin 10.5 percent gross is most always, Costco is an unparalleled • As the economy recovers, Costco will be able to introduce more aspirational products at higher price margin, which leaves little room for price item velocity merchant. Costco gains a points. While margins will remain thin, the higher price points will yield greater sales volume and profit. changes on existing merchandise. Lowering high share of wallet from its best members. • The company has plenty of expansion room both in North America and globally, building on a presence prices requires changing the merchandise The problem occurs when members are in the UK, Japan and other markets, such as Australia where it opened its first store last year. mix. That takes time. Customers didn’t destabilized, like last year. Shopping trips • With most of its US stores located on the west and east coasts, Costco will increasingly compete abandon Costco. It’s a club and shoppers were up but the average basket declined – head-to-head with Walmart as it fills in the middle of the country. are loyal. They spent less, however, which primarily because members traded down was a problem. on aspirational merchandise. 54 GLOBAL RETAiL BRANDS 2010 55
  • 29. ThE TOP 20 18. SAM’S CLUB wide range of annual sales. Its highest producing stores gain about $120,000 in annual sales, about eight times the volume of its least productive stores. In contrast, Costco stores operate within a narrower fluency with shopper research, the initiative may actually outstrip Walmart’s capabilities and it exceeds Costco’s efforts. It also potentially provides a cost-effective way for Sam’s to shape its merchandise range for range. Its highest and lowest performing local tastes while accruing the economies of The Sam’s Club brand value stores differ by a multiple of three. scale of central buying. softened slightly last year. At the same time, Sam’s is segmenting its membership to target higher-spending Elite Emerging from the recession, many consumers may feel cautious, materially members with special offers. The program sated and perhaps less inclined spend is part of a wider effort to more aggressively hundreds of dollars per trip at a warehouse mine shopper transactional data from club. They will continue to seek value on the Sam’s loyalty card to target member basic items and the occasional reward, and communication and refine the product Sam’s is well positioned to capitalize on this offering. While indicative of Walmart’s shopper mindset. At a glance $3.2 billion Brand Value % ange YOY% -7 Brand Value Ch Sales $47.6 billion Total Company Stores 596 Total Company and Sales $47.6 billion SAM’S CLUB Br and Stores 596 SAM’S CLUB Br eration 1 Countries of Op stco,, costc, es include Co Costco brand sal But Sam’s warehouse club pricing an d Costco Business Center. tail, Millward Bro wn Optimor urces: Kantar Re credentials, and its strong offer in So food and other basics, buffered the brand somewhat from the full brute force of the recession. ntonville, Ar kansas, located in Be ate parent. m’s Club is art, its corpor This Sa ain and Walm The sales volumes at Sam’s Club sto headquar ters of the ch At the same time, recessionary pressure To differentiate the Sam’s brand, the at about $120,000 annually. res vary widely, top ping out revealed the brand’s fundamental company is implementing a strategic store challenge—the need to differentiate. As refurbishment program, not unlike the consumers sought the best value for Walmart’s Project Impact. By reducing everyday essentials, the choice often was clutter and making the in-store environment insights & implications not between Sam’s and its warehouse club more appealing, Sam’s hopes to reduce • Sam’s needs to establish legitimate differentiation from Walmart with which it shares significant rival Costco, but between Sam’s and other distractions and make the product the hero. shopper overlap. grocers, including its fiercely competitive • The brand has a major opportunity to leverage its considerable member insight information to corporate parent, Walmart. To tackle this challenge, Sam’s installed more precisely target communication and assortment. a new CEO, in March 2010, with a • Improvements to the store shopping experience also should help strengthen the bond with Geography and a merchandising focus on background in food retailing and consumer the customer. essentials rather than treasure hunt items, goods marketing. He will contend with insulate Sam’s from Costco somewhat, but another lingering challenge—the need to expose it directly to Walmart, with which prune Sam’s sites and optimize inventory. it often shares locations and shoppers. The Sam’s warehouse stores produce a 56 GLOBAL RETAiL BRANDS 2010 57
