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Top 25 Retail Brands - Kantar Retail

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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Top 25 Retail Brands - Kantar Retail

  1. 1. The Top 20 Most Valuable Global Retail Brands 2010 Powered by
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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