Retail Branding - UK - January 2008

Table of Contents

Issues in the Market

• Key themes and issues
• What matters in retail branding?
• What is retail branding doing well, not so well, not doing at all?
• How is it performing, and who is performing well?
• How could retail brands improve?
• Brand elements
• Research methodology
• Brand map
• Abbreviations

Market in Brief

• When the going gets tough, the tough get going
• Insularity dominant?
• Relevant consumer orientation
• Breakout thinking
• Never mind the differences look at the similarities
• Visionary leadership
• Star retail brands - movers and shakers
• What now for retail?

Retail Industry in Context

• Figure 1: Industry category averages, 2007
• Figure 2: Retail categories compared to all categories, 2007
• Sameness pervades consumers' perceptions
  • Figure 3: Retail category average KPIs compared to all categories, 2007
• Cross-category comparison
  • Figure 4: Retail category brand map, 2007
• Average category indicators don' t do credit to brand stars
• Homewares kick up to hyper drive
• Department stores opting for quality
• Wine - is its future rosé?
• Clothing needs to accessorise some style and purpose
• Books dominated by specialists
• DIY or Do it for me?
• Home shopping companies especially vulnerable
• Telecommunications providers the least trusted category
• Manufacturers pull better than retailers in portable technology
• Electrical needs higher voltage
• Convenience stores close to our heart
• Food on trial
• Non-food unrealised
• Own-label from budget to finest and beyond

Brand Analysis

• Figure 5: Retail brands footprint, based on brands surveyed, 2007
• When the going gets tough, the tough get going
• Putting the brand effort in the right place
  • Figure 6: Topline performance summary KPI, retail brands footprint, based on brands surveyed, 2007
• Quadrant 1 - Immature growth brands
  • Figure 7: Immature brands' KPIs, based on all brands surveyed, 2007
• Low ratings for innovation, service and quality a common feature
• Worth paying more for, consideration and recommendation are levers to develop brand strength
• ' Immature' growth brands, what' s driving their momentum?
  • Figure 8: Growth brands with momentum, based on all brands surveyed, 2007
• Specsavers not as trusted as it might think
• Goldsmiths is proud of its reputation
• HMV customers are very satisfied
• Fired Earth needs to fire up quality awareness online
• Topps Tiles with unmet consideration could top up its coverage
  • Figure 9: Growth brands with momentum KPIs, based on all brands surveyed, 2007
• Consideration and recommendation give these brands momentum
• Above-average retail innovation and poor service are inhibitors
• Developing points of difference to escape
• Mature growth brands, but lower recommendation
• Quality and innovation need attention
• Lack of differentiation typical of Signet-owned jewellery brands
• Virgin Megastores - fresh start as Zavvi
• Time for Habitat to come out of hiding?
  • Figure 10: Q1 established brands' KPI gaining ground, poor recommendation, of brands surveyed, 2007
• High consideration gives these brands momentum
• Low recommendation and poor perceptions of service are the main inhibitors
• Brands standing still - good recommendation
  • Figure 11: Q1 brands standing still, based on brands surveyed, 2007
• Life in the price war zone
• Fashion brands have to deliver affordability
• Laura Ashley leveraging quality to escape
• Arcadia flagship brands tired and losing relevance
• Primark in danger of losing momentum
• Service and recommendation important for mobile phone brands
• Wilkinson' s cheap and cheerful neighbourhood retailing
  • Figure 12: Q1 standing still brands' KPIs, based on brands surveyed, 2007
• Brands standing still - lacking recommendation
  • Figure 13: Retail brands Q1 standing still, lacking recommendation, from all brands surveyed, 2007
• Value is the only merit
• Topshop - striving for breakout from value sector
• Improving relevance to strengthen George at Asda
• Bhs - what' s the vision?
• High adspend not a solution for a weak brand or proposition
• TK Maxx - proposition mis-match?
• Peacocks' brand development: a work in progress
• Commodity electrical brands architects of their own-brand weakness
  • Figure 14: Q1 value brands' KPIs, from all brands surveyed, 2007
• Value is the only merit
• Immature, losing ground brands
  • Figure 15: Q1 unfocused and losing ground brands' KPIs, based on brands surveyed, 2007
• Two more Arcadia fashion brands failing to achieve standout
• Strong-performing companies with weak brands
• MFI brand values damaged beyond repair?
• Not all brands with a distinct proposition achieve standout
• JJB Sports finding it hard to deliver on its distinctive positioning
• Traditional mail order brands losing relevance
• Undifferentiated convenience stores highly vulnerable to encroachment
• Underperforming on a range of attributes
• Littlewoods - where next?
• TJ Hughes - unique format but with limited differentiation
• Round-up: I' m not a value brand - get me out of here!
• Developing other brand values
• Quality discounters - a contradiction in terms?
• Breaking away from obsessive use of price
• Raising service standards to improve the shopping experience
• So what' s wrong with being a value brand?
• Price-led brands are highly vulnerable as in electrical goods
• Quadrant 2 - maturing, aspirational and challenger brands
  • Figure 16: Quadrant 2 - aspirational and challenger retail brands based on all brands surveyed, 2007
• Young, dynamic brands
• Below-average trust linked to lack of awareness
• Strongly differentiated proposition is worth paying extra
• Brand profit is also aspirational
• ESR credentials gives these brands a strong reputation
• Orange - triumph of image over reality?
• The Body Shop most vulnerable to loss of momentum
• IKEA also in the leadership quadrant
  • Figure 17: Quadrant 2 KPIs - maturing retail brands surveyed, 2007
• Realising potential through sustained momentum
• Fashion energy to sustain relevance
• Quadrant 2 - round-up
• Quadrant 3 - Mature brands losing relevance
• Quadrant 3 - mature brands - gaining ground
  • Figure 18: Mature retail brands with limited relevance, gaining ground, 2007
• Directional dilemma
• Brand elements point the way forward
• New technology brands peaking?
  • Figure 19: Mature brands' KPI, gaining ground, based on brands surveyed, 2007
• Mature brands standing still
  • Figure 20: Mature brands standing still, based on brands surveyed, 2007
• Caught napping?
• Complacency - few compelling points of difference
• Debenhams not delivering
• Sainsbury' s - restoring credibility
• Tesco - super state becoming a victim of its own success
  • Figure 21: Mature brands standing still KPI based on brands surveyed, 2007
• Mature brands losing ground
  • Figure 22: Mature retail brands losing ground, from brands surveyed, 2007
• Crisis looming for brands with no strong points of difference
• Correlation between these ailing brands and weak profitability
• Low ESR ratings reflect concern about profitability
• Loss of authority particularly damaging to specialist drinks retailers
• House of Fraser, house of brands
  • Figure 23: Mature brands losing ground KPI based on brands surveyed, 2007
• Quadrant 3 Round-up - Is there a way back?
• In need of revitalising
• Re-inventing the differences that make a brand special
• Personality profile needs work
• Quadrant 4 - Leadership brands
  • Figure 24: Q4 leadership brands based on all brands surveyed, 2007
• Highly trusted brands distancing themselves from the pack
• Defending quality against the challenger brands
• Building a point of difference into a point of view - ' Plan A - because there is no Plan B'
• Emotional engagement reinforces points of difference
• IKEA rated highest for differentiation
• Waterstone' s holding its own against Amazon
• Boots
• Q4 round-up - consistency, quality and innovation required
• Maintaining position by avoiding complacency
• Maintaining vitality through innovation and new ideas
• Customer retention is paramount
  • Figure 25: Q4 leadership brands' KPIs, based on all brands surveyed, 2007
• So what we' ve found is

