What will 2011bring?Interbrand predicts the year tocome for brands by sector
Interbrand | Pg. 2What will 2011 bring?Interbrand predicts the year tocome for brands by sectorAirlines from environmental groups, not to mention percent of arrivals, up from 18.3 percentby Stuart Green volcanic ash clouds and of course the now. Asia Pacific will also account for nearlyAs we enter 2011 we are witnessing a weather! On top of all of this, airlines will 32 percent of all travel spending, up from 21stronger than expected recovery in the have to get used to being in a constant state percent today.global airline industry with increased of flux driven by evolving demographics, A huge potential revenue stream will comedemand and more stable cost structures. the influence of technology and changing from catering to travelers from emergingAfter numerous profit upgrades, the world’s customer demands. markets, particularly Brazil, India, Russiaairlines anticipated a profit of $US 15.1 billion Post-recession strategies and China. However, a key challenge forin 2010. Consolidation has continued as airlines many international airline brands willHowever, the current recovery remains struggle to adapt to a post-recession era be how they cater to very differentfragile with Europe lagging behind with of lower profits and price competition. customer tastes.expected losses of US $1.3 billion in 2010 and Following the merger between Delta Airlines Cross-selling opportunitiesAsia and Latin America surging, indicating a and Northwest Airlines in 2008, United We continue to see an increase in thevery divergent global picture. Furthermore, Airlines and Continental Airlines announced growing importance of ancillary revenuesnet margins in the airline remain extremely a merger in May 2010, and Southwest and earnings from non-core operations withlow at 2.7 percent (and are expected to fall has announced its planned acquisition of airlines increasingly unbundling productsfurther to 1.5 percent in 2011) because AirTran to increase economies of scale and previously included in the ticket price,airline recession strategies often centered competitiveness. In 2011, expect to see such as seat assignment and passengeron realigning to deliver value to customers more of the same. British Airways and Iberia preferences for meals, entertainment,through low prices, co-branding, have already agreed to a five billion pound and internet access. Longer-term, we mayand packages. merger in order to expand their international even see greater variety of cabin classes presence and airlines in the Asia Pacific.This is an industry that already contends catering to differing customer tastes andwith many factors out of its control such as Emerging markets affordability.huge capital requirements, high operating Global travel will continue to expand with There is also a huge opportunity for thecosts, government policies, a reliance on the main growth coming from Asia and more “trusted” airline brands to furtherground operating systems, strict aviation emerging markets. It’s estimated that by cross-sell services provided by third partiesregulations, strong labor unions, pressure 2020, Asia-Pacific will account for nearly 22
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 3such as insurance, car hire and hotel Key markets likely to catch up will begin to kick-in across many developedrooms—providing a more seamless Most global manufacturers will markets, stimulating the industry tocustomer experience. continue to focus their growth on Asia, produce vehicles with significantly lower specifically China. However, some CO2 emissions. Companies such as GE,Technology adoption markets such as the U.S. and Southeast which are looking to convert their fleets toAdoption of mobile technology for both Asia, are demonstrating some level zero emission vehicles, will alsoentertainment and business needs of stability and confidence. Indeed, if provide momentum.will continue to transform the in-flightexperience, for better or for worse. Brand the economic signs continue to tread Additionally, the thought of driving your carowners need to have a clear strategy that positively, there could be a mini surge anywhere from 35-90 miles on one chargealigns all aspects of the customer experience on the horizon, as a downturn tends to per day at just US$ 1.50 per charge may bearound their brand promise to determine drive up the average age of vehicles on enough for customers to overcome theirwhat and how technology is implemented. the road. And yet, while all signs point range-anxiety and skepticism over the initial to an upswing in key markets, the 2010 cost of the vehicle and the fee for settingOn the ground, the travel industry continues expiration of government incentive up their charge station. And who can argueto be transformed by social media, with programs in a number of European and against the cool navigation systems andlarge numbers of consumers choosing to Asian markets could lead to a drag in smartphone apps that allow you to controlbook accommodation, flights and activities Japan, Germany and China, which have a number of vehicle functions in the palm ofdirectly online, based on the advice of fellow benefitted from these subsidies. your hand? By the end of next year, expectholidaymakers and travelers. Setting the new normal to see the EV infrastructure gain broader,Twitter, Facebook, Flickr, YouTube and online In 2011, expect to see a continued push public visibility and demonstrate that EVsblogs have been used as advertising and and pull between old habits and new. are a viable alternative. Also expect topromotion platforms, and some airlines have The Electric Vehicle (EV) movement see this year’s trailblazers, the Chevroletdeveloped iPhone apps for online booking seems to heating up, even while light Volt and Nissan Leaf, joined by otherand check-in, targeting specific market trucks, including SUVs, crossovers, alternatives — lower emission vehicles, suchsegments and developing brand loyalty to minivans and pickups, have been the as Fiat’s methane-propelled Punto and athe carrier. fastest growing vehicles in the U.S. plug-in Toyota Prius. While the conversion in 2010. While EVs are legitimately to EVs may not be immediate given theUltimately, airlines will increase profitability gaining momentum, if petrol prices complexities of getting these new vehiclesin