Unable to Buy Homes Some Shoppers are Investing on Luxury Instead
After several years of frugality, consumers now feel entitled to spend on luxury. In the seventh annual BrandZTM Top 100 Most Valuable Global Brands study commissioned by WPP Group and conducted by Millward Brown Optimor, luxury brands grew by 15% in value over the last year.
Louis Vuitton once again bagged the top spot as the world’s most valuable luxury brand. With a value of $25.9 billion, the brand grew by 7%. Hermés atno.2 in the luxury category with a brand value of $19.2 billion, an increase of 61%, gained the most places in the Top 100 ranking and is now 32nd globally, up 39 places. Hermés increased its operating income by 32.5% to 885.2 million Euros ($1.2 billion) with sales growth of 18.3%.
“Although shoppers have become smarter in the way that they choose brands - with considered rather than conspicuous purchasing - they are still determined to spend, but spend more wisely,” said Nick Cooper, Managing Director of Millward Brown Optimor. “Luxury is seen as a good investment, with people increasingly buying classic pieces rather than high fashion. Those who can afford it indulge – including young professionals who, increasingly unable to buy houses, are spending their disposable income on mid-tier luxury.”
With healthy demand for a little bit of luxury, brands expanded their presence with many opening new stores, engaging with e-commerce and conducting extensive advertising campaigns.
Prada was also boosted by strong sales growing by 21% and making its debut in the luxury ranking with a value of $5.7 billion. The brand plans to add about 80 stores annually over the next three years. Many of these will be Prada brand stores, reflecting a general trend among luxury brands to assert tighter brand control by shifting away from licensing and franchising.
Quality craftsmanship, heritage and history are key factors of success for luxury brands. As a result many of the big brands such as Chanel, Louis Vuitton and Prada, are making a beeline for Britain’s wool, footwear and leather factories. The Made in Britain “label” has global appeal and has helped luxury brands like Burberry enjoy healthy sales in China and other fast-growth markets with expanding middle classes.
The 2012 ranking demonstrates the power of strong brands as a driver of new business growth but also as an insurance policy in hard times. “Luxury businesses can embrace brand management as a critical competency for building long-term financial value,” added Cooper.
The Most Valuable Luxury Brands 2012
Value in $ million
Brand Value change from 2011
Moët & Chandon
The BrandZ Top 100 Most Valuable Global Brands study is the only valuation in the world that takes into account what people think about the brands they buy alongside rigorous analysis of financial data, market valuations, analyst reports and risk profiles. The research report, which is available online, includes a ranking and analysis of the Top 10 most valuable brands for key regions of the world and 13 market sectors including luxury. Download the complete BrandZ ranking, including regional and category breakdowns. The rankings and a great deal more are also available as a free application for the iPhone, iPad, Nokia, BlackBerry and Android from www.brandz.com/mobile
NOTES TO EDITORS:
About the BrandZ Top 100 Most Valuable Global Brands Ranking
Developed for WPP’s operating companies by Millward Brown Optimor, the BrandZ Top 100 Most Valuable Global Brands ranking is now in its seventh year. It is the only study to combine measures of brand equity based on interviews with over 2 million consumers globally aboutthousands of global “consumer facing” and business-to-business brands with a rigorous analysis of the financial and business performance of each company (using data from Bloomberg and Kantar Worldpanel) to separate the value that brand plays in driving business revenue and market capitalization. Consumer perception of a brand is a key input in determining brand value because brands are a combination of business performance, product delivery, clarity of positioning, and leadership.
The ranking takes into account regional variations since, even for truly global brands, measures of brand contribution might differ substantially across countries.
About Millward Brown
Millward Brown is one of the world's leading research agencies and is expert in effective advertising, marketing communications, media and brand equity research. Through the use of an integrated suite of validated research solutions - both qualitative and quantitative - Millward Brown helps clients build strong brands and services. Millward Brown has 82 offices in 52 countries. Additional practices include Millward Brown's Global Media Practice (media effectiveness unit), The Neuroscience Practice (using neuroscience to enhance traditional research techniques), Millward Brown Optimor (focused on helping clients maximize the returns on their brand and marketing investments), Dynamic Logic (the world leader in digital marketing effectiveness) and Firefly Millward Brown (a global qualitative research business). Millward Brown is part of Kantar, WPP's insight, information and consultancy group.
WPP is the world’s largest communications services group. Through its operating companies, the Group provides a comprehensive range of advertising and marketing services including advertising; media investment management; consumer insight; public relations and public affairs; branding and identity; healthcare communications; direct, digital, promotion and relationship marketing and specialist communications. The company employs over 158,000 people (including associates) in 2,500 offices in 107 countries.