· Nike remains the world’s most valuable apparel brand, valued at US$32 billion
· H&M expands its e-commerce footprint and enjoys a 24% boost in value
· Zara’s flexible business model provides competitive advantage, bolstering value
· Anta grows 67%, increasing its international presence through player deals
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s most valuable apparel brands are ranked and included in the Brand Finance Apparel 50 2017.
Nike has retained its position as the world’s most valuable apparel brand after a 13% rise in brand value to US$32 billion. Its brand strength score of 92 and AAA+ rating renders Nike the most powerful brand in the sector and third most powerful across all sectors. The brand’s strength is partially attributable to the apparel giant’s ability to continuously innovate and deliver state-of-the-art products to a range of consumer demographics. Last year, the brand released the anticipated self-lacing HyperAdapt sneakers popularised by the sci-fi movie, “Back to the Future”, as well as becoming the first major commercial athletic apparel brand to announce a plus-size workout and clothing line.
Alongside its tangible products, Nike’s delivery of powerful messages through its marketing campaigns undoubtedly bolsters its brand value and strength. Its “Equality” campaign encourages people to take their attitude on the court or field off-court, demonstrating the same fairness and respect in their everyday interactions. Nike has also recently introduced the high-performance hijab for Muslim athletes. The new product seeks to normalise the fact that women – religious or otherwise, are equal to men in the sporting world. Nike’s constant involvement in promoting an active, positive lifestyle both inside and outside the scope of sport will continue to positively impact its brand value and strength.
H&M is the second most valuable apparel brand with a brand value of US$19 billion after 24% growth. Whilst the Swedish company continues to expand its network of physical stores, opening 442 in 2016 alone, it is redirecting some of its efforts towards expanding its e-commerce operations to cater to the rising popularity of online shopping. The competitive business model and its investments in IT will aid it in generating future returns as it develops in emerging markets.
Spanish giant Zara is the third most valuable brand, valued at US$14.4 billion after an impressive 43% growth. The brand has seen total sales rise 14.5% and net profits were up 9% last year. Unlike the more rigid business models of other apparel brands, the flexibility that comes with Zara’s fast fashion model allows it to adapt its clothing to unpredictable circumstances such as unusual changes in weather and the brand’s value flourishes as a result of this competitive advantage.
Marc Jacobs is the fastest growing brand in the table, its brand value growing 84%. This is attributed in part to its recent restructure which involved folding its widely distributed “diffusion” collection Marc x Marc Jacobs into its main line to offer a wide range of products under a single unified brand in an attempt to move upmarket and fortify the brand name of each collection. If the restructure proves successful, the luxury apparel’s brand value will continue to rise.
Chinese sports and footwear brand, Anta, is the second fastest growing brand in the table, its value up 67% to US$2 billion. While the brand is still relatively unfamiliar to those outside of China as the home market has always been a priority, Anta is increasingly shifting its focus overseas. Having secured a deal with NBA player Klay Thompson, Anta has successfully established a direct-to-consumer e-commerce relationship in the US. If Anta continues to effectively penetrate international markets, the increased recognition of its brand will drive its brand value up further.
Note to Editors
Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.
Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.
Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.
Brand is defined as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services, or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding Brand Rating up to AAA+ in a format similar to a credit rating.
Brand Finance calculates the values of brands in its rankings using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity, and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, while in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Discount post-tax brand revenues to a net present value which equals the brand value.
Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.
The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.