a sustained way by creating unique remain within a reasonable range, to market, the EV is likely to becustomer experiences that are meaningful U.S. producers could revert to their old the innovation that redefines theand relevant, with a clear understanding of image as big, bold and not so good for automotive landscape.which touchpoints are genuine driversof purchase. the environment. The survival of the fittest Still, there is much in favor of a mass- For the few auto suppliers with a globalAirlines that continually question their market adoption of electric cars in the footprint, 2011 will be more stable. Butbusiness models and adapt to constant next few years, as global manufacturers for 75 percent of the industry, it maychanges in customer behavior will be those continue to invest in newer, cleaner be a challenging year that permanentlythat prosper most in 2011 and beyond. technologies, infusing these efforts into seals their fate. Many auto suppliers haveAutomotive their core brand foundations. While exceedingly high debt levels, and the marketby Andrew Martschenko adoption by the mass market is likely can expect a number of bankruptcies and to take more than a year — prolonged more intense consolidation among smaller,After a year of structural realignment and due to a fair share of naysayers — the less diversified businesses.incentive-driven sales, the forecast for theautomotive sector looks more optimistic. difference between now and the first Global manufacturers will also continueWhile consumers’ value-driven mindset attempt with EVs is that carmakers, to focus on developing products thatappears to be more or less permanent, 2010 policymakers and infrastructure are designed for their home marketshowed signs that the overall health of the providers are working together to align as well as key international markets.market has been getting stronger. their roles and objectives. Over the Deploying one global platform for compact next five years new emission standards vehicles appears to be the strategy that
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 4The global economy is by nomeans in full recovery mode,and business consultingorganizations stand to benefit.a number of North American, European Regulatory navigation Global onenessand Asian manufacturers are betting on. The crisis provoked governments into The top services players are massive globalThe technological complexity and tight sweeping legislative reforms. The Heritage organizations. Accenture has 200,000configuration of vehicle components will also Foundation estimates that in the U.S. employees. Deloitte has 170,000. KMPG,breathe life into dealer service bays but may alone, the cost for new regulations in the smallest of the big four, has roughlydo so at the expense of local installers and 2010 is over US $26 billion. Making sense 140,000 employees. And unlike producttraditional distributors of aftermarket of these new regulations falls squarely on organizations where people work behind theauto supplies. the shoulders of the lawyers, accountants, scenes to build brands, services are delivered consultants and financial advisors of the directly to clients through nearly every2011 should carry over a significant number professional services sector. After Enron, one of these employees. It’s impossible toof challenges in the industry, but the business consulting firms evolved their deliver a consistent promise and experienceautomotive sector overall is poised for a more roles to provide greater transparency and across such vast networks of ambitiousprosperous year. compliance services. Post-crisis, they and autonomous employees. Most largeBusiness Consulting will evolve further to become regulation business consulting employers can’t evenby Josh Feldmeth navigators, steering boards and managers communicate to all their employees, let through the thicket of government reform. alone orchestrate behavior and teamTalent and navigation selling strategies—but they must. They mayThe global economy is by no means in full Talent test have grown up in partner and specialistrecovery mode, and business consulting Because of the first two trends, everyone models, but the new role of the post-crisisorganizations stand to benefit. Ambitious wants to work for business consulting navigator demands client-centered thinking.long-term hiring and growth plans are taking firms. According to Universum’s study of The partners that wrap their advice andshape as business consulting providers gear the world’s most attractive employers, services around clients holistically will beup to play the role of post-crisis navigator in 2010, KMPG was the second most best positioned to lead their clients into theto CEOs looking for growth. Businesses attractive business employer in the world, cloudy yet thrilling markets of the future.that build distinctive employee brand E&Y was the third, PwC was the fourthpropositions and integrate across silos and and Deloitte was the fifth: All ahead of Businesses that progress in 2011 will beborders will win. Here are four trends that prestigious bonus factories Goldman Sachs those that craft a richer experience with thewill define the category in 2011. and J.P. Morgan. Do you see a pattern? brand in the digital space. With distractions BCG, McKinsey, Bain and Accenture are like device, interface, application, andThe growth challenge also in the top 50. Being one of a small platform, it’s easy to lose track of theMost CEOs predict growth for their number of ideal employers is a good importance of a meaningful message and anbusinesses in 2011. It’s easier said than problem to have. But it’s still a problem. on-brand journey. Therefore there are fivedone. Major economies are still structurally These firms have ambitious hiring targets related areas for brand owners to focus inunsound. The Eurozone is teetering. over the next five years. And they will likely 2011 and beyond.Technology and innovation is moving fill those spots. However, the brands thatrapidly and sure-bet growth markets (think develop the strongest employee valueIndia and Brazil) are a mystery to Western propositions will win the best talent.managers. Business consulting firms will And talent in this business is justplay an essential role in defining strategies about everything.for achieving growth within this challengingoperational environment.