  • 30. ThE TOP 20 19. SAFEWAY the company is taking steps to grow share of wallet from this narrow group of existing and potential customers. These steps include: refining its loyalty card Safeway also is differentiating itself with a focus on health and wellness. The company engages shoppers about the healthiness of the food they consume. On the Safeway Web site, for example, loyalty cardholders program; developing a private label program can review their purchases for calorie count Safeway may have made the right in organic food, called O Organics; and selling O Organics to other food merchants and receive recommendations for reducing it. moves at the wrong time last year. in the US and globally through a Safeway subsidiary company. Prior to the downturn, the US grocery chain finished its At a glance $3.1 billion Lifestyle prototype rollout, which Brand Value % ange YOY% -8 is aimed at shoppers interested in Brand Value Ch Sales $40.0 billion Total Company trading up in food and exploring a Total Company Stores 1,724 more premium offer. Brand value d Sales $26.5 billion SAFEWAY Bran 1,159 declined somewhat. SAFEWAY Bran d Stores 2 western US , Safeway sh ould . eration ioned in the on recovers Countries of Op ay supermarkets but not other Well posit the econom y of that regi es include Safew prosper as Safeway brand sal r Retail, Millward The chain remodelled its Safeway stores holdings with different name s. Sources: Kanta Safeway believes that its expanded food will help gain focus on health and to emphasize perishables and reduce Brown Optimor greater share of wa organic llet from its core cus tomers. dry groceries. As the premium customer became thriftier, Safeway lost share to lower-priced, need-based competitors. The impact of inopportune timing was compounded by difficult geography. More than one-third of Safeway’s selling space is located in California, one of the states spending but will prefer offerings that are insights & implications hardest hit by the recession. more personalized. Plus, Safeway is the • As the California economy recovers, and consumers consider purchasing premium items, Safeway’s historic grocer of choice west of the Rocky business should strengthen. It was as if the chain had put up a giant Mountains, with dominant market share in • Safeway will continue to build share of wallet from its most profitable shoppers by leveraging loyalty sail and the wind died. As the wind many metro areas. card and e-commerce information to create targeted offers. picks up, however, both strategy and • As Safeway moves into the more premium sector of the grocery business, it becomes more geography could be strong assets. The To get its fair share of the recovery, Safeway insulated from price-driven competition but faces strong up-market competitors. chain’s focus on a narrow but vital group of will need to win back customers lured away customers, rather than a mass audience, to the competition and reengage them with is consistent with the sensibilities of post- the brand. Rather than focus on the mass recession consumers who will resume market and attempt to grow market share, 58 GLOBAL RETAiL BRANDS 2010 59
  • 31. ThE TOP 20 20. SAiNSBURY'S If not integrated into the brand proposition, the price-driven tactics potentially threaten to erode an upmarket heritage. And they may not be enough to secure a sustainable market position for Sainsbury, whose Sainsbury's has proved that it can fix problems. Its in-stock position is much improved from a few years ago, for example, when supply chain problems resulted in excessive out-of-stocks. offering is considered just above Tesco in The company also has more aggressively The value of the Sainsbury's shopper perception and just below Marks & Spencer and Waitrose. expanded its online business during the past several of years. brand dipped only slightly during the recession. At a glance $2.7 billion Brand Value % ange YOY% -4 Brand Value Ch Sales $30.9 billion stomers Total Company aign that helped cu Stores 859 ily for a fiver” camp s. Total Company The “Feed your fam mo ted meal solution $30.9 billion recession also pro and Sales manage during the SAINSBURYS Br 9 While the UK brand trades close SAINSBURYS Br and Stores 85 eration 1 to the upmarket end of