In the first of a series of sector-specific branding league tables, Interbrand has revealed that the UK owns nearly a third of the best-performing retail brands in Europe.
The branding group unveiled its inaugural Top-Performing European Retail Brands 2008 index at the World Retail Congress in Barcelona last week.
Interbrand global chief executive Jez Frampton says his consultancy is considering creating similar tables for other sectors, including financial services and automotive.
‘We have started with retail because this is a sector that has embraced the importance of branding. We want to recognise that achievement and stimulate debate about retail branding,’ he says.
Marks & Spencer, Tesco, The Body Shop and The Carphone Warehouse join fashion retailer H&M on the league table. With eight names jostling for position on the list, the UK has more top-performing retail brands than any other European country.
‘There are no surprises in this index,’ says Frampton. ‘You would expect to see these stores here. The thing that amazes me is the sheer financial might of these companies, and how little, proportionally, they spend on understanding their assets.’
Interbrand claims to have calculated the ‘brand value’ of retailers, estimating the top five European retail brands – H&M, Carrefour, Ikea, Tesco and M&S – are together worth more than €34.2bn (£27bn).
Frampton believes that, despite a revolution that has seen retailers view their businesses ‘more in terms of branding and marketing and less in terms of location and footfall’, the race for brand differentiation is accelerating.
‘Retailers increasingly spend a lot of money on design, but there is room for them to spend more’, he says. ‘Building a strong retail brand is complex, involving factors from interiors, facias and windows to retail experiences, products, corporate branding and communications. There are many touch-points between retail and design.’
‘But the really big opportunity for designers lies in creating in-store experiences,’ observes Frampton. ‘Retailers are keen on this aspect of design at the moment, as it adds value in the most efficient way possible.’
The report notes that, in terms of both branding and retail experiences, general retailers (mainly supermarkets) are learning from – and fast catching up with – fashion stores. In a Europe where the general retailer is king, this is good news for design.
The index features just six types of store: general retailers, apparel, health and beauty, home and furnishings, books and electronics and telecoms brands. With 12 entries and a collective brand value of €27.2bn (£22bn), general retailers dominate.
But pessimists point to a cloud on the horizon for design. According to the report, more than half of the top 25 stores generate between 33 per cent and 100 per cent of their revenue through own-brand products. Three of the top five brands sell only private-label products. Also of concern is the recent news that Sainsbury’s is to massively expand its own-label non-food offer, possibly at the expense of external design groups.
Frampton warns that design consultancies need to be more business-savvy if they want to maximise opportunities.
‘Consultancies let themselves down through an unwillingness to combine art with science,’ he says. ‘They must have a 50-50 balance between their financial/
business and creative sides.
If designers embrace business thinking more, it will be easier for them to plead the case with clients for bigger budgets, so that they can create bigger, better retail experiences.’
This is a familiar lament, but heeding it could protect design consultancies from losing jobs to in-house teams, and give them the whip-hand in shaping the retail brands of the future.
TOP-PERFORMING EUROPEAN RETAIL BRANDS 2008
H&M Sweden Apparel £8.3bn
Carrefour France General £5.3bn
Ikea Sweden Home and furnishings £5.2bn
Tesco UK General £4.5bn
Marks & Spencer UK General £4bn
Zara Spain Apparel £3.3bn
Aldi Germany General £2.1bn
Boots UK Health and beauty £1.6bn
El Corte Inglés Spain General £1.5bn
Auchan France General £1.5bn
Other top retail brands: Asda, Media Markt, Lidl, Edeka, C&A, The Body Shop, Argos, Mango, Sainsbury’s, Mercandona, The Carphone Warehouse