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 5 Digital interaction needs to move beyond functional and branded look-and-feel to a full experience reflective of the brand throughout the user’s journey. Digital Ideally as brands launch new products or employing artificial intelligence or behavioral by Robin Rusch services, the consumer will intuitively adapt tools — you have the opportunity to and adopt because he or she is programmed either delight or disturb with the uncanny The journey defines the brand to know it from all other interactions with knowledge of a user’s behavior. Brand owners need to be asking themselves: the brand. Is the digital experience delivered on brand? It’s the message not the medium I don’t mean usability (which ensures a user Personal access without the burden of It’s easy to get caught up in the medium and achieves his goal), but rather user experience. ownership forget content and message. Whether it’s a So, was the user delighted by his or Spotify, Zipcar, cloud storage — all wildly social media opportunity or a 3D depiction, her experience and was that journey popular despite the consumer ceding the the content must be reflective of the brand. reflective of what one would expect from this privileges of ownership. Turns out we don’t In fact we can argue that there will always be particular brand? always need to own things; we just want a new thing on the horizon — five years ago to feel like it’s ours when we want it and for Twitter, iPads, and 3D television weren’t on Interface draws an audience in, but the the duration of the interaction. That can be the scene, but the value and importance of user’s experience throughout the interaction achieved by weaving personalization and what is actually communicated will never go is critical to the impression of the brand. individual preference into the service out of fashion. Offline this would take the form of an on- or product. brand experience: from the shop front to the Energy merchandise, from the dressing room to the Providing a feeling of “mine” could involve by Tom Zara store employee, from the cash register to programming an individual’s unique settings, In 2010, the momentum of innovation and the packaging, from returns to the customer but it also applies to smart services built in initiative was blunted. The core tenants of service hotline, direct mail promotions, and for general population groups. For example, powerful brands, such as trust and relevancy, so forth. tying in related interests based on typical were compromised by the notoriety of greed population profiles, providing alternative Digital interaction needs to move beyond and ignorance in the Gulf of Mexico and functionality for low-bandwidth locations, functional and branded look-and-feel to a full partisan politics and indecisiveness at the or recognizing special needs groups with experience reflective of the brand throughout Copenhagen Climate Conference. In the features appropriate to their abilities. the user’s journey. Is this the experience one past 18 months, we have been witness to should expect from this brand? Getting to know the consumer the fact that neither regulatory nor political One way to deliver that individual experience might has had a material effect on energy Next generation convergence in a shared service is by capturing user management and global energy policy. But It’s a term we’ve heard for years in regard preferences and tailoring the journey. the temptation to dwell on the negative to devices. When applied to brands, Employing artificial reality (AIML) or must be resisted. convergence does not just ask do different intelligent behavior personas, a system interactions look the same, but rather do 2011 will be the antidote to 2010. More learns the user and tailors paths, content, different interactions also act the same? so than ever before, brands will be the and experience to the level of a user type or Whether your customer is engaged with lightening rod that forges new relationships specifically for the individual. the website, app, podcast or dashboard, the with consumers, both educating and entire experience should be recognizable and This personalized experience helps foster rewarding smart energy living. The power of reminiscent of all other previous points of brand loyalty as the consumer feels that the brands will invoke new behaviors. A change interaction with this brand. brand gets him or her. Of course, consider in perceptions and attitudes will contribute your audience and don’t end up defining your brand as “creepy.” It’s a fine line when
