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:
|Brand||Brand Value 2020||Brand Value % Change|
2020 Vs. 2019
|Costco||$28.7B||35%||Retail||🇺🇸 United States|
|Amazon||$415.9B||32%||Retail||🇺🇸 United States|
|Target||$10.6B||32%||Retail||🇺🇸 United States|
|Walmart||$45.8B||24%||Retail||🇺🇸 United States|
|Sam’s Club||$6.8B||19%||Retail||🇺🇸 United States|
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:
|Brand||Brand Value 2020||Brand Value % Change|
2020 Vs. 2019
|Under Armour||$2.6B||-34%||Apparel||🇺🇸 United States|
|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|
|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.
From Bean to Brew: The Coffee Supply Chain
How does coffee get from a faraway plant to your morning cup? See the great journey of beans through the coffee supply chain.
What Does The Coffee Supply Chain Look Like?
View a more detailed version of the above graphic by clicking here
There’s a good chance your day started with a cappuccino, or a cold brew, and you aren’t alone. In fact, coffee is one of the most consumed drinks on the planet, and it’s also one of the most traded commodities.
According to the National Coffee Association, more than 150 million people drink coffee on a daily basis in the U.S. alone. Globally, consumption is estimated at over 2.25 billion cups per day.
But before it gets to your morning cup, coffee beans travel through a complex global supply chain. Today’s illustration from Dan Zettwoch breaks down this journey into 10 distinct steps.
Coffee From Plant to Factory
There are two types of tropical plants that produce coffee, both preferring high altitudes and with production primarily based in South America, Asia, and Africa.
- Coffea arabica is the more plentiful bean, with a more complex flavor and less caffeine. It’s used in most specialty and “high quality” drinks as Arabica coffee.
- Coffea canephora, meanwhile, has stronger and more bitter flavors. It’s also easier to grow, and is most frequently used in espressos and instant blends as Robusta coffee.
However, both types of beans undergo the same journey:
Plants take anywhere from 4-7 years to produce their first harvest, and grow fruit for around 25 years.
The fruit of the coffea plant is the coffee berry, containing two beans within. Ripened berries are harvested either by hand or machine.
Coffee berries are then processed either in a traditional “dry” method using the sun or “wet” method using water and machinery. This removes the outer fruit encasing the sought-after green beans.
The green coffee beans are hulled, cleaned, sorted, and (optionally) graded.
From Factory to Transport
Once the coffee berry is stripped down to green beans, it’s shipped from producing countries through a global supply network.
Green coffee beans are exported and shipped around the world. In 2018 alone, 7.2 million tonnes of green coffee beans were exported, valued at $19.2 billion.
Arriving primarily in the U.S. and Europe, the beans are now prepared for consumption:
Green beans are industrially roasted, becoming darker, oilier, and tasty. Different temperatures and heat duration impact the final color and flavor, with some preferring light roasts to dark roasts.
Any imperfect or somehow ruined beans are discarded, and the remaining roasted beans are packaged together by type.
Roasted beans are shipped both domestically and internationally. Bulk shipments go to retailers, coffee shops, and in some cases, direct to consumer.
Straight to Your Cup
Roasted coffee beans are almost ready for consumption, and by this stage the remaining steps can happen anywhere.
For example, many factories don’t ship roasted beans until they grind it themselves. Meanwhile, cafes will grind their own beans on-site before preparing drinks. The rapid growth of coffee chains made Starbucks the second-highest-earning U.S. fast food venue.
Regardless of where it happens, the final steps bring coffee straight to your cup:
Roasted beans are ground up in order to better extract their flavors, either by machine or by hand. The preferred fineness depends on the darkness of the roast and the brewing method.
Water is added to the coffee grounds in a variety of methods. Some involve water being passed or pressured through the grounds (espresso, drip) while others mix the water and grounds (French press, Turkish coffee).
Liquid coffee is ready to be enjoyed! One average cup takes 70 roasted beans to make.
The world’s choice of caffeine pick-me-up is made possible by this structured and complex supply chain. Coffee isn’t just a drink, after all, it’s a business.
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.
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, 2020||Market Value July 1, 2010||Normalized % Change 2010-2020||Retail Revenue|
|The Kroger Co.||$26B||$13B||107%||$118Be|
|Walgreens Boots Alliance||$36B||$26B||38%||$111B|
|The Home Depot||$267B||$47B||466%||$108B|
|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.
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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