The report, compiled by Interbrand Design Forum—a division of the global brand consultancy, ranks retailers based on the value of their brands. The ranking is based on a number of factors: financial forecasting, the percentage of sales and profit that can directly be attributed to branding, and brand strength. These form a net present value, or the economic value of a brand.
Walmart dominated the charts again this year with a 19 percent increase in brand value to $154.1 billion. Target, in second place, saw a jump of 49 percent to $25.5 billion. Best Buy dropped 19 percent in brand value, though it still came in at third place with a brand value of $17.8 billion.
Macy’s was a newcomer on the list. The department store made the final cut as No. 50, with a brand value of $472 million, right below Abercrombie & Fitch (down 81 percent to $484 million). Macy’s three years ago realigned and renamed all of its regional department store brands as part of its efforts to become a national brand.
Greg Silverman, managing director of evaluation for Interbrand, said one key theme in this year’s report was that the big brands got bigger and the smaller brands got smaller. This year’s rankings “started to separate into a growing top 25 and a weaker, bottom 25. The folks who are falling down lost focus on their brand and took a lot of short-term tactics that started to undercut their proposition . . . [whereas] the real winners who stuck to their brand strategy were really bold about it and that paid off,” Silverman said.
Target’s nearly 50 percent jump in brand value, for instance, could be attributed to the mega retailer’s intense focus on its new, up & up private label line. Target has also put more marketing muscle behind its Archer Farms grocery brand, and has branded itself as stylish, trend-setting retailer. Target is a textbook example of “investing in the things that matter, and [doing away with] the things that don’t,” Silverman said.
Though retailers across all industries suffered a grueling year last year, the economic downturn has taught brands that a “flight to price” isn’t necessarily the answer, Silverman said. Brands that fell off the list—in part due to heavy price promoting—include Hollister, Barnes & Noble, Men’s Wearhouse, Gymboree and Anthropologie.
Moms, the key decision makers in U.S. households, realize that “it’s not just price. It’s something else, too,” Silverman said of why the strategy doesn’t work. Retailers can still get consumers to trade up and continue spending if the value equation and brand differentiation is right, he said.
What the report also found is that Americans are still closely watching their wallets. Newcomer Dollar General ranked no. 18 on the list, with a brand value of $4.7 billion.