What will 2011 bring?: Interbrand predicts the year to come for brands by sectors Interbrand | Pg. 6In 2011, we can expecta continued antagonismbetween the state and banks. to a broader awareness that the reduction Financial Services Expect more CEO’s in select committees and of dependence on diminishing fossils fuels is by Julian Dailly punitive reporting requirements of banker both a personal and societal choice. bonus allocations. Also expect challenges Banks will keep a low profile as they Shell, Exxon Mobil, IBM, GE, EDF and to the assumption that banks must be aggressively rebuild Pacific Gas & Electric, are just a few of the profitable and are too big to fail. In 2011, In 2011, we can expect a continued global energy and technology brands that banks will be challenged with making the antagonism between the state and banks. are investing significantly in developing case to society that they need substantial innovation to better manage and distribute The events of the last few years have required freedom to operate sufficiently. energy in responsible and efficient ways. the state to play a larger role in creating Challenger brands will take on the The collective brand building efforts of stability through bailouts and legislation. dominant players the category will ultimately change the Consumers continue to be outraged at banks’ With large parts of the retail banking model regulatory and consumer landscape resistance to disclosure and their complicated commoditized and product innovation to embrace new and responsible answers and defense of the status quo. deemed “not worth it” there is a space in the energy behaviors. Overall, in many consumers’ minds, the sector market for consumer retail oriented banks appears unwilling to change its attitudes Climate change is no longer debated as glib to enter and differentiate when it come or behaviors. Still, despite public opinion, sentimentality from a misguided scientific to service. Those that focus on service can financial service brands have continued to community. The changes to our planet are steal share from traditional banks that can’t profit and grow. This and their quick return poignantly documented in the headlines deliver. Expect to see this occur primarily in to pre-downturn bonus culture are evidence each day where record highs and lows are the developed work world. This challenge will that cultural reform may not be required commonplace and the new norm is the expand out from core banking services based to safeguard shareholder returns. In 2011, unexpected. For brands in this sector, there’s on clients’ requests. expect traditional banks to lie low as the a new urgency to address the consequences drama continues to play out. Also expect Also expect to see criticism of pan-regional of a global population explosion, mass opportunities for genuinely ethical, service payment brands like Visa and MasterCard. urbanization, and geo-political unrest. and end-user oriented brands to enter Customers will see fees as too high, share too And yet, brands in the energy sector will the fray. dominant, and competition as ineffective. As need to do more than simply broadcast their a result, payment methods that claim ease Banks will become the scapegoat if intentions. In the end, they will be measured of use will be developed. Innovations linked governments can’t fix economic problems by their actions. Look to 2011 as the year to web payment and low-cost, peer-to-peer The legislative framework through which when innovations in automotive, home and money transfer are also likely. financial services sector gains its license industrial energy consumption will herald a to operate may become more difficult to new movement in smart energy living. Basel II driven consolidation will drive navigate if the recessionary climate hardens. out risky activities by banks looking to be There are high expectations that the ills of Politicians are keen to sidestep their own bought and decrease local communities’ the recent past will fuel the energy sector to responsibility for the situation and are likely to access to credit lead a global campaign that encourages and reframe their own economic mismanagement Compliance with new balance sheet stability rewards responsible energy consumption. as the greed of the financial services sector rules means large, unstable banks will buy Now is the time for brands to change the — as the recklessness and misalignment with and integrate many smaller, less risk-hungry world for the better. society in general. banks to improve their overall asset mix.
