Top brands: It’s about being nimble
The list of top global brands is dominated by retail firms that have scored during the Covid-19 pandemic – and those with e-commerce capabilities are expected to fare best
Retailers use the midyear global annual brand value rankings tables to demonstrate successful growth and increasing market penetration. The simultaneous release this year of the Brand Finance and WPP’s BrandZ tables are more likely to be used as antennae to see which brands will best weather the Covid-19 pandemic.
Local retail experts say brands that are nimble and online-ready are more likely to survive. BrandZ chair David Roth notes: "The coronavirus crisis underscores the essential role retail plays in our daily lives and the overall global economy; we are seeing some heroic examples of retail companies stepping up to meet consumer needs."
Roth says the top retailers in the 2020 ranking illustrate the scale of activity making brands meaningfully different and of importance to consumers in the coronavirus age: "Amazon (No 1, $415.9bn) is managing demand and reducing its speed of delivery to prioritise key products; Alibaba’s (No 2, $152.5bn) subsidiary Ali Cloud used artificial intelligence to help medics in China significantly shorten the coronavirus diagnosis time; Louis Vuitton (No 5, $51.8bn) parent company LVMH took only 72 hours to convert its production lines to make hand sanitiser; and Chinese e-commerce brand JD (No 13, $25.5bn) delivered medical supplies and food, using its extensive distribution network."
On the BrandZ research, the fastest-riser category is dominated by pure retail, with grocery outlets experiencing a boom in demand as people stock up.
Unsurprisingly, the digital-native brands scored highly — Amazon, JD and Alibaba were up 32%, 24% and 16% respectively.
BrandZ says smart retailers are resisting the temptation to cut back on advertising investment, learning lessons from China where brands that went dark are struggling to reconnect during the early stages of recovery as consumers opt for those that actively demonstrated support.
It’s pointless making a direct brand-value comparison between the two surveys as different methodologies are employed. But the trends remain largely the same.
The Brand Finance study says retail brands are likely to record mixed fortunes as a result of the Covid-19 pandemic, with e-commerce brands predicted to fare the best while automotive retailers are expected to suffer.
Brand Finance is also predicting a modest post-pandemic future in the retail sector.
"The top 50 most valuable retail brands, on average, should undergo a slight increase in brand value following the pandemic, growing a modest 1% in brand value — a result of the majority of the brands in the ranking either being e-commerce brands or dominant, well-known brands, which tend to have strong e-commerce capabilities."
A trend that is likely to be mirrored in SA is the future of the apparel sector, which Brand Finance says will be heavily hit by Covid-19, with brands across the sector potentially losing up to 20% of their brand value.
In its survey Amazon remains a cut above the rest, breaking the so-far-unattainable $200bn brand value mark, 18% up from $187.9bn last year. Amazon’s brand value has now reached $220.8bn, with second-placed Walmart far behind on $77.5bn.
Brand Finance notes that as with fellow e-commerce brands, Amazon has been negotiating the unprecedented surge in demand as consumers turn online, in the wake of widespread store closures.
This spike has not come without its challenges. Amazon’s logistics and supply-chain network is being stretched to uncharted levels and the brand’s next-day delivery service is being compromised, with fulfilment and third-party vendors extending their lead times considerably.
First-time users of the platform will not be experiencing the world-leading level of speed that the brand prides itself on, which could jeopardise its long-term reputation.