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Ranked: The Fastest Growing and Declining Retail Brands, from 2019-2020

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Retail brands growing and declining graphic

The Fastest Growing and Declining Retail Brands in 2020

The COVID-19 outbreak has led to the savage disruption of retail the world over.

Almost overnight, foot traffic in physical stores disappeared, and supply chains were left scrambled. Now at a major fork in the road, many retailers are forced to make tough decisions that were completely unforeseen.

While some global retail giants are laying down their weapons and filing for bankruptcy, others are innovating to save themselves, serving their customers in new and unexpected ways.

Today’s graphic uses data from Kantar’s Brand Z™ report to illustrate the retailers that are growing through adversity, and those that may struggle to survive.

Editor’s note: The report compares brand value of the top 75 retailers globally between 2020 and 2019, using mid-April as a cut-off date for incorporating latest financial information. Some early effects of the pandemic are incorporated in these calculations, but the pandemic’s impact on retail going forward is uncertain.

Retailers Rising to the Top

The calculation of brand value refers to the total amount that a brand contributes to the overall business value of the parent company.

In this case, it is measured by taking the financial value of a brand (latest data as of mid-April), and multiplying it by the brand’s contribution, or the ability of the brand to deliver value to the company by predisposing consumers to choose the brand over others or pay more for it, based purely on perceptions.

Based on these metrics, activewear brand lululemon is the world’s fastest growing retail brand for the second year running. Famous for its culture of accountability and global community events, the brand has struck the perfect balance between a seamless online and offline experience.

Explore the 10 fastest growing retail brands of 2020 below:

BrandBrand Value 2020
Brand Value % Change
2020 Vs. 2019
Category
Country
lululemon$9.7B40%Apparel🇨🇦 Canada
Costco$28.7B35%Retail🇺🇸 United States
Amazon$415.9B32%Retail🇺🇸 United States
Target$10.6B32%Retail🇺🇸 United States
Walmart$45.8B24%Retail🇺🇸 United States
JD.com$25.5B24%Retail🇨🇳 China
Sam’s Club$6.8B19%Retail🇺🇸 United States
Alibaba$152.5B16%Retail🇨🇳 China
Tanishq$2.8B15%Retail🇮🇳 India
Flipkart$4.7B14%Retail🇮🇳 India

Interestingly, Walmart holds three spots in the ranking as it also owns Flipkart and Sam’s Club. Moreover, the American retail giant purchased a stake in Chinese e-commerce platform JD.com, which has grown from 5% to 12%.

The two brands entered the strategic partnership together with the goal of dominating the Chinese market and surpassing Alibaba.

The Recipe for Retail Success

While every retailer has a unique growth strategy, according to the authors of the report, there are three factors that are undeniably crucial for success.

  • Value: Offering value for money through fair pricing for all products or services.
  • Uniqueness: Having a clear purpose and standing for something that consumers find meaningful.
  • Premium: Being perceived as being worth more than the price consumers pay.

Further, research also suggests that successful brands dominate their respective category when it comes to brand awareness and consistently provide experiences that enrich their customers’ lives, as demonstrated by lululemon.

As retailers continue to shift their focus towards digital transformation, consumers are still finding great value in having the best of both worlds when it comes to combining e-commerce and brick-and-mortar, otherwise known as “brick and click”.

Retailers Struggling to Stay Relevant

Unfortunately, there are several brands that haven’t yet mastered this winning combination, and the ruthless pandemic economy has only emphasized their struggles.

Here are the 10 fastest declining retail brands of 2020:

BrandBrand Value 2020
Brand Value % Change
2020 Vs. 2019
Category
Country
Under Armour$2.6B-34%Apparel🇺🇸 United States
H&M$4.7B-27%Apparel🇸🇪 Sweden
Walgreens$6.8B-26%Retail🇺🇸 United States
Tim Hortons$5.4B-20%Fast Food🇨🇦 Canada
Subway$13.8B-20%Fast Food🇺🇸 United States
Burberry$3.8B-18%Luxury🇬🇧 United Kingdom
M&S$2.5B-18%Retail🇬🇧 United Kingdom
Uniqlo$8.2B-16%Apparel🇯🇵 Japan
Dunkin'$2.4B-15%Fast Food🇺🇸 United States
The North Face$2.4B-14%Apparel🇺🇸 United States

Under Armour’s distribution relies heavily on third party retailers and department stores, so the brand has understandably been negatively impacted by the mass store closures.

