Feb. 21 (Bloomberg) -- Online sellers Amazon.com Inc. and EBay Inc. gained brand value last year at the expense of brick-and-mortar retailers such as Best Buy Co., according to an Interbrand report.
Amazon’s brand surged 32 percent in a year, the most in U.S. retailing, while EBay’s increased 16 percent, Interbrand said today in a statement. Best Buy’s brand declined 11 percent, Interbrand said. The biggest loser in the nation by percentage was American Eagle Outfitters Inc., whose brand shed 16 percent of its value, according to the report.
“Amazon.com is doing a lot of aggressive work in creating virtual relationships with customers,” Bruce Dybvad, chief executive officer of Interbrand Design Forum, said in a telephone interview. About 10 percent of retail purchases occur online, he said.
There is “pressure on physical retailers to really bring up their online presence,” said Dybvad, whose Dayton, Ohio-based operation is part of Omnicom Group Inc.’s Interbrand Corp. It is no longer enough for physical stores to be a “vending machine of stuff,” he said.
Wal-Mart Stores Inc. was the top brand in the U.S. and worldwide, with a value estimated at $139.2 billion, according to the latest report. Target Corp.’s brand placed second, at $23.4 billion. Wal-Mart, based in Bentonville, Arkansas, is the world’s largest retailer by sales. Target is based in Minneapolis, Amazon in Seattle, and EBay in San Jose, California.
Best Buy’s decline in brand value may reflect “fulfillment issues that Best Buy had through the holidays,” Dybvad said. The Richfield, Minnesota-based retailer canceled some online orders last year after running out of popular merchandise.
Best Buy has said it plans to double its online business in the next three to five years and reduce the square footage of its physical locations. Net income fell 29 percent to $154 million, or 42 cents a share, in the three months ended Nov. 26, according to a company filing.
Interbrand estimated the brand value at $1.07 billion for Pittsburgh-based American Eagle, which sells apparel through retail stores and a website. The company operates in the crowded market for clothing worn by teenagers, and had to cut prices during the holidays as it faced reduced demand for outerwear.
In the U.K., Cheshunt-based Tesco Plc’s brand was the most valuable, at $11 billion, according to the Interbrand report. Tesco, the U.K.’s biggest grocer, announced plans last year to exit Japan because it can’t build a large enough business there.
Woolworths Ltd.’s brand, with an estimated value of $4.2 billion, led in the Asia Pacific region, followed by Uniqlo Co., a clothing maker owned by Yamaguchi, Japan-based Fast Retailing Co., at $2.95 billion, according to the report. Woolworths, Australia’s largest retailer, is based in Sydney.
Interbrand measures worth by assessing corporate earnings, the brand’s role in driving consumer decisions, and management’s commitment. The researcher has compiled lists of the top global brands since 2001, and retail-specific rankings since 2009.
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