traditional Countries of Op grocers, it responded early and sales include Sa insbury and sains Sainsbury brand wn Optimor promotionally to the slow down Sources: Kantar Retail, Millward Bro in spending even among its core The Sainsbury Sydenham store in the UK offers a broa assortment of both food and d non-food merchandise. shoppers. Clever marketing like “Feed your family for a ‘fiver,’” captured the mood of the nation and drew shoppers from the competition. insights & implications Sainsbury's also ventured into non-food, • Sainsbury’s need for a stronger convenience store presence becomes even more imperative as adding a mix of margin and impulse items, The merchandising and the promotional Waitrose aggressively adds stores. such as entertainment and video games, to activity proved to be successful responses • Tactical promotions, which helped Sainsbury weather the recession, need to be sustained and some of its larger stores. The chain of 534 to an immediate problem, the recession, integrated into its brand proposition. supermarkets and 325 convenience stores and an untenable reality—50 percent of • It is not clear whether Sainsbury management believes that the best way to maximize shareholder hopes to grow the non-food part of its Sainsbury's shoppers also visit Tesco. value is to build the brand or to sell it. But the urgency of the question increases as debt costs fall. supermarket mix to about 5-to-10 percent These incremental moves enabled growth of total sales. by somewhat blurring the Sainsbury brand. 60 GLOBAL RETAiL BRANDS 2010 61
  • 32. The Top 20 Most Valuable Global Retail Brands 2010 # Company/ Brand Value Brand Sector(s) Total Corp. Sales Total Corp. Stores Brand Sales Brand Stores Country home Country Value Markets Change YOY 1. US $39,421,000,000 -4% Discount $406,420,425,761 8,051 $294,656,926,728 4,577 15 2. US $27,459,000,000 +29% Online $24,509,000,000 0 $23,556,652,474 0 7 3. UK $25,741,000,000 +12% Food $89,742,099,511 4,768 $77,331,772,473 3,396 15 4. , France $14,980,000,000 0% Hypermarket, Other $131,595,035,573 14,299 $98,935,192,557 3,489 41 5. US $12,148,000,000 -1% Discount $63,435,000,000 1,740 $63,435,000,000 1,740 1 6. US $9,328,000,000 -28% Online Auction $57,206,000,000 0 $30,319,180,000 0 39 7. US $8,971,000,000 -3% Home Improvement $65,906,929,397 2,244 $65,906,929,397 2,244 7 8. Germany $8,747,000,000 1% Hard Discount Food $65,876,476,921 9,396 $59,211,435,002 8,957 20 9. France $7,848,000,000 -26% Hypermarket, Other $63,265,135,037 2,624 $37,147,816,243 323 13 10. US $7,008,000,000 +10% Home Improvement $47,207,073,792 1,709 $47,207,073,792 1,709 2 11. US $5,807,000,000 +18% Home Electronics $48,821,391,535 4,037 $38,510,436,791 1,222 14 12. Sweden $5,710,000,000 -15% Home Furnishing $29,957,818,134 309 $29,957,818,134 309 38 13. UK $5,699,000,000 -5% Department Store, Food $15,081,753,582 929 $15,081,753,582 929 27 14. UK $4,922,000,000 -9% Discount, Food $29,958,557,695 371 $29,958,557,695 371 1 15. US $4,371,000,000 +12% Department Store $17,178,000,000 1,058 $17,178,000,000 1,058 1 16. Germany $4,102,000,000 -1% Hard Discount Food $53,079,853,088 9,736 $53,079,853,088 8,772 23 17. US $3,875,000,000 -26% Warehouse Club $72,843,092,770 559 $72,843,092,770 559 9 18. Sam’s Club, US $3,255,000,000 -7% Warehouse Club $47,605,497,314 596 $47,605,497,314 596 1 19. US $3,173,000,000 -8% Food $40,062,671,355 1,724 $26,552,665,159 1,159 2 20. UK $2,728,000,000 -4% Food $30,981,119,982 859 $30,981,119,982 859 1 Sources: Kantar Retail, Millward Brown Optimor. See the At a glance charts for brand footnotes. 62 GLOBAL RETAiL BRANDS 2010 63
  • 33. COMMENTARY the imagination. Visits have been made to other sites where equivalent plant has been installed – to the complete satisfaction of the operators. The suppliers’ calculations of expected ROI have been double-checked Why a Ruritanian Poltergeist by Jeremy Bullmore and audited: the predicted payback is mouth-watering. Unless this programme is fully funded, competitive pricing of the can be as valuable as an company’s goods may soon become impossible. Automated Processing Plant We’re in the boardroom of a The Production Director’s case is a First published in the WPP Annual Report company that makes fast- sturdy one: proposed investment at its most responsible, with deeply reassuring moving consumer goods. numbers attached to every item. Like At the heart of today’s agenda the assets it’s designed to protect and enhance, it’s wonderfully tangible: it’s is budget