Study: Vuitton Scores Highest Value in Luxe

Interbrand's “Best Global Brands 2009” report cites trust as key factor.

It’s a matter of trust.

This story first appeared in the September 18, 2009 issue of WWD.  Subscribe Today.

Evoking that feeling among consumers is a key reason luxury brand Louis Vuitton has scored the top value, $21.12 billion in projected annual cash flow, among global, publicly held fashion players in Interbrand’s new annual report, “Best Global Brands 2009.”

“The relevance of all brands at this time is that they are something you can trust, something you can believe in,” said Jez Frampton, Interbrand’s global chief executive officer.

“For luxury brands, it has the same significance in the shopper’s choice as the actual product. When money is tight, it becomes more important,” he said of the reliability and continuity consumers perceive.

Fashion brands in the luxury sector — including Vuitton, ranked 16th; Gucci, 41st, with a value of $8.12 billion; Chanel, 59th, $6.04 billion; Hermès, 70th, $4.59 billion; Prada, 87th, $3.53 billion, and Armani, 89th, $3.3 billion — dominated the style portion in the brand consultancy’s top 100.

They were joined by a handful of other fashion firms, notably 21st-ranked Hennes & Mauritz and 50th-ranked Zara, whose brand values rose 11 percent and 14 percent, respectively, this year versus 2008, the biggest leaps among fashion franchises. H&M’s annual cash flow was projected at $15.38 billion, Zara’s at $6.79 billion.

Interbrand’s annual list, topped by Coca-Cola’s $68.73 billion in brand value, ranks the 100 most valuable global brands by projecting their annual cash flow. It does so by evaluating three measures: a brand’s operating earnings, a brand’s influence on shoppers’ purchases where they are made and brand loyalty. The latter two measures are derived from Interbrand’s own consulting work and analysis.

The world’s 10 most valuable brands range in value from Coke’s $68.73 billion to Disney’s $28.45 billion. The Interbrand list places IBM second, followed by Microsoft, GE, Nokia, McDonald’s, Google, Toyota and Intel.

As many high-end fashion designers have established networks of their own retail shops, the store setting is figuring more prominently in the strength of luxury players like Louis Vuitton as well as chains such as Zara, with its fast-changing offer of affordable, runway-inspired looks, Frampton said.

“On the high-fashion side, some of the environments Louis Vuitton creates are stunning,” he said. “The store on the Champs-Elysées in Paris is a knockout, and the store in Tokyo is magnificent. The same can be said for Prada’s stores in New York and Tokyo.”

In highlighting the shopping scene at Zara stores, Frampton noted, “there is a lot of theater, a sense that [even] if you went in yesterday, something is going to be different today. Zara brings some of the values of [designer] fashion to Main Street.”

Nine of the 14 fashion brands listed among the 100 most valuable brands saw percentage declines in cash flows projected by Interbrand. The biggest decrease was forecast for Gap, a drop of 10 percent to $3.92 billion. In addition to the upswings foreseen for H&M and Zara, Interbrand projected cash flow will increase 6 percent from the Adidas brand, to $5.39 billion this year, and 4 percent from Nike, to $13.18 billion. Nike was ranked 26th in the top 100, Adidas was 62nd.

Some major shifts in the most valuable brand rankings could occur in the next year or two after the recession, if consumers start making bigger changes in what they buy. “Changes in people’s attitudes have yet to really play out,” Frampton said. “People have been asking, ‘Are we consuming too much? Are we living too much on credit?’ There is a growing interest in sustainability, in Obama’s age of responsibility. If people start purchasing in this manner, it’s bound to have an impact.”