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 7 Attracting younger “digital native” consumers demands that many historic brands immerse themselves online. Unfortunately, the losers here will be small- Food and Beverage Coffee in QSR channels (Burger King and and medium-sized businesses looking for by Bill Chidley Taco Bell for example) bodes for overall credit lines. As smaller banks try to avoid revenue. Meanwhile the crowded QSR looking bad in their quest to attract picky Seeking social equilibrium category will continue to promote breakfast buyers, expect continued frustration from Stalwart brands McDonald’s and Coca-Cola as a new occasion to drive brand relevancy small business folk unable to get credit, represent a new challenge as we enter the and frequency. With chains like Subway and expand or start new and risky businesses. next decade: How to be socially responsible Wendy’s adding breakfast fare, it will be when you have persistent demons. interesting to see if the majority of growth Life insurance companies will be comes from switching McDonald’s customers increasingly seen as attractive choices for As Coca-Cola rolls out its plant bottle (partially or bringing their loyal lunch users into the a wider range of financial services needs comprised of polymers from sugar cane) it is new day part. If the later is the case, the Insurance companies are getting better at under escalating attack from governments conundrum is whether core lunch customers presenting themselves as credible suppliers for causing obesity. In an attempt to curb will “double dip” and visit these chains more of more financial services products — consumption, The New York City Health often or just trade lunch visit habits for from savings and mortgages to complex Department continues to air PSA’s promoting breakfast habits. investment products. The blurring of the the excessive amount of sugar in soft drinks. boundaries in the sector means banks will Spirits on the move Meanwhile as McDonald’s seeks to provide have to work harder to secure the deposit In December, Fortune Brands announced healthier alternatives such as oatmeal on its balances required for lucrative lending. its intent to split into three businesses so it menu, San Francisco’s board of supervisors Nevertheless, there continues to be a lack can better focus on developing its distilled voted to ban the majority of McDonald’s of delivered surplus needs in either sector beverage brands and face off with Diageo existing Happy Meals, claiming that it is illegal — personal identity, usage experience or globally with a stronger bourbon portfolio. In to offer free toys with meals that exceed aspiration — leaving the door open for a mature markets, all spirit brands will seek to certain limits on calories, fat, and sugar and challenger brand to enter the market. drive consumption to fuel growth and bring do not include fruits or vegetables. new users into their franchises. Banking will continue to be viewed as a These two examples reflect the tensions dirty business Attracting younger “digital native” consumers inherent in transitioning a brand to a new The bonus culture rolls on, but at what cost? demands that many historic brands immerse age of social responsibility in the age of Large investment banks continue to attempt themselves online and in the mobile omnipresent media attention. In the coming to please and sustain their employees environment. New offerings — like green tea year these stories and others will likely even as general public perceptions grow Vodka from UV — use product innovation to overshadow responsible initiatives. more negative. attract these younger consumers. Fueled by coffee As the world teeters on the edge of another In-store promotions remain a critical volume- Starbucks is committed to staying relevant, recession, people are wondering, “How come building tool across a fragmented and driving growth, and grabbing headlines in we’re still in their mess and they are back to regulated distribution network. Increasingly 2011. The coffee icon seeks to expand its retail their old ways?” Consequently, bankers are the spirits business is looking to developing business even if it means battling long-time increasingly seen as disconnected and aloof. markets for growth, but the challenges are partner Kraft Foods in order to control its This threatens the employee proposition many; for example, adapting to local tastes lucrative packaged coffee distribution. As at the graduate and middle manager level. and determining how luxury beverages may Starbucks continues looking to Asia for store Expect lower trust scores, less effective need to integrate into old consumption growth, the battle in North America is against corporate citizenship investments, and less patterns and palates. As access to alcohol McDonald’s for share of coffee occasions. corporate citizenship activities overall. and Western style marketing hit developing Watch to see how Starbucks’ strategy to nations, look for governmental regulations leverage recently repositioned Seattle’s Best and pressure from organizations like the