allocation for the concrete. And so is the language in which forthcoming year. The two the recommendation is framed. most prominent supplicants The Marketing Director is responsible for are the Production Director the company’s brands. On the company’s and the Marketing Director. balance sheet, they are categorised as intangibles. Marketing budgets have The Production Director has a meticulously- traditionally been decided on the basis prepared case for an increase in capital of last-year-plus-a-little. The Marketing expenditure. A concerning proportion of Director’s most high-profile recent campaign the company’s manufacturing capacity is aimed at teenagers and features a is obsolescent. Working together, Ruritanian poltergeist who wears a kilt Production and Procurement have put and is called Feliks. Although there’s their requirements out for tender and have evidence to suggest that this campaign is interrogated the competitive proposals greatly appreciated by its target audience, within an inch of their lives. They are and sales are indeed buoyant, not every wholly satisfied that they’ve got the most member of the Board fully appreciates cost-effective deal. Full-colour plans and Feliks nor is familiar with the largely digital scale models are on display to augment media on which he features. 64 GLOBAL RETAiL BRANDS 2010 65
  • 34. COMMENTARY When compared with a new robotic Throughout their report, the Deutsche Their analysis of over 30 large European the maintenance and enhancement of those processing plant, a kilt-wearing Ruritanian Bank team use ‘A&P’ as shorthand for this and US consumer staples companies over assets has no commonly agreed name. poltergeist doesn’t intuitively strike them as investment. more than 15 years shows “that companies Among the 30 companies scrutinised, being as deserving a recipient of precious, that increase A&P to sales ratios deliver Deutsche Bank identified 10 slightly different finite funds. Here are three of their conclusions. sales growth 30% faster than those who do terms for A&P expenditure. The precise not.” And while it’s self-evident that cutting composition of different companies’ A&P The Marketing Director makes an excellent “Brands are critical in consumer marketing spend delivers an immediate expenditures also varies widely – and in case. He doesn’t resort to jargon, sensibly staples. Intangible assets account cost benefit, “companies that increase A&P several instances, their expenditures are not plays down the creative awards that deliver profit growth faster than those that disclosed at all. Feliks has accumulated and musters for more than 100% of the market cut A&P.” They add the chilling comment: an impressive array of research that value of the consumer staples sector To attempt to compare the relative values demonstrates a strong correlation between reflecting the power of brands built “Losing market share can be quite a of Capex and A&P would be as pointless as levels of marketing spend and his brand’s up over many decades. Indeed, profitable experience – it is the cost attempting to determine which is the more market share and profit contribution. The just as Capex protects the tangible important wheel on a bicycle. To be unable Board listens attentively to his presentation of stabilising and rebuilding a brand to make what you sell is neither better nor assets, advertising and promotional that is expensive.” and asks intelligent questions. But as the worse than being unable to sell what you Chairman puts it in summary: times are spend builds and protects the value make. But because of their uniquely elusive tough, and there’s universal agreement that of consumer brands.” What the Deutsche Bank note does, among quality, the value of brands – rather more costs must be contained. So on balance, many useful things, is to remind us of the than the value of machinery – badly needs with economic conditions being what “The importance of A&P is not remarkable differences in vocabulary, in the periodic championing; and so, it follows, they are, and with the brand’s momentum well understood. A&P spend is the use of language, that are employed when does the importance of A&P. looking gratifyingly healthy, rather than the we talk about a company’s different assets. second largest cost for the staples suggested increase, perhaps some modest industry and critical to the health of Mere products may have life cycles – and reduction in promotional support would be A company’s tangible assets are exactly