While the brand focuses on expanding its personalized and connected fitness product offerings, it faces huge pressure from powerful competitors such as Nike and Adidas who already dominate this space.

A Rising Tide Lifts All Shipments

2020 has instigated a retail renaissance of epic proportions through accelerated digitization and changing consumer values. Ultimately, some brands will be better positioned than others to benefit from these changes.

As retailers begin reopening for business, they are presented with an opportunity to recalibrate the current retail landscape by setting new standards for the industry.

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Technology

Visualizing the Size of Amazon, the World’s Most Valuable Retailer

Amazon’s valuation has grown by 2,830% over the last decade, and the tech giant is now worth more than the other 9 largest U.S. retailers, combined.

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Visualizing the Size of the World’s Most Valuable Retailer

As brick-and-mortar chains teeter in the face of the pandemic, Amazon continues to gain ground.

The retail juggernaut is valued at no less than $1.4 trillion—roughly four times what it was in late 2016 when its market cap hovered around $350 billion. Last year, the Jeff Bezos-led company shipped 2 billion packages around the world.

Today’s infographic shows how Amazon’s market cap alone is bigger than the nine biggest U.S. retailers put together, highlighting the palpable presence of the once modest online bookstore.

The New Normal

COVID-19’s sudden shift has rendered many retail outfits obsolete.

Neiman Marcus, JCPenney, and J.Crew have all filed for bankruptcy as consumer spending has migrated online. This, coupled with heavy debt loads across many retail chains, is only compounding the demise of brick-and-mortar. In fact, one estimate projects that at least 25,000 U.S. stores will fold over the next year.

Still, as safety and supply chain challenges mount—with COVID-19 related costs in the billions—Amazon remains at the top. It surpasses its next closest competitor, Walmart, by $1 trillion in market valuation.

How does Amazon compare to the largest retailers in the U.S.?

10 Largest Public US Retailers*Market Value July 1, 2020Market Value July 1, 2010 Normalized % Change 2010-2020Retail Revenue
Walmart$339B$179B90%$514B
Costco$134B$24B458%$142B
Amazon$1,400B$50B2,830%$140B
The Kroger Co.$26B$13B107%$118Be
Walgreens Boots Alliance$36B$26B38%$111B
The Home Depot$267B$47B466%$108B
CVS$84B$40B112%$84B
Target$60B$37B64%$74B
Lowe's$102B$29B251%$71B
Best Buy$23B$14B59%$43B
Combined value of retailers (without Amazon)$1,071B

Source: Deloitte, YCharts
*Largest public US retailers based on their retail revenue as of fiscal years ending through June 30, 2019, e=estimated

With nearly a 39% share of U.S. e-commerce retail sales, Amazon’s market cap has grown 2,830% over the last decade. Its business model, which aggressively pursues market dominance instead of focusing on short-term profits, is one factor behinds the rise.

By the same token, one recent estimate by The Economist pegged Amazon’s retail operating margins at -1% last year. Another analyst has suggested that the company purposefully sells retail goods at a loss.

How Amazon makes up for this operating shortfall is through its cash-generating cloud service, Amazon Web Services (AWS), and through a collection of diversified enterprise-focused services. AWS, with estimated operating margins of 26%, brought in $9.2 billion in profits in 2019—more than half of Amazon’s total.

Amazon’s Basket of Eggs

Unlike many of its retail competitors, Amazon has rapidly diversified its acquisitions since it originated in 1994.

Take the $1.2 billion acquisition of Zoox. Amazon plans to operate self-driving taxi fleets, all of which are designed without steering wheels. It is the company’s third largest since the $13.7 billion acquisition of organic grocer Whole Foods, followed by Zappos.

Accounting for the lion’s share of Amazon-owned physical stores, Whole Foods has 508 stores across the U.S., UK, and Canada. While Amazon doesn’t outline revenues across its physical retail segments—which include Amazon Books stores, Amazon Go stores, and others—physical store sales tipped over $17 billion in 2019.