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 8 As demonstrated in this sector, the best innovations often come during lean economic times. WHO to intervene and set the policy on Business model innovation into question user-generated reviews and consumption and distribution. In developing As demonstrated in this sector, the best their objectivity and authenticity. The big markets, fashion and trendiness are still alive innovations often come during lean economic question is how many of these are biased and well as drivers of trial and consumption. times. Rent-by-the-hour businesses (Streetcar reviews or paid-for reviews on these sites. Off the back burner and ZipCar) and community-based share They often fall into two extremes: either Lastly, as the economy crawls back, the schemes are giving conventional car rental extremely positive or deeply negative. In casual restaurant sector is seeing signs of dealerships a run for their money by catering some cases, writers may be hotel staff life, and chains like Cheesecake Factory are more effectively to customers. City dwellers commenting under pseudonyms or a writer looking to add units after a long period of enjoy the freedom of booking a car for a solicited by a hotel through a professional belt tightening. As more consumers eat out, couple of hours for their trip to IKEA to pick review writing service. To get around this expect to see deals on prepared and packaged up furniture, or for an afternoon drive to issue, some sites like Expedia and Priceline foods continue in an effort to retain the the countryside. Meanwhile, websites like require hotel reviewers to be customers windfall share of food spending. Whether or www.drivemycarrentals.com are enabling who’ve stayed at a property. While others not the eat-at-home austerity habits take communities to rent out their own private like Oyster.com, send anonymous reviewers hold will determine how long the restaurant cars during the week when it usually sits to produce detailed inspection reports. Peer industry takes to rebound and how long outside their home. This makes marvelous review and recommendation issues raise the packaged food brands can continue to build financial sense; individuals can gain additional debate on how internet content is policed on their momentum. income, rather than watch their cars and will result in consumers shifting closer to depreciate. It also has a great environmental friend’s recommendation sites or those from Hotels and Hospitality benefit, in that it results in fewer cars on more trusted sources than the open market. by Iain Ellwood the roads. Friend’s word of mouth endorsements are Loyalty programs target exclusive access increasingly critical in navigating many of Several hotel chains like IHG have looked at To most customers, a wallet full of loyalty these decisions. fractional usage by guests. Rather than paying cards offers little value in return. In 2011, for 24-hour periods, you pay for exactly how Volunteer vacations on the rise hotels will be picking up on this, rewarding us long you stay. So if you arrive mid-day and Given the economic pain of the past couple with exclusive access as a loyalty incentive, depart before breakfast the next day, you pay of years, countless people are searching rather than financial points. Gone will be the for that time, rather than being charged for for a more meaningful and enriching type days of incomprehensible point quotients. the generic 4 PM to 11 AM slot. The back office of vacation. Volunteer vacations cater to New and improved loyalty programs will give operations to achieve this are difficult in full- this, with people travelling and giving their us access to museums and art galleries when service hotels, but the growing sector of “sleep time and skills to a local community. These they’re closed to the general public. Also and go” hotels with a smaller staff is ideal volunteer vacations range from providing expect tailor-made incentives like talks with for processing this more flexible, consumer- humanitarian aid and historic restoration artists at galleries, famous archaeologists centric operating model. building to farm work and teaching. National at a history or science museum, or chefs at Geographic is a big advocate of the trend, famous restaurants. Hospitality businesses explaining that, “We think adding ‘giving will begin to recognize that their valuable Objectivity of peer review travel sites back’ to your vacation ‘must-do’ list is the assets are not just what they sell — but more The increasing influence of travel peer review best way to make the memories last a importantly, who does the selling of their sites such as TripAdvisor and Yelp or book products or services. reviews on sites like Amazon.com has brought
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 9 In 2011, retail will continue to undergo some of the most dramatic changes the industry has seen in half a century. lifetime.” Additionally, volunteer vacations Retail information on customers, transactions and offer the truly authentic way to deep dive by Bruce Dybvad operations than they know what to do with. into a local community and avoid the They will seek to find ways to separate the In 2011, retail will continue to undergo some voyeurism associated with guided tours. wheat from the chaff in terms of metrics, by of the most dramatic changes the industry So rather than speeding through a Mumbai way of refined research into the shopper’s has seen in half a century due to underlying slum in a rickshaw with a Lonely Planet guide path to purchase. drivers that have permeated society and open and the camera clicking, travellers shopping behavior. The most powerful, of The art of the deal can gain the rich human benefit of working course, is digital. Less immediate but also While technology has allowed consumers alongside Indians in these areas of Mumbai highly significant are demographic, economic to become increasingly savvy, skilled and to educate children and and cultural value changes that are having an sophisticated shoppers who gleefully drive help others. impact at both the local and global level. deals, it also makes them susceptible to In-store promotions remain a critical volume- impulse purchases. The group bartering Consumers’ digital domination building tool across a fragmented and trend has been formalized through programs Nielsen predicts one in two U.S. consumers regulated distribution network. Increasingly such as Groupon, where stores grant deep will own smartphones by the end of 2011. the spirits business is looking to developing discounts if enough people sign up for And yet, despite the rapid adoption of digital markets for growth, but the challenges are them. Members only clubs for apparel like technology, the majority of retailers have many; for example, adapting to local tastes Gilt