Jan 14, 2009

Mktg - Study;Wal-Mart Tops Retail Brands

Elaine Wong, Brandweek

NEW YORK Low prices trumped panache as big-box stores crowded out department stores in Interbrand's first survey of the top 50 retail brands.

In the report, released today, the New York branding agency placed Wal-Mart at the top of the list. Best Buy, The Home Depot, Target and CVS rounded out the top five.

Among the study's inaugural findings: The best retail brands have a clearly defined purpose, "surround the purchase with a relevant experience," "make good on the brand promise" and maintain a consistent brand quality and shopping experience over time. Moreover, the presence of such e-commerce retailers such as eBay (No. 11) and Amazon (No. 14) illustrates that the scope of retail brands is no longer defined by a purely brick-and-mortar model.

Interbrand, which each year publishes its "Best Global Brands" report in conjunction with BusinessWeek, said it commissioned a study of the U.S retail landscape this year due to the economy. "We really thought that retail was going to be a very topical area. It's something everyone is really interested in right now," said Lee Carpenter, chairman of Interbrand, Design Forum and CEO of Interbrand North America.

While the rankings encompassed a range of retailers from apparel (Gap, Hollister) to pet stores (Petsmart), Macy's and Sears weren't on the list. Though department stores like J.C. Penney and Kohl's made the list, Macy's and Sears were conspicuously absent.

That reflects the fact that department stores, as a category, are in a tight spot right now, said Doug Spong, president of Carmichael Lynch Spong, a Minneapolis public relations agency that works with Target. "They are caught in no man's land…They don't offer the price advantages that the distributors do and they don't offer the expertise that some of these luxury goods and highly sought-after brands like Coach do," he said.

The study has implications for marketers who do business with retailer, said Bill Chidley, svp at Interbrand Design Forum. Retail partners that have done this well, such as Method, were able to introduce their new product offerings into the mass merchandise channels of Target, simply by honing their product design and innovation to fit the Target model of business.

While still a small player in the green spaces compared to such household cleaning giants like Clorox, Method quickly became a household name because it was "able to find a blue ocean space in that category and it fit really well into Target's overall positioning, so it gets premium placement near the end caps of aisles, drawing people into the category," Chidley said."

The study's timing comes as the importance and value of retail brands is particularly crucial. "It's a big idea in an environment where consumers are dramatically cutting back their spending," said Paul Kurnit, marketing professor at Pace University in New York.

Methodology for the report consisted of financial forecasts, the role of brand (which includes such factors as the brand's impact on consumer purchasing behavior, price, location, convenience and customer service) and brand strength. These three factors are then computed into a proprietary Interbrand formula to come up with a net present value.

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