Discount retailers gaining ground in the US

12 March 2010

NEW YORK: Discount retailers are strengthening their position in the US as the financial crisis continues to weigh on shoppers, Interbrand has found.

The consultancy, which is part of Omnicom Group, has updated its annual ranking of the most valuable retail brands in America.

Each brand was assessed, in the first instance, in terms of its contribution to the current and projected future sales of its parent company.

Similarly, the role these assets played in stimulating popular demand, and their overall "strength", in terms of loyalty, re-purchase and retention, were also considered.

According to Jez Frampton, global chief executive of Interbrand, the results revealed the importance of offering goods and services that meet the changing needs of consumers.

"It's about understanding your shopper and your shoppers' needs," he said.

Wal-Mart, the world's biggest retailer, took the top spot for the second successive year, having been one of the main beneficiaries of the financial crisis to date.

"As I visit with customers, it's striking how much people trust us to provide more value and quality than any other retailer," Mike Duke, the Arkansas-based firm's ceo, said on a recent conference call.

Target jumped from fourth to second in the standings, and is now committing greater resources to a multimedia advertising campaign promoting its competitiveness on cost.

"It's really a holistic merchandising marketing effort ... to more clearly communicate the credit for the great prices that we already have in store," said Gregg Steinhafel, its ceo.

Best Buy, the consumer electronics specialist, dropped one place to third, with Home Depot, the DIY group, pushed down to fourth as a consequence.

Walgreens, the pharmacist, made up the top five, leapfrogging CVS, its leading rival, in the process, with price competition also having intensified between these two organisations.

"We are certainly feeling the effect of the economy. We are still seeing a cautious consumer," Greg Wasson, chief executive of Walgreens, said.

Sam's Club, owned by Wal-Mart, was in seventh, and posted a 1.7% uptick in like-for-like sales over the last 12 months.

Dollar General and Family Dollar also made the list for the first time, while AutoZone, which places an equal emphasis on its value credentials, climbed five spots, to twentieth.

Coach was the best-performing luxury brand, rising by one place to ninth, but Polo Ralph Lauren and Tiffany & Co both slipped slightly on an annual basis.

However, conditions were not wholly adverse for high-end operators, with Whole Foods, the organic grocery pioneer, and J. Crew, the premium apparel firm, both improving their positions.

Dell, the IT company, was in eighth, while Amazon, the online retailer, rose from fourteenth to tenth, having also recently been named as a "great brand of tomorrow" by Credit Suisse.

One of the more noteworthy new entrants to the table was Buckle, a "fast fashion" chain that relies on advocacy among the general public to drive awareness about its products.

Conditions were less favourable for Anthropologie, Gymboree, HollisterMen's Wearhouse and Victoria's Secret, which all slid down the ratings compared with last year.

Data sourced from Forbes/Interbrand; additional content by Warc staff