Groupe, are being adopted by other been slow to respond to the opportunity. and determining how luxury beverages may categories. Flash sales, or time-limited The coming year will be one of catching need to integrate into old consumption offers via text or Twitter, will continue to up. The lion’s share of capital budgets will patterns and palates. As access to alcohol trigger impulse buying and give shoppers the be allocated to the online channel and its and Western style marketing hit developing smart feeling of having scored a great deal. optimization for mobile use, while marketing nations, look for governmental regulations Traditional retailers like J. Crew are already departments will try and crack the code for and pressure from organizations like the learning to use the flash sale: It recently connecting with customers through social WHO to intervene and set the policy on opened an online factory store only on the media. To truly connect with shoppers who consumption and distribution. In developing weekends for deal-happy shoppers. are adept at controlling the interaction, retail markets, fashion and trendiness are still alive brands will continue to discover innovative Brick and mortar transcends itself and well as drivers of trial and consumption. ways to be invited into consumers’ Despite the fact that the point of purchase Off the back burner closed loop. is now highly mobile, retailers are going Lastly, as the economy crawls back, the to find that the physical store still needs At the same time, consumers are increasingly casual restaurant sector is seeing signs of significant investment. Shoppers expect it more willing to allow access to their private life, and chains like Cheesecake Factory are to be the epitome of the brand experience information. Amazon.com now allows looking to add units after a long period of and the embodiment of all that is unique users to link their Amazon account to their belt tightening. As more consumers eat out, about the way a merchant does business. Facebook account, so that the subjects in expect to see deals on prepared and packaged Otherwise, why go to the store? Stores will their social posts can be integrated into their foods continue in an effort to retain the incorporate new services and experiences Amazon recommendations. Keep in mind windfall share of food spending. Whether or into their concepts to remain relevant and that in exchange for access, customers will not the eat-at-home austerity habits take provide emotional engagement. This will be expect to receive more value. hold will determine how long the restaurant key to the increased importance of word-of- industry takes to rebound and how long As retailers rush to take advantage of mouth as great service and experience will packaged food brands can continue to build digital’s new channels for customer insight, be actively compiled, commented upon and on their momentum. interaction and engagement, they will shared by wider audiences. also be faced with data overload — more
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 10 Technology brands have been going through transformations in their struggle to differentiate. In the past, the 80/20 retail rule of thumb Corporate philanthropy and good citizenship That’s why we’re likely to see increased said that 20 percent of a store’s SKUs will also be a growing expectation. Brands will brand partnerships in the category. equaled 80 percent of sales. That rule will learn to strengthen customer loyalty through Together, brands will play together to deliver be turned on its head. In a digital world generosity and acts of kindness, such as Dutch against an ever-increasing set of consumer with almost infinite choice, shoppers will KLM’s campaign of spreading happiness by expectations. While a partnership approach is be drawn to stores with a personalized surprising passengers with unexpected gifts more likely to yield success for both parties, it focus. Physical store concepts will become at the airport. also is true that consumers may have difficult smaller, better executed and highly tailored. discerning which brand delivers what portion Expect retail expansion into China and India Assortments will become relevant and finely of the experience. As a result, if a product fails to continue. Retail spending in China has curated as they evolve toward true demand. to meet expectations, the brand with the risen by double digits the last two years and is As shoppers buy less of what’s mainstream greatest equity and loyalty base is likely to expected to maintain that pace. Merchants, and more of what suits them individually, carry most — if not all — the risks. seeing manufacturers’ succeed by launching 80 percent of units will earn 80 percent of new products and brands that are culturally Balance and authenticity profits. Additionally, private labels, localized right for emerging markets, such as Levi’s Technology brands have been going sourcing and cultural influences will be dENIZEN jeans and Hermès’ Shang Xia, will through transformations in their struggle further differentiators, as shoppers demand adopt a similar strategy and create store to differentiate. Many are attempting to tap simplicity, convenience and closeness. concepts inspired by native culture. Barriers into the emotional space, claiming that they Urbanization, empathy and to global trade will continue to come down, are responsible for life changing experiences. emerging markets which will encourage retailers to think Results so far have been mixed. In some Two big demographic trends have arrived and work towards a global customer base, cases, the pendulum may have swung too that will affect the retail industry’s long- sources, talent and reach. far. The key to long-term success will be to term planning outlook. The first is a striking examine the relationship between functional population shift. Today, half the world’s and emotional attributes and communicate Technology population lives in urban areas. Nearly