Retail Loyalty Wars: Tesco Grows, Wal-Mart Falls Short

9/27/2011

Over the past few years, we have seen countless studies analyzing the impact of the faltering U.S. economy on national branded consumer products. The latest of which, from SymphonyIRI Group, reported some really good news: Brand loyalty has increased in 45 of the top 100 consumer packaged goods categories over the last three years.

But what about retailers? How has their brand loyalty been tested? Findings from the newly launched Brand Finance Global 100 update show that the economy hasn’t been kind to most. Overall, the top 10 retail brands have lost $4.2 billion — or 2 percent — from the combined brand value.

Europe’s largest retailer Carrefour suffered the biggest drop, falling $2.2 billion (18 percent) in brand value. The business has suffered from a number of challenges this year, including stock problems, “over-centralised” decision making and issues in the roll out of the new store format.

The world’s biggest retail brand Walmart also felt the pressure with a $1.2 billion collapse in brand value. This is supported by findings from a survey of 1,500 Walmart shoppers conducted in August by Blueocean Market Intelligence. It showed that programs aimed at reinforcing Walmart's price leadership, like “Ad Match Gauruntee”, are not yet translating into improved perceptions or sales.

Meanwhile, Tesco managed to buck the declining trend recording a $510 million rise in brand value. The United States continues to be a tough market for the company, but Europe and Asia sales continue to climb. Consumers have continued to rely on the retailer to cater for their squeezed household budgets.

“Tesco has benefitted from the extensive customer insight it holds in the clubcard loyalty program and has used this to carefully balance its low price ‘value’ and high end ‘finest’ offerings, to span the markets,” says David Haigh, CEO of Brand Finance plc. “As ‘modern trade’ retailing grows in the developing world, the opportunities for further brand value growth by brands like Tesco is huge.”

Swedish brand H&M is the only clothing retail brand in the top 10 global retailers with a brand value of $9.7 billion. Supermarkets make up six of the brands in the top 10.

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