· Nike continues to dominate as the world’s most valuable apparel brand, with a brand value of US$32.4billion
· Zara and Adidas move up the ranks as H&M’s brand value decrease pushes it down to 4th place
· Uniqlo is the fastest-growing apparel brand in the top 10, up a whopping 48% year on year
· Rolex is the strongest brand in the sector, posting an elite AAA+ brand strength rating
· Luxury brands account for 7 out of the top 10 strongest apparel brands, showing importance of brand strength in the segment
Sportswear giant Nike has maintained and strengthened its position as the world’s most valuable apparel brand, according to the latest report by Brand Finance, the world’s leading independent brand valuation and strategy consultancy. Nike’s brand value has increased by 16% since last year to US$32.4 billion on the back of healthy sales growth in China, Europe, the Middle East and Africa during the course of the year. Rival Adidas, meanwhile has bitten into some of Nike’s North American market, with brand value rising by 17% to US$16.7 billion. Nevertheless, the gap between the two remains colossal as Nike’s brand value is nearly double that of Adidas.
Nike’s iconic status is confirmed every time the brand’s marketing campaigns make front-page news. Last year’s “Dream Crazy” ad featuring Colin Kaepernick sparked a social media backlash in the US with some customers going as far as to burn their Nike products. Despite controversy, Nike’s sales were reported to go up in the weekend following the ad’s release. More recently, the Oscars’ night saw the premiere of a powerful follow-up, “Dream Crazier”, which celebrates inspirational female athletes.
Richard Haigh, Managing Director of Brand Finance, commented:
“Nike’s bold marketing makes it stand out in a busy marketplace of sportswear apparel brands. In a time when customers look for experiences and emotional connection, Nike’s offering comes with unambiguous messages and values that people can rally behind.”
Zara wins online as H&M struggles
Spanish fast-fashion retailer Zara, (brand value up 6% to US$18.4 billion) has moved into second position supplanting H&M which falls down to fourth place (brand value down 16% to US$15.9 billion). Whilst Zara’s acclaimed integrated store and online business has seen it gain access to a further 106 countries, H&M has struggled with a mounting stack of unsold inventory. It is also changing its UK womenswear sizes after repeated complaints from customers that the clothes are smaller than expected. The effects of Zara’s controversial rebranding on customer loyalty remain to be seen in next year’s valuation.
Richard Haigh, Managing Director of Brand Finance, commented:
“The apparel sector continues to thrive. Brand value growth has been particularly strong among brands aware that consumers who shop both in-store and online spend significantly more than those who buy in bricks-and-mortar boutiques alone. It pays to create a robust omnichannel shopping experience for clients. Collaboration with celebrities, the digital age, and an ability to feed fast-fashion habits whilst being ethically aware will continue to benefit brand value.”
Surge in sales for Uniqlo
Japanese Uniqlo’s international expansion and recent collaboration with tennis ace Roger Federer pay off. Brand value has risen by a massive 48% to US$12.0 billion. A robust supply chain and high-quality, innovative, affordable clothes that transcend gender, age and ethnicity are also supporting sales growth.
Uniqlo aims to be the world’s largest clothing retailer by 2020 by increasing sales in the US, China and online; it has already managed this in Asia.
Rolex is strongest apparel brand
Aside from calculating overall brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Along with the level of revenues, brand strength is a crucial driver of brand value.
Rolex is the only brand in the Brand Finance Apparel 50 ranking to post the elite AAA+ brand rating. With a Brand Strength Index (BSI) score of 90.0 out of 100, the luxury watchmaker is the strongest brand in the industry. Although second place for brand strength is held by Nike, and Inditex-owned Zara and Bershka also make the top 10, luxury brands continue to dominate the lineup. 7 of the top 10 strongest brands are luxury, demonstrating the importance of brand strength in the segment. Although Bottega Veneta’s brand value has decreased by 11% to US$1.6 billion, its arrival in the top 10 list of strongest apparel brands is noteworthy. The brand has tapped into a new approach towards the affluent consumer, namely the idea of selling an aspirational existence.
Note to Editors
Every year, leading brand valuation and strategy consultancy Brand Finance values the world’s biggest apparel brands. The 50 most valuable apparel brands in the world are included in the Brand Finance Apparel 50 2019 report.
Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.
Additional insights, more information about the methodology, as well as definitions of key terms are available in the Brand Finance Apparel 50 2019 report.
Brand Finance helped craft the internationally recognized standard on Brand Valuation – ISO 10668, and the recently approved standard on Brand Evaluation – ISO 20671.
Data compiled for the Brand Finance league tables and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.
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.