tangible assets certainly do. But if nurtured the more responsible course of action at brands and thus valuation. However, that. They’re tangible. The money that is and nourished by its A&P, a brand can this moment in time. financial disclosure of these items commonly agreed to be necessary for the be forever. is generally poor and 73% of maintenance and enhancement of those At the end of the Board Meeting, the respondents in our investor survey assets has a commonly agreed name: It seems somehow appropriate that Marketing Director is not as happy an capital expenditure, or Capex. A public the only company asset capable of said that they did not have a good company’s Capex is necessarily disclosed. executive as the Production Director. returning a profit for all eternity should idea of how the industry spends its be called an intangible. marketing budget.” A company’s brands, perhaps representing more than 100% of its market value, are Jeremy Bullmore is a member of the The above cameo, of course, is fiction. “Actions in recession key to called intangibles. Synonyms for intangible WPP Advisory Board. But it was prompted by a remarkable shape of recovery. Our analysis include insubstantial, elusive, vague, ethereal and indefinable. The money that *European Consumer Staples: The Importance investors’ note issued by the Consumer shows that companies who continue of A&P, 15 January 2010. Deutsche Bank AG, Staples Research team from Deutsche every company knows to be necessary for to invest, grow faster, and we can Consumer Staples Research team. Extracts Bank, Europe, in January 2010*. Its stated from Deutsche Bank note reproduced with purpose was to analyse “the effect of see clear trends in terms of A&P kind permission. advertising and promotional investment on investment during the downturn. The the consumer staples sector, its impact on actions of companies through the profit growth rates and the likely shape of recession have diverged significantly profit recovery coming out of the recession.” and it is those actions that we believe will drive the trajectory of subsequent profit recovery.” 66 GLOBAL RETAiL BRANDS 2010 67
  • 35. 10 KEY 4 Retailing will be about much more 8 Developing markets provide than the transaction between buyer tremendous opportunity for retail and seller. The best retailers will brands to cultivate extremely loyal leverage the unique bond of trust shoppers who view successful TAKEAWAYS with their shoppers to become more retailers not simply as suppliers of important in other aspects of the lives merchandise, but also as agents of of their shoppers—financial services, economic transformation helping to healthcare and entertainment are improve local life. China, for instance, good examples. has some of the highest retailer bonding scores of any market in the 5 Mobile commerce will be a game world. changer in how, when and where people purchase products, in the 9 This slow-growth era still requires same way that the Web dramatically altered the way people research long-term vision to build and sustain products before purchasing. retail brand equity. But sustaining M-Commerce potentially will change that vision becomes more difficult, the store experience, if not the very as many retailers, particularly nature of the store and retailing itself. in continental Europe, painfully recognize. While cost cutting can be necessary and appropriate, short- 6 Retail brands need to think outside term gains need to be understood against the fundamentally important the box. Literally. Brands must be investment in brand equity. active participants in the digital conversations that surround 1 Value remains critical. But it’s not 3 The battle for shopping trips will purchases. Or they risk becoming 10 Retailers with business models that irrelevant and disintermediated as enough. Brands that combined drive competitive strategy coming enable them to thrive on slim profit shoppers find product information, value with a more emotion-based out of the recession. Retailers will margins will continue to disrupt the product reviews, pricing and connection to consumers did well fight to keep shopping trips gained market with often unbeatable prices. purchasing options without going near last year. That ability will continue during the downturn (by keeping the These retailers have an opportunity a physical store. to be the key to engaging post- shopper from going back to the outlet to leverage that value—with smart recession shoppers. they