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The megabrands are powering ahead.
This story first appeared in the July 1, 2009 issue of WWD. Subscribe Today.
H&M, Louis Vuitton and Wal-Mart, respectively, are ranked as the world’s most valuable apparel, luxury and retail brands this year, according to a study by consulting group Millward Brown Optimor.
The group assessed global brands with the highest valuations in 17 sectors, from cars and coffee to technology and personal care. Much like a financial analyst evaluating the prospects of a company’s stock, the Millward Brown study forecast the “intrinsic value” of 100 global brands by estimating their ability to “generate demand.”
The valuations are not based solely on conventional measures, but use both tangible and intangible measurements from Millward Brown, such as earnings directly attributable to sales of a brand and consumers’ views of those brands. In some cases, such as Vuitton, Millward Brown’s valuation for 2009 exceeds the brand’s 2008 revenues, and in other cases, like Wal-Mart, the valuation for this year is far lower than the company’s actual revenues. This points to the aura of the Vuitton brand, for instance, playing a bigger role in purchases of those luxury products than, say, the Wal-Mart brand figuring into shopping the discount giant.
Google was assessed as the number-one brand worldwide, worth $100.04 billion, followed by Microsoft, $76.25 billion; Coca-Cola, $67.63 billion; IBM, $66.62 billion, and McDonald’s, $66.58 billion.
H&M blew by Nike under Millward Brown’s assessment to become the most valuable apparel brand, worth an estimated $12.06 billion, in a sector hit hard by the recession.
The 62-year-old Swedish fast-fashion retailer was fueled by its offer of fashion, value and exclusive designer collections at affordable prices, such as a recent collection by Matthew Williamson and a collaboration with Jimmy Choo, which will launch a collection for women and men in about 200 H&M stores in November, said Pierre Dupreelle, a director at the brand consultant.
H&M’s mastery of the supply chain hasn’t hurt, either. As fashion is fundamentally about the offer of something new, the chain continues to benefit from the frequent deliveries of fresh items to its stores — in intervals of about three weeks, according to The Boston Consulting Group Inc. Its even speedier competitor, third-ranked Zara, gets it done in 14 days.
“They’ve also been helped by ongoing store openings,” Dupreelle acknowledged of H&M’s more than 1,500 locations worldwide. New stores helped H&M to continue to gain market share in the second quarter as the chain reported a better-than-expected 6.4 percent increase in net profits.
Fashion players dominated the 10 luxury brands ranked as the world’s most valuable, led by Louis Vuitton, worth $19.40 billion, up 5 percent from 2008. Wal-Mart was the retail brand with the highest valuation, at $41.08 billion, a gain of 19 percent. Both Vuitton and Wal-Mart far surpassed the second-place brands in their respective categories: Hermès, projected to be worth $7.86 billion, and Tesco, $22.93 billion.
“Louis Vuitton and Hermès control their distribution channel from A to Z and they don’t discount,” Milton Pedraza, chief executive officer of the Luxury Institute, said of the luxury brands’ leading status.
Flexing some marketing muscle has helped Vuitton and Hermès as well, contributing to reports of “[mid]- to high-single-digit profits and tens of millions of dollars of growth throughout this recession,” said Greg Furman, president of The Luxury Council.
On Monday, for instance, LVMH Moët Hennessy Louis Vuitton, the world’s largest luxury goods company, said it will be a main sponsor of New York City’s 2009 Summer Streets event. Summer Streets closes a 6.9-mile route from the Brooklyn Bridge to Central Park to cars, so that people can run, bike, walk and participate in eco-friendly activities on the thoroughfares on Aug. 8, 15 and 22.
In conjunction with the beginning of Summer Streets, LVMH will unveil prototypes of the biking apparel designs created by the winner of its Bike in Style Challenge, Fashion Institute of Technology student Jessica Velasquez. LVMH Inc. in North America worked with New York City agencies and FIT to create the Bike in Style Challenge this year.