Benchmarking

• Themes and issues
• Financial performers
  • Figure 26: Retail profit growth based on brands surveyed, 2007
  • Figure 27: Retail profit growth based on brands surveyed where only 2006 figures available, 2007
  • Figure 28: Retail sales growth based on brands surveyed, 2007
• Biggest-spending brands
  • Figure 29: Top ten retail advertising expenditure, based on brands surveyed, 2003-07
• DFS sings loudest in a disappointing Christmas
  • Figure 30: Top ten retail advertising expenditure 2007, based on brands surveyed, 2007
• River Island shrugs off the consumer caution
  • Figure 31: Top ten retail advertising expenditure 2003-07, based on brands surveyed in 2007
• Amazon revs up in 2007 on the Internet
  • Figure 32: Top ten retail advertising expenditure, based on brands surveyed, 2006-07
• Vision Express can see opportunity
  • Figure 33: Top 20 retail adspend ratios in 2007, based on brands surveyed in 2007
• M&S best reputation contrasts to Tesco' s best value
  • Figure 34: Best reputation and profits orientation of brands surveyed, 2007
• M&S is quality: premiumisation and consistency
  • Figure 35: Retail top ten for high quality, premium retail brands surveyed, 2007
• M&S dominates top service
  • Figure 36: Top 20 retail brands' aspects rated on service from the brands surveyed, 2007
  • Figure 37: Top 20 retail brands rated on best service achieved from brands surveyed, 2007
  • Figure 38: Retail service vs innovation in brands surveyed, 2007
• IKEA brings dynamism in both differentiation and innovation
  • Figure 39: Top ten retail differentiation and innovation of brands surveyed, 2007
• M&S and The Body Shop lead on ESR
  • Figure 40: Retail category average KPIs compared to all categories, 2007
• The Body Shop still hot on ethical and environmentally friendly leadership
  • Figure 41: Top ten ESR rankings for ethical and environmentally friendly, 2007
• Amazon leads M&S as the most trusted brand
  • Figure 42: Top ten retail ESR: social responsibility and trust, 2007
• The ultimate satisfaction!
  • Figure 43: Top ten retail satisfaction of all the brands surveyed, 2007
  • Figure 44: Top retail brand quality vs excellent satisfaction of brands surveyed, 2007
• Commitment
  • Figure 45: Top ten rankings of retail loyalty, retention and preference of brands surveyed, 2007
• DFS and Amazon show most momentum
  • Figure 46: Top ten retail consideration and recommendation of all brands surveyed, 2007
• Monsoon vibrancy leads Zara
  • Figure 47: Top ten rankings of retail energy of brands surveyed, 2007
• Conclusion: the strongest brands
• Appendix
  • Figure 48: Fastest-growing sales for retail brands surveyed, 2007
  • Figure 49: All retail brands surveyed profit growth, for retail brands surveyed, 2003-07
  • Figure 50: Adspend of all retail brands surveyed, 2007
  • Figure 51: Advertising expenditure and adspend ratio of all retail brands surveyed, 2007
  • Figure 52: Most differentiated and innovative of all retail brands surveyed, 2007

Conclusions

• Insularity dominant?
• Never mind the differences look at the similarities
• Relevant consumer orientation
• Breakout thinking
• Visionary leadership
• Star retail brands - movers and shakers
• Conclusion - What now for retail?