abandoned). And they’ll fight to merchandising, marketing and regain shopping trips (by stealing their customer understanding—into a 7 Best-in-class retailers will maximize shopper back from another outlet or broad and intense connection 2 Successful retail brands increasingly another activity). share of wallet from their most with shoppers. profitable shoppers to expand their will be built on intimate knowledge business in today’s slow-growth of shopping behavior. Retailers environment. Category conversion that invest in this capability most (getting shoppers to buy more of the aggressively are the ones mostly likely assortment) may replace category to continue to thrive. Retailers that growth (adding more skus) as the ignore these insights will struggle. lingua franca of supplier-retailer partnerships. 68 GLOBAL RETAiL BRANDS 2010 69
  • 36. METhODOLOGY how Brand Value is Financial Performance Financial data is sourced from Bloomberg, Calculated analyst reports, Datamonitor™ industry reports, and company filings with regulatory Millward Brown Optimor applies an bodies. A team of Millward Brown Optimor The brand value published is based economic use approach to brand valuation, analysts then prepares financial models for using a methodology similar to that each brand that link brand perceptions to employed by analysts and accountants. on the intrinsic value of the brand – company revenues, earnings, and ultimately The brand value published is based on the shareholder and brand value. intrinsic value of the brand – derived from its derived from its ability to generate ability to generate demand. The dollar value of each brand in the ranking is the sum of The Valuation Process demand. all future earnings that brand is forecast to generate, discounted to a present-day The brand value is calculated in three steps: value. Given the high volatility of financial markets over the past 12 months, the Branded Earnings brand value is in some cases high relative to What proportion of a company’s earnings is current market capitalization, reflecting true generated “under the banner of the brand”? value rather than current market swings. First, we identify the portion of total company earnings generated by each The Data Sources business that carries the brand. For example, in the case of Coca-Cola, some Brand Equity earnings are not branded Coca-Cola, but Insights into customer behavior and brand come from Fanta, Sprite, or Minute Maid. perceptions come from WPP’s BrandZ, an From these branded earnings, we subtract annual quantitative brand equity study in capital charges. This ensures that we only which consumers and business customers capture value above and beyond what familiar with a category evaluate brands. investors would require any investment in Since the inception of BrandZ 12 years ago, the brand to earn — the value the brand over one million consumers and business- adds to the business. This provides a to-business customers across more than bottom-up view of the earnings of the 30 countries have shared their opinions branded business. about thousands of brands. It is the most comprehensive, global, and consistent study of brand equity. 70 GLOBAL RETAiL BRANDS 2010 71
  • 37. METhODOLOGY Corporate Brand Contribution cars, or beer, brand is particularly important. Earnings ‘Branded’ How much of these branded earnings are Over the past five years, the importance Earnings $ ‘Branded’ generated due to the brand’s close bond with its customers? of brand has risen. Brand Contribution is calculated as a percentage, but displayed Brand Brand $ Intangible Earnings x % x M as an index from 1 to 5 (5 being the highest). Value = Value $ Only a portion of these earnings can be considered as driven by brand equity. This Brand Multiple Step 1. Step 2. Step 3. is the “Brand Contribution,” the measure What is the growth potential of the brand- Intangible Earnings Brand Contribution Brand Multiple that describes the degree to which brand driven earnings? Intangible corporate earnings Portion of intangible Brand earnings multiple. allocated to each brand earnings attributable plays a role in generating earnings. This by country, based on to brand. Calculated based on market valuations, brand is established through analysis of country, In the final step, the growth potential company and analyst reports, Directly driven by growth potential and market, and brand-specific customer of these branded earnings is taken into industry studies, revenue BrandDynamics™ Loyalty