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Brand Value: Some Lose Their luster

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One hundred and forty one billion dollars. That's the estimated brand value of Walmart, according to Interbrand's "Best Global Brands" report. The annual study ranks the 50 most valuable U.S. retail brands, along with the top store brands in countries around the world.

How did Interbrand determine brand value? The brand consultancy basically looked at three key criteria: financial performance (only companies with publicly available financial data are considered); the role of the brand in driving the decision to purchase; and the overall strength of the brand, or its ability to inspire loyalty, allowing it to keep generating profit and demand going forward.

"The brands that make our list define the retail industry and determine where it's going," said Justin Wartell, managing director, Interbrand Design Forum, Dayton, Ohio, which valued the U.S. brands in collaboration with Interbrand.

The top three U.S. brands remain unchanged from last year: Walmart, Target and The Home Depot. What's so striking is the gap between Walmart (No. 1 now for five consecutive years) and all other retailers on the list. Target may be ranked second, but with a brand value of $25 billion it's not even within striking distance. Neither is The Home Depot at $22.9 billion.

The most valuable brands have a lot in common, including an understanding that in today's market, experience extends beyond the store.

"'Retail' no longer refers to physical stores; it refers to the complete experience created by retail brands — from physical stores to digital touchpoints to service experiences to products," Wartell said. "Retailers witnessing big gains this year have committed to this holistic view of experience."

A good example, Wartell noted, is Anthropologie, which complements a remarkable store experience with an inspiring staff, an aligned e-commerce channel and a product portfolio that tells a coherent story.

In contrast, Radio Shack's poor performance (down 26%) can be partially blamed on experience. Its flexible, small format is a start, Wartell noted. But the alignment of its channels, especially product and service, underwhelm.

The report reflects the shifting sands in the retail landscape, with some brands shining more brightly and others losing their luster. Macy's had the biggest jump (among all countries, not just the U.S.), increasing its brand value by 62% to move up to No. 40 from 49.

Amazon was another big mover, with its brand value shooting up 46%. The e-commerce giant ranked No. 4 on the list, up from nine in 2012.

Absent from the top 10 this year was Best Buy, whose brand value plunged 52%. The chain dropped from fifth place in 2012 to 13th this year. Best Buy's declining fortunes also reflect the challenges facing other retailers in its sector: Radio Shack's brand value, as noted earlier, fell 26% and GameStop's was down 29%. Those challenges extend beyond the U.S. France's Franc, Germany's Media Markt and Australia's Harvey Norman — all electronics retailers — all had sharp declines in brand value.

The full Interbrand report and rankings can be viewed and downloaded at BestRetailBrands.com. It's full of fascinating insights and information, from country overviews to succinct brand summaries.

mwilson@chainstoreage.com

© 2014