this with balance and authenticity. by Federika Judica 180,000 people move into cities daily, which will impact the retail landscape dramatically. Cloud computing and education Mergers & Acquisitions Retailers will concentrate less on traditional The adoption of cloud computing continues Growth in the category continues to be malls in favor of heading back into the city. to surge. While its relevancy is no longer spurred by mergers and acquisitions. More Real estate will become more of a challenge, in question, the need now is for an than ever, the emphasis is on aligning as city lots require clever adaptations understanding of its characteristics and internal cultures and clarifying what the of core concepts. We are already seeing benefits. Companies have started to assume brand stands internally. A survey Interbrand arguably more creativity from retail brands the educator role in the category, clarifying conducted in 2010 across a variety of as they incorporate existing and sometimes the differences among the spectrum of sectors showed that while 82 percent of historical architecture into the shopping offerings on the market and what are public, companies regularly measure internal brand experience, discovering new aspects of their private and a hybrid cloud. While growing the engagement, 21 percent of them actually brand personality in the process. The dense category means growing a piece of it, unless link it to customer satisfaction. In the living and working environment will also tech brands are able to bring clarity to their technology sector, internal activation is key spawn new retail business models, such as complex offerings, it will be hard for them to to loyalty growth. pay-to-share for large expensive items, like capitalize on their investments. Zipcar and B-cycle car and bike sharing. As Increased partnerships consumers, city dwellers tend to be more In mobility, a single brand can’t arguably open to new concepts, so expect merchants deliver a complete end-to-end experience. to react accordingly.
What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 11 Telecoms continue to face significant challenges to break out of the commodity, price-driven space they typically hold. Telecommunications their wireless phones, unless fixed-mobile truly evolve internally and drive customer by Kevin Perlmutter convergence solutions allow them to keep choice and loyalty though improved both affordably. customer experiences. They will be the In the coming year, mobile dependency ones to seize the opportunity to be better will continue to rise as people rely on their To address these challenges — and retain and aggregators, integrators and simplifiers — handheld devices, tablets and laptops for attract customers — telecoms must ensure trusted brands that help integrate the many many aspects of their work and personal superior network quality. They’ll need to aspects of their customers’ lives. ■ lives. Telecoms will focus on speed, rolling address pricing structures for increased data out 4G networks that have the capacity to usage and converged services. They’ll also move data many times faster than current need to launch more loyalty-engendering 3G networks. Increased network speed offerings that simplify and integrate the many and capacity will make video — from video aspects of people’s on-the-go lifestyles. conferencing to HD movies — as easily In 2011, government regulation negotiations sharable as the photos we currently share on around net neutrality will continue. Telecoms 3G networks. Customers’ satisfaction with will to fight against being legally responsible telecom brands will primarily be determined for massive network infrastructure by network quality. investments, while at the same time losing Industries will also continue to evolve how full control or pricing authority on how their they conduct business and serve customers networks are used. thanks to wireless connectivity and devices. Telecoms continue to face significant Cloud-based services will increasingly challenges to break out of the commodity, impact businesses. More of their technology price-driven space they typically hold. The very capabilities, business applications and networks that telecoms run are fueling new proprietary data will be housed and accessed consumer and business behaviors, and people remotely. The same will be true for personal are forming brand relationships differently files, address books, music, videos and photos. across all product and service categories. To VOIP services like Skype will gain in earn the love and loyalty of other brands in the popularity, as consumers and businesses technology ecosystem, telecoms must evolve avoid paying a telecom for interaction their cultures and customer experiences as that is free over the internet. Unlocked aggressively as they evolve their network SIM cards will emerge and allow people to infrastructures. Business unit silos that once choose devices and networks separately. naturally existed must now be converged Mobile payments will also continue emerge like the products they support. Cultures that as historical infrastructure and behavioral were once government-owned or have a long barriers are broken down by technology. history of break-ups and mergers must come together as one. Customer service models Expect to see many consumers increasingly that frustrate and often infuriate people need look for bundled phone, TV and internet to be improved to better serve customers. solutions, especially as home entertainment becomes more easily accessible on mobile The brands that will see the most success will devices. Even more consumers will eliminate clearly define the role that they play in the their wire line home phones in favor of ecosystem without overpromising. They will
Andrew Martchenko Josh Feldmeth Robin RuschTom Zara Julian Dailly Bill ChidleyIain Ellwood Bruce Dybvad Federica Judica Kevin Perlmutter Stuart Green Creating and managing interbrand.com brand valueTM