While the social network isn’t doing away with its direct-sale initiative, it is focusing its attention on ads that drive consumers to retailers’ sites.
Macy’s, which has been connecting offline and online shopping, had the biggest increase in brand value among the 50 North American retailers in a report by consulting firm Interbrand.
Amazon.com Inc. maintained its fourth place position in Interbrand’s 2014 Best Retail Brands report, with a 27% improvement in its overall brand value, which is a measure of the brand’s effect on consumer demand and on the retailer’s revenue. EBay Inc. jumped one spot—from nine to eight—with a brand value increase of 20%. But the real story was Macy’s Inc., which had the most improvement among retail brands—it jumped from No. 40 to 16—and the e-commerce reasons for its success.
Retail brand consulting firm Interbrand calculates brand value based on a five-year profit projection, along with current and estimated future consumer demand related to the brand. The calculation yields a dollar amount, which Interbrand uses to rank the top 50 retailers in North America, 30 in Europe and 20 in each of Latin America and Asia-Pacific.
The brand value of Macy’s, No. 12 on Internet Retailer’s Top 500 Guide, increased 383% year over year—the largest increase for a retailer on the North America list. Interbrand says the retailer’s focus on serving consumers who shop both offline and online is largely responsible for the gain. “Adopting a “digital hybrid” model, Macy’s uses technology to create a tailored shopping experience within an environment that is fashion-forward, celebrity-infused and luxurious,” the report says.
Interbrand notes that having a good e-commerce strategy is now a requirement for driving high brand value. “Adapting retail formats to accommodate the shift in consumer preferences for e-commerce is proving to be the key to success for many retailers worldwide,” says Jez Frampton, Interbrand’s global chief executive officer. But e-commerce strength doesn’t always translate into high retail brand value. Best Buy Co. Inc., No. 20 on Interbrand’s list and No. 10 in the Internet Retailer 2013 Top 500 Guide, had the largest year-over-year decline in brand value, falling 41% to $4.8 million. Interbrand notes that in 2009, Best Buy was the second most-valuable retail brand. “Two years later, however, weak sales and online competition chipped away at the company’s dominion and by 2013, Best Buy had lost more than 50 percent of its brand value,” the report says.
Thirty-four of the 50 North American brands Interbrand ranked also appear in the Internet Top 500 Guide, and 25 of them are in the Top 100. Here are those 25 retailers with their Top 500 rankings, the percentage Interbrand says their brand value changed in the 2014 Interbrand ranking compared with 2013, and their position in Interbrand’s 2014 list of North American brands:
- Wal-Mart Stores Inc., No. 4, down 6%, 1
- Target Corp., No. 18, up 8%, 2
- The Home Depot Inc., No. 46, up 12%, 3
- Amazon.com Inc., No. 1, up 27%, 4
- CVS Caremark Corp., No. 95, up 12%, 5
- Walgreen Co., No. 36, up 8%, 6
- Lowe’s Cos Inc., No. 44, up 9%, 11
- Nordstrom Inc., No. 28, down 12%, 12
- Costco Wholesale Corp., No. 16, up 13%, 13
- Victoria’s Secret, No. 21 (with Bath & Body Works), up 2%, 15
- Macy’s Inc., No. 12, up 383%, 16
- Kohl’s Corp, No. 26, up 3%, 17
- Staples Inc., No. 2, down 11%, 19
- Best Buy Co., No. 10, down 41%, 20
- Avon Products Inc., No. 42, down 11%, 22
- Gap Inc. Direct, No. 19, up 5%, 24
- GameStop Corp., No. 53, down 8%, 31
- J. Crew Group Inc., No. 56, up 3%, 35
- Dick’s Sporting Goods Inc., No. 94, up 7%, 39
- Bath & Body Works, No. 21, up 7%, 42
- American Eagle Outfitters, No. 64, up 8%, 43
- Urban Outfitters Inc., No. 48, down 5%, 45
- Cabela’s Inc., No. 45, up 27%, 48
- Express Inc., No. 97, up 15%, 49
- Chico’s FAS Inc., No. 79, new, 50