Wal-Mart’s brand value is waning, as competitors like Amazon have dulled its low-price edge.
By contrast, the savvy use of big data to customize shoppers’ wants and needs has catapulted the brand equity of retailers as disparate as Whole Foods and Macy’s.
That’s some of what Interbrand’s 2014 Best RetailBrands report revealed.
The annual report from the brand consultancy, released today, ranks the 50 most valuable U.S. retail brands and the leading store brands internationally.
The biggest gainers on the North American list in terms of brand value (Macy’s, Whole Foods,Amazon.com AMZN +2.93% and Cabela’s), as well as the biggest losers (Best Buy BBY +0.66%), place holders (Wal-Mart) and names that have dropped off the list entirely (RadioShack, Guess), paint a larger picture of the trends reshaping the retail industry.
First, The Good News
Retail brands that have gained the most value are stretching beyond their core businesses to assume a new relevance, nimbly bridging the divide between brick-and-mortar stores and online/mobile shopping, and leveraging big data to personalize the shopping experience for consumers, as one-size-fits-all retailing no longer cuts it today in a market with infinite buying options.
Hot off the press, here’s Interbrand’s list of the 50 most valuable North American retail brands.
The Biggest Gainers: Macy’s, Whole Foods
Macy’s brand value surged 383%, the most of any retailer on the list, reflecting its swiftness in adapting to consumers’ ever evolving digital shopping behavior and a commitment to their growing demand for seamless in-store, online and mobile shopping options.
To that end, the department store will roll out a “buy online, pickup in store” concept to all of its stores this spring.
Macy’s has also been “a big adopter of RFID [radio-frequency-identification technology], tagging all of their SKUs with RFID tags so that they can track merchandise from the time it leaves the production facility to when it reaches the cash register, which has enabled them to reduce distribution centers and compete [better] with Amazon,” Dirk Defenbaugh, managing director of Interbrand Design Forum, told Forbes.
What’s more, Macy’s has invested in its private-label program with house brands like Charter Club, a key point of merchandise differentiation from other retailers.
“We’ve seen in the past consumers reward brands that get that mix right,” Graham Hales, chief marketing officer for Interbrand, told Forbes.
A common theme among the big brand gainers this year – be it Macy’s, Amazon or Whole Foods – is that they are expert at harnessing data to get a “better picture of their customer,” Hales said.
In Whole Foods’ case, the upscale supermarket chain has created “customized assortments for [local] store environments,” Defenbaugh said.
Despite their “Whole Paycheck” reputation, Whole Foods is attuned to the fact that the wellness trend means there’s a demand among low-income shoppers for healthful foods, hence their push to “provide lower-cost options for people by category, brands and price points, and big data plays into that [effort],” he said.
Whole Foods has moved into food deserts such as Detroit to serve shoppers in areas lacking in healthy-eating options.
Whole Foods has moved into food deserts such as Detroit to serve shoppers in areas lacking in healthy-eating options.
Wal-Mart Stumbles
No merchant comes close to Wal-Mart in terms of its retail dominance. The company’s U.S. sales alone equal about 1.6% of the U.S. GDP.
And according to Interbrand’s 2014 rankings, Walmart is more than $100 billion more valuable than Target TGT +1.65%, a distant second on the North American list.
Still, retailers, most notably dollar stores and Amazon, have chipped away at Walmart’s raison d’être: its low price, competitive edge.
Many shoppers who defected to dollar stores during the recession haven’t returned, particularly for low-cost replenishment trips. “Then there’s the Amazon factor,” Hales said.
The online giant, also obsessively driven to offer shoppers low prices, dwarfs Walmart’s ecommerce business.
What’s more, as consumers can instantly price check items from their smart phones, all manner of retailers have gotten meaningfully sharper on price. It’s all added up to a 6% decline in Walmart’s brand value, the Interbrand report revealed.
The Biggest Losers: Lacking Relevance In A Changing Retail Landscape?
For chains that lost the most brand value, such as Best Buy, and ones that fell off the top 50 entirely on the North American list, like RadioShack and Guess, it’s a matter of “relevance in today’s market,” said Defenbaugh.
Best Buy and RadioShack, which is shuttering 1,100 stores, are battling concept obsolescence as shoppers flock to online merchants like Amazon to buy consumer electronics.
And despite a clever Super Bowl ad campaign that garnered some attention, “what role does a brand like RadioShack play in today’s environment?” Defenbaugh said.
Meanwhile, Guess, which reached its brand apex in the 80s, lost its cool and slipped into irrelevance.
Today it lacks a compelling brand story in a merciless fashion business “that’s so trend driven,” he said.
“Most great brands have a great story behind them,” Hales said.
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