Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power/ strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s most valuable retail brands are ranked and included in the Brand Finance Retail 50 2017.
TJ Maxx (known as TK Maxx in Europe) has grown rapidly this year, with brand value rising 79 per cent to US $5.6 billion. A stronger trend for cost consciousness in western markets, originally initiated by the financial crisis, has been sustained even as the economy has recovered. TJ Maxx’s reputation for exceptional value is key to its success and consumers’ affinity for its brand. However, just as significant is the fact that it is a gateway to the world’s most powerful and desired apparel brands for a vast swathe of consumers who could otherwise not afford them.
Ross Dress for Less operates in a similar way and is also growing strongly. Like TJ Maxx, it has minimal online presence, relying on its buying and merchandising expertise to sell designer goods (in addition to own brand) for up to 70 per cent less than conventional retailers. Its brand value is up 71 per cent to US $5.3 billion.
Nudging slightly ahead of TJ Maxx’s growth, Alibaba’s brand value has nearly doubled, making it this year’s fastest growing retail brand. Valued at over US $34.8 billion, the online marketplace continues to thrive in China and globally. Alibaba has created a fair and open portal for small businesses and enterprises. Its success stems from the opportunities to both open up and simplify commerce for Chinese communities, particularly rural ones. Its service has clearly underpinned brand value growth at home, but in order to accelerate growth abroad by aiding brand recognition, it is investing in marketing communications including joining McDonald’s, Coca-Cola and Visa as a major sponsor of the Olympics Games.
Amazon is the world’s most valuable retail brand. Its strong 53 per cent brand value growth this year meant Amazon was close to becoming the most valuable brand across all industries. For now, with a brand value of US $106.4 billion it sits just behind Google (US $109.5 billion) and Apple (US $107.1 billion). The firm is growing strongly as it continues to both reshape the retail market and to capture an ever larger share of it. Its brand value is already nearly double that of second-placed Walmart.
Amazon Fresh, its grocery service, is still relatively limited in scale but this year began operating overseas for the first time, serving Central and East London initially. Amazon has stated it will create 100,000 jobs in the US over the next 18 months. Such confidence suggests that Amazon may well become the most valuable brand in the world in 2018.
IKEA, the world’s largest furniture retailer, is another brand that has always been very price-led and reliant upon physical sales. However, it is making more concessions to the digital revolution than TJ Maxx and Ross, expanding its click-and-collect network and opening more of much locations in than traditional stores in 2016. IKEA has been making plans to accelerate its expansion in China and India as it seeks to boost sales by almost 50 per cent over the next four years. IKEA draws upon its national heritage more than almost any other major firm for its brand positioning. Its visual identity and brand personality are strongly associated with Sweden’s reputation for quality manufacturing, simplicity, design expertise and social modernity. However, the IKEA brand is now owned and managed from the Netherlands rather than its own country. Managing intellectual property from a different jurisdiction can be a sensible strategic move for many brand owners, however the potential repercussions for consumer-facing brands in particular must be carefully assessed against the financial benefits.