Voltage™ as measured estimates, etc Pyramid and Category by BrandDynamics™ research from the BrandZ database. account. Both financial projections and Segmentation collected consumer data are used. This provides an within the BrandZ study This guarantees that the Brand Contribution earnings multiple aligned with the methods Data Sources Data Sources Data Sources is rooted in real-life customer perceptions used by the analyst community. It also and behavior, not spurious “expert opinion.” takes into account brand-specific growth The Brand Contribution allows us to capture opportunities and barriers. differences in the importance of brands by category and by country, the role of brand The Brand Momentum™ metric that versus other factors such as price and indicates each brand’s growth is based location, and changing customer priorities. on this evaluation. It is presented as an In some categories, such as luxury goods, indexed figure that ranges from 1 to 10 (10 being the highest). 72 GLOBAL RETAiL BRANDS 2010 73
  • 38. ABOUT The extensive knowledge presented in spend investment analysis and go-to- this report can be reduced to a single market strategy. conclusion: Past performance won’t assure • Activation: We provide the designs and KANTAR future success. Success requires an integrated understanding of the business tools required to implement new or from insight through strategy and activation. revised strategies. Our broad offering That’s the broad perspective Kantar includes retail content and skills- Retail provides and why we are uniquely based training along with coaching and RETAiL qualified to help businesses serving today’s eLearning. These proven implementation complicated retail industry. products and services assure that creative thought is quickly converted We offer the combined experience and into profitable action. capabilities of four companies renowned for their leadership in retail insight and Our focus on pragmatic results helps clients consultancy: Cannondale, Glendinning, achieve tangible transformational change. MVI and Retail Forward. Enhanced with With offices in 15 countries, we work with the expertise of our WPP sister companies, more than 350 companies. To learn how we help our clients achieve both major Kantar Retail can help your company shifts in their business and incremental enjoy the immediate benefits of tangible For further information please contact: improvements. transformation, please see our details on the opposite page and contact us. USA • Insight: Our syndicated intelligence Steve Pattinson, Chief Executive Officer. services, MVI-Insights and the Retail Kantar Retail – Market Insights, Ste. 1000 Forward Intelligence System™, provide 245 First Street, Cambridge, MA 02142 unparalleled insight into global retailing D: +1 617 588 4110 and retail brands. To understand purchase F: +1 617 499 2723 behavior we rely on our Shoppers E: Genetics® database, the largest loyalty household database in the US, and EMEA ShopperScape, our monthly survey that Ethan Sinick, Managing Director. tracks where people are shopping and Kantar Retail – EMEA, 6 More London Place what they’re buying. Tooley Street, London, England, SE1 2QY • Strategy: With custom consulting we D: +44 (207) 031 0257 help our clients identify the key drivers F: +44 (207) 031 0270 of category growth and more effectively E: understand and shape the path to purchase. We also specialize in helping ASiA our clients with marketing and trade Phil Smiley, Chief Executive Officer. Kantar Retail – Asia Pacific, 25th Floor The Center, 989 Changle Road Shanghai 200031, China D: +86 (21) 2405 0291 F: +86 (21) 2405 0133 E: GLOBAL RETAiL BRANDS 2010 75
  • 39. DiRECTORY WPP is a world leader in marketing communications. WPP companies, which include some of the most eminent agencies in the business, provides global, multinational and local clients with: Advertising Media Investment Management Consumer Insight Public Relations & Public Affairs Branding & Identity Healthcare Communications Direct, Digital, Promotion & Relationship Marketing Specialist Communications Collectively, WPP employs over 138,000 people (including associates) out of almost 2,400 offices in 107 countries. Clients include 354 of the Fortune Global 500, 60 of the NASDAQ 100 and 33 of the Fortune e-50. A complete list of WPP companies and a searchable directory is available at For further information contact David Roth 76 GLOBAL RETAiL BRANDS 2010 77
  • 40. Design by Lambie-Nairn Writing by Ken Schept