The world’s most valuable luxury brand just barely beat out the most well-known fast fashion giants in this year’s “Best Global Brands” ranking. This annual list – which is compiled by New York-based brand consultancy, Interbrand – identifies the world’s 100 most valuable brands based on three key aspects that contribute to a brand’s value: The financial performance of the branded products or service, the role the brand plays in influencing consumer choice, and the strength the brand has to command a premium price, or secure earnings for the company.
Louis Vuitton, the world’s most valuable luxury brand, which ranks at number 19, is the most favorably situated of the high fashion companies on the list. It is followed by Hermes (in the number 32 spot), Gucci (51), Cartier (65), Tiffany & Co. (81), Burberry (86), Prada (94), and Christian Dior (95).
Interestingly, H&M and Zara – which rank at 23 and 24, respectively – are more preferably ranked than all of the high fashion brands on the list save for Louis Vuitton.
As for the sportswear giants: Nike comes in at number 18, whereas adidas lags behind all the way at 55 – although it is worth noting that adidas did earn a “Top Growing” nod on this year’s list, as did Amazon, which is ranked at number 5. (Note: Apple, Google, Microsoft, and Coca Cola took the top four spots).
A Look Behind the Rankings
So, why exactly did Louis Vuitton place most prominently of the high fashion brands on the list (it managed to beat out Hermes, despite the latter’s near-constant growth reports and the seemingly never-falling amount of demand for pricey Birkin and Kelly bags) – and why is it that H&M and Zara are just a few spots behind?
Well, according to Interbrand, “Louis Vuitton has just been through a rationalization of its retail network, opened its first e-commerce store in China, and headlined one of the most coveted pop-ups in its collaboration with Supreme. This is indicative of some radical rethinking of retail to come.”
Louis Vuitton also scored well due to its most recent attempts to use technology to fuel the luxury experience. As noted by Interbrand, “A market to watch is luxury travel goods, which is set to grow 16% to USD $5 billion by 2020. As the brand that owns ‘the journey,’ Louis Vuitton has just announced its new connected watch, where the real news is in what it represents, as an appetizer to a moveable feast that will indulge the real potential of the Internet of Things. Tapping into the zeitgeist means embedding a culture of innovation within a culture of excellence.”
(It is worth noting that LVMH appears to be – or at least has, in the recent past, appeared – on Interbrand’s fellow Omnicom subsidiary Omnicom Media Group’s roster of clients. H&M also appears to have ties to Interbrand’s parent company, Omnicom, by way of its subsidiary BBDO Worldwide).
In terms of the fast fashion brands, they appear to benefit most significantly – in terms of Interbrand’s ranking – from their adoption of e-commerce as a way to reshape the retail experience and connect with consumers.
While Zara and H&M have both made enormous strides to enhance the experience of consumers on their e-commerce sites in recent years, most luxury brands are still quite far behind. This is almost certainly because for years, high fashion brands resisted the push to make themselves available online in an attempt to retain an aura of exclusivity; they have since begun to change their tunes – and fast – in experiences consistently falling sales.
Prada – one of the most poorly ranking fashion brands – is a good example of this. While all luxury goods companies have been hurt by collapsing demand in China, the strong dollar and the terrorist attacks in Europe, the Italian brand has been hit harder than most, at least in part because it has been too slow to invest online. As of this April 2016, the brand announced that in light of stagnant sales, it would – among other efforts – double its online business.
According to Interbrand, “Much of the innovation in the [retail] sphere has come from retailers that have placed convenience at the core of their philosophies.” This is something with which luxury brands are still experimenting, while fast fashion and mass-market brands are in a position to work to fine-tune their already-existing efforts.
With this in mind, until high fashion brands can find a way to balance their delicate image of exclusivity, while, at the same time, evolving to meet the needs of the modern-day consumer (which, according to Interbrand, includes prioritizing convenience, such as instant fulfillment, fast delivery, and easy returns), they will see disappointing sales and placements on lists like these.