Chain Store Age - July 2009

Retail Is Still a Local Affair

Wal-Mart Stores, Tesco, Amazon.com and other brands with a strong price-value message occupy the top spots on the annual BrandZ Top 100 study, produced by MVI, Cambridge, Mass., a division of WPP. The study ranks the world’s leading brands in 17 different categories by assigning them a value based on a methodology that includes financial analysis and consumer research.

One of the strongest retail performers in this year’s survey was Amazon. It not only ranked as one of the fastest-growing brands, but also was the No. 1 brand, among all categories, in brand momentum, a measurement of short-term prospects. Its performance reflected the particular strength of the brand and the general growth of online, according to the study.

In contrast to the global nature of many of the top brands in other categories, retailing remains the world’s most locally based major industry, according to the study. Almost half of the top 25 brands are largely single-market operators. Twelve derive 90% or more of their revenues from one country.

The study found that wide expansion hedges exposure: A presence in a variety of markets beats heavy reliance on the most challenged macro-economic trading environments: the United States and the United Kingdom. French hypermarket operator Auchan, for example,

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posted significant growth in Italy, Russia and China as a way to mitigate exposure to slow-growth markets.

It also found that value-centric competition beats pure differentiation. Nearly all of the retailers whose brand value grew have value-for-money at the cornerstone of their brand proposition.

Among the study’s insights:

• Want-based retailers should rebound as the economy warms up, but sustaining strong growth will require stronger value messaging.

• The increase in online shopping for seasonal apparel shopping may reflect a permanent shift in behavior as consumers find that the Internet provides greater convenience, time-saving and product focus than the traditional store environment.

• Large apparel retailers face the same challenge worldwide: In an environment where scale may be detrimental to trend (since it slows reaction times), what is the appropriate place for scale in the fashion business?