EXCLUSIVE: Department store giant Myer has been labelled a “global top riser” with its brand value rising 4% in one year to hit US $625m, according to a study by branding agency Interbrand.
But there was no joy to be found in the ‘Best Retail Brands’ report for Harvey Norman as its brand value shrunk by a massive US $231m.
Harvey Norman lost its grip on third place to Bunnings ($1.107bn) as its brand continued to slide.
The tech retailer’s brand is now valued at $642m in fourth place, down from $873m in 2012 which was $25m less than its 2011 value.
Harvey Norman is not the only bricks-and-mortar electronics retailer feeling the pain as the Interbrand study revealed sharp declines for American electronic brands.
America’s Best Buy shed 52% of its brand value while GameStop lost 29% and RadioShack dropped 26%.
“These brands need to discover how to stay relevant and deliver value beyond price,” the report said.
“What role should these retailers play in customers’ lives as e-commerce alternatives dilute their equity?
“An answer to this question may help to slow the deterioration of value in these once venerable retailers.”
The addition of $26m to Myer’s brand value saw the retailer nab fifth place within Australia’s top five brands.
In comparison, David Jones’ brand value shrunk by $50m to $512m.
David Jones’ is now ranked ninth and four places behind Myer.
Andy Wright, general manager of Interbrand Sydney, said there is a “lot of latent love for the DJs brand and this needs to be activated”.
“David Jones’ opportunity is to surprise the market and deliver a fresh, exciting perspective on its brand experience and on the department store of the future.”
While Wright believes Myer and DJs are “starting to blur in the eyes of Australian shoppers” he feels Myer’s new digital executions and exclusive brand strategy is giving it an edge.
Woolworths was another local retailer to earn the “global top riser” moniker as its brand value increased by 9% to $4.57bn as it maintained its number one spot.
Woolworths’ arch rival Coles ranked second with a brand value estimated at $3.645bn.
Coles is successfully closing the “perception gap” between it and Woolies’ fresh food credentials, according to Wright.
However, Coles’ price-focused marketing needs a re-think.
“The recurrent ‘Down, down, prices are down’ messaging, however, cheapens the brands perception,” asserts Wright.
“The ongoing price war is also intensifying media scrutiny on the duopoly and the negative implications for the welfare of Australian farmers.”
The brand values of discount department stores Target, Big W and Kmart were tight with Big W leading the pack in sixth place on $562m.
Target pipped Kmart by taking seventh place and achieving an estimated brand value of $536m ahead of Kmart’s $516m.
In 2012 the gap between Australian consumers and local retailers “widened”, according to the study.
“And the lack of creativity and differentiation in the Australian retail market become apparent.”
“Australia’s pace of change is crippling.
“Historically, monopolistic market dynamics have made it difficult for new entrants. The digital revolution has removed this barrier.”
International retailers such as Amazon, Asos, Macy’s and Net-a-porter are targeting the Asia-Pacific consumer and applying pressure to home grown brands.
This issue is one key theme from the report, which reiterated the fact that size and scale no longer guarantee success.
Instead, competition from foreign retailers is pushing domestic operators to “get smarter on all fronts, from digital strategy and customer experience to savvier marketing and corporate citizenship”.
The study also pointed to the need for retailers to treat their physical store as their “experiential centre”.
“Retailers that invest in innovation, design, media, and technology to enhance the customer experience and showcase goods in an exciting way will reinvigorate the game.”
Private labels have become the new battleground and a tool for retailers to boost customer loyalty.
“While once considered ‘house brands’ that were positioned as lower cost alternatives, private label brands are now evolving to fill niche markets at a premium quality level.”
Private labels now account for more than 40% of sales at Walmart, the world’s largest retailer which boasts a brand value of $141bn.
On a global scale, the most growth was recorded by American retailer Macy’s.
Macy’s brand value exploded by a whopping 62% during 2012, pushing the department store from number 49 to 40 on the 2013 U.S. list.
In the UK the top five brands retained their top spots with Tesco taking the top spot ahead of Marks & Spencer, Boots, ASDA and Next.
The study is based on publicly available financial data therefore most privately held companies are excluded from the list.
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