Apple, Google, and Amazon Top List of Global Brands That ‘Create Loyalty [and] Sustainable Profit’
What makes a person choose Coke over Pepsi? How about Starbucks over Dunkin’? According to Interbrand’s 20th annual Best Global Brands report, it’s all about brand strength, or a brand’s ability “to create loyalty and, therefore, sustainable demand and profit.” Along with financial performance and the role of the brand strength in purchasing decisions (against other factors like price and convenience), the marketing firm used brand strength to rank the world’s 100 strongest brands. Unsurprisingly, almost all of them are household names.
Last year, the luxury sector saw the biggest increase in brand value, at 42%, which was “extraordinary,” according to Rebecca Robins, Interbrand’s global luxury lead. “Luxury has continued to outperform as a top sector, and we continue to see two luxury brands in the top five fastest-growing brands across all categories,” she said of this year’s ranking. Of the luxury brands, only two from the original report, issued in 2000, are still on the list: Gucci and Louis Vuitton, and both received top marks. Louis Vuitton has ranked within the top 20 companies across the board since 2005, and is now the highest-valued luxury/retail brand, at $32 billion. Gucci saw 23% growth in the last year alone, bringing its value to nearly $16 million. (Chanel is a new entrant because the brand released their data for the first time in 2018.)
Perhaps the biggest shift in luxury over the past twenty years is the introduction of a theory that luxury brands should speak to everyone, not just the 1% who can afford to shop them with any consistency. “One of the things we have seen is an exponential shift with all of the luxury brands [toward] a greater openness, transparency, and inclusiveness,” Robins said. “[CEO Marco] Bizzarri at Gucci talks all the time about inclusivity and he means that in terms of reaching new generations of consumers.”
Through aggressive social media campaigns and collections incorporating cultural touchstones like the Italian Renaissance, the Chateau Marmont, and GucciGhost, Michele has built a vibrant, self-referential world around the Gucci name. On the business side, Bizzarri has angled the marketing towards young people. “One of the biggest successes there is he retooled the business as ‘Gucci by millennials for millennials,'” Robins said. The brand is more accessible “to new generations and that’s been true of the brands that have consistently done well over the past few years.”
Platforms like Rent the Runway, Depop, and The RealReal have also made luxury more accessible for young consumers, allowing them to wear luxury for an event, (likely) take an Instagram photo, and then return or resell it. “If there’s a 20-year-old who would never buy Dior, they can still access Dior through rental and resale,” Robins said.
The valuations themselves, Robins said, don’t tell the entire luxury story. Hermès, she says, is a sleeper narrative whose 9% growth doesn’t indicate its role in culture. “Over the time it’s been in the chart, it’s the only brand to achieve consistent increase in brand value over the entire timeline, whereas you look at the other luxury brands, and they’ve gone through peaks and troughs,” she said. That, she attributes to the value of Hermès’ recognizable Birkin and Kelly bags, which are said to be a better investment than gold. “Unlike so many brands, they’re a family business. Back in 2010, when Hermès fought hard to regain control of the business [from LVMH] their brand value trajectory continued to grow.”
Leadership, too, seems to play a role in brands seeing growth. Dior entered the ranking around the time Maria Grazia Chiuri took creative control of the brand in 2016, and the growth at Gucci can be attributed to the leadership team of creative director Alessandro Michele and CEO Marco Bizzarri, who favor diverse campaigns and progressive celebrity spokespeople like Harry Styles. “Going hard on a point of view, I think we’re really starting to see a lot of that come through now,” Robins said of Dior, referencing the house’s most recent show focusing on sustainability and climate change.
While brands like Gucci are making significant gains, their goal is to create an “ecosystem” around their brand, Robins said. “If I’m looking at Vuitton, Chanel, we’re talking about $32 billion, we’re looking at $22 billion, they’re almost in a world of their own apart from when you’re looking at the scale of a Prada or a Burberry at $4 or $5 billion,” she said. “The same is true when you look at the parallels, the Apples, the Googles, they are big ecosystem brands. Once you create that ecosystem, you’re creating a virtual monopoly.”
Amazon (ranked third of 100) is perhaps the best example of creating an ecosystem, with its acquisition of Whole Foods and expansion into media. “It’s been one of those sheer exponential examples,” Robbins said, noting that Amazon was absent from several of the first reports. “It leapfrogged into the top 100 and very quickly hit the top 10, and look at where it is today in that sheer dominance, not only the top 10 but already the top 5.”
Still, the strongest brands are not those with a monopoly, but those who see gains amid fierce competition: “Brands at their best do polarize,” Robins said, “that’s the whole very premise of a brand: for some people, not for others.”
More must-read stories from Fortune:
—The high price of signing up for retailer credit cards
—The next biggest thing in the beer world isn’t necessarily beer
—These shoes are shifting the economics of deforestation in the Amazon rain forest
—Here are the most popular beers of the 2019 Great American Beer Festival
—Ready to Lego of your kids’ old building bricks? Here’s how you can recycle them
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.