Meanwhile, Amazon also owns gaming streaming platform Twitch, which it acquired for $970 million in 2017. Currently, Twitch makes up 73% of the streaming market and brought in an estimated $300 million in ad revenues in 2019.

Carrying On

Despite the flood of online orders due to quarantines and social distancing requirements, Amazon’s bottom line has suffered. In the second quarter of 2020 alone, it is expected to rack up $4 billion in pandemic-related costs.

Yet, at the same time, its customer-obsessed business model appears to thrive under current market conditions. As of July 1, its stock price has spiked over 51% year-to-date. On an annualized basis, that’s roughly 100% in returns.

As margins get squeezed and expenses grow, is Amazon’s growth sustainable in the long-term? Or, are the company’s strategic acquisitions and revenue streams providing the catalysts (and cash) for only more short-term success?

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Markets

Charting the Rise and Fall of the Global Luxury Goods Market

This infographic charts the rise and fall of the $308 billion global personal luxury market, and explores what the coming year holds for its growth

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The Rise and Fall of the Global Luxury Goods Market

Global demand for personal luxury goods has been steadily increasing for decades, resulting in an industry worth $308 billion in 2019.

However, the insatiable desire for consumers to own nice things was suddenly interrupted by the coming of COVID-19, and experts are predicting a brutal contraction of up to one-third of the current luxury good market size this year.

Will the industry bounce back? Or will it return as something noticeably different?

A Once Promising Trajectory

The global luxury goods market—which includes beauty, apparel, and accessories—has compounded at a 6% pace since the 1990s.

Recent years of growth in the personal luxury goods market can be mostly attributed to Chinese consumers. This geographic market accounted for 90% of total sales growth in 2019, followed by the Europe and the Americas.

Analysts suggest that China’s younger luxury goods consumers in particular have significant spending power, with an average spend of $6,000 (¥41,000) per person in pre-COVID times.

An Industry Now in Distress

The lethal combination of reduced foot traffic and decreased consumer spending in the first quarter of 2020 has brought the retail industry to its knees.

In fact, more than 80% of fashion and luxury players will experience financial distress as a result of extended store closures.

luxury market McKinsey supplemental

With iconic luxury retailers such as Neiman Marcus filing for bankruptcy, the pressure on the luxury industry is clear. It should be noted however, that companies who were experiencing distress before the COVID-19 outbreak will be the hardest hit.

Predicting the Collapse

In a recent report, Bain & Company estimated a 25% to 30% global luxury market contraction for the first quarter of 2020 based on several economic variables. They have also modeled three scenarios to predict the performance for the remainder of 2020.

  • Optimistic scenario: A limited market contraction of 15% to 18%, assuming increased consumer demand for the second and third quarter of the year, roughly equating to a sales decline of $46 billion to $56 billion.
  • Intermediate scenario: A moderate market contraction of between 22% and 25%, or $68 to $77 billion.
  • Worst-case scenario: A steep contraction of between 30% and 35%, equating to $92 billion to $108 billion. This assumes a longer period of sales decline.

Although there are signs of recovery in China, the industry is not expected to fully return to 2019 levels until 2022 at the earliest. By that stage, the industry could have transformed entirely.

Changing Consumer Mindsets

Since the beginning of the pandemic, one-quarter of consumers have delayed purchasing luxury items. In fact, a portion of those who have delayed purchasing luxury goods are now considering entirely new avenues, such as seeking out cheaper alternatives.

However, most people surveyed claim that they will postpone buying luxury items until they can get a better deal on price.

luxury market supplemental

This frugal mindset could spark an interesting behavioral shift, and set the stage for a new category to emerge from the ashes—the second-hand luxury market.

Numerous sources claim that pre-owned luxury could in fact overtake the traditional luxury market, and the pandemic economy could very well be a tipping point.

The Future of Luxury

Medium-term market growth could be driven by a number of factors, from a global growing middle class and their demand for luxury products, as well as retailers’ sudden shift to e-commerce.

While analysts can only rely on predictions to determine the future of personal luxury, it is clear that the industry is at a crossroads.

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