Although LVMH has said it is feeling the impact of global economic woes, the French luxury group continued to gain market share in the second quarter, reporting a better-than-expected 6.4 percent increase in net profits — thanks to strong demand for Louis Vuitton bags.
Wal-Mart Stores Inc. has been in the right place at the right time during the recession, with its low-priced merchandise appealing to cost-conscious shoppers, but Goldman Sachs & Co. last month cut Wal-Mart to “neutral” from “buy” and said there were few “positive catalysts” to drive the stock higher.
To make its valuation projections, Millward Brown Optimor identified the earnings of brands flowing from direct sales to customers. Next, the group analyzed the potential impact of consumers’ views of the brands and conditions in markets and countries where they are sold. Based on these tangible and intangible factors, Millward Brown Optimor projected the dollar value of 100 leading brands worldwide.
Apparel was one of five sectors appraised in the new study, “Brandz Top 100 Most Valuable Global Brands 2009,” which realized a decline in overall value, falling 9 percent to $53.05 billion. Just two of the 10 top apparel brands saw gains this year: Hennes & Mauritz, rising 8 percent to $12.06 billion, and fifth-ranked Adidas, increasing 2 percent to $4.94 billion. The sector’s top name in 2008, Nike, decreased 4 percent to $11.99 billion. Zara fell 1 percent to $8.61 billion, and Esprit, ranked fourth, was down 17 percent to $6.57 billion.
“H&M has made itself more relevant to what the consumer wants and needs now: great value,” said Patricia Pao, ceo of strategic consultant Pao Principle. “Value as defined by meeting or exceeding customers’ expectations versus comparable products. Matthew Williamson’s product — not one of the best known designers — sold out [this spring] in three hours in H&M’s Piccadilly store in London.”
Sectors besides apparel losing combined brand value were retail gasoline (-5 percent), financial institutions (-11 percent), cars (-22 percent) and insurance (-48 percent).
In contrast to the declining valuations projected for the top apparel names, Millward Brown’s forecasts increased 10 percent to $67.81 billion for the world’s leading luxury brands and grew 7 percent to $160.71 billion for the top retail brands.
Despite the struggles of the apparel business this year, six high-end brands of clothes placed in the ranks of the top 10 premium names, as did watchmaker Rolex, jeweler Cartier, and two types of spirits, Hennessy and Moët & Chandon. The third most valuable luxury brand, Gucci, was valued at $7.47 billion.
“Ready-to-wear has great functional value, whereas jewelry and watches are more frivolous,” Pedraza observed. “Consumers are loyal to luxury brands, whereas mass brands are more interchangeable,” he added. “There are too many apparel brands competing for the same dollars.”
Amazon.com — whose wide-ranging offer online stretches beyond its signature books and music to apparel brands such as DKNY, Reaction Kenneth Cole, Levi’s, Adidas, Izod and Roxy — was worth $21.29 billion, making it the world’s third biggest brand in the retail category.
Mobile phone providers made the biggest leap in value, gaining 28 percent and led by China Mobile, with $61.28 billion in brand worth.
|Luxury Brand||Brand Value||Change in Value vs. 2008|
|1. Louis Vuitton||$19.40B||+5%|
|8. Moët & Chandon||$4.85B||-2%|
|Source: Millward Brown Optimor, “Brandz Top 100 Most Valuable Global Brands 2009.”|
|Apparel Brand||Brand Value||Change in Value vs. 2008|
|6. Ralph Lauren||$3.03B||0%|
|10. Old Navy||$986M||-7%|
|Source: Millward Brown Optimor, Brandz Top 100 Most Valuable Global Brands 2009|
|Retail Brand||Brand Value||Change in Value vs. 2008|
|8. Home Depot||$9.28B||-40%|
|Source: Millward Brown Optimor, Brandz Top 100 Most Valuable Global Brands 2009|