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Alibaba Now World’s Most Valuable Retail Brand

Today’s most valuable retail brands come sans physical stores, and e-commerce kings like China’s Alibaba are fueling fierce growth in the sector.

Alibaba was ranked world’s most valuable retail brand at $66.4 billion in the 10th annual BrandZ Top 100 Most Valuable Global Brands published Wednesday by brand consultancy Millward Brown and WPP.

The value of the retail sector as a whole grew 24 percent, tying it with technology as the fastest rising category—driven largely by Alibaba’s arrival on the scene. The e-commerce company qualified for the Top 100 after its IPO last September and it climbed straight ahead to lead the Top 20 retail brands list.

Amazon followed Alibaba with a $62.3 billion brand value, and Walmart was a far-off second runner-up, valued at $35.2 billion.

“Alibaba and Amazon have no physical stores but surpassed Walmart, which operates over 10,000 stores worldwide, and ranks third in the Retail Top 20. This irony illustrates the impact of e-commerce on the radical transformation and rationalization of retail,” the report noted.

Online retailers accounted for more than half of the Retail Top 10 brand value compared to just 14 percent in 2006—brand value among these e-tailers has increased 645 percent since then.

Mainstream brands, which have been the sector’s key casualties, had over half of the brand value in 2006 and now have less than one fifth. Brand value among the mainstream fell 41 percent in that time.

This year’s BrandZ list looked back at trends that drove value over the last 10 years, noting, “Consumers now view high quality products that offer good value for money as a basic entitlement. They scrutinize brands and favor those that protect the health of their customers and the planet. All these changes happened in the context of the other ubiquitous disruptor – technology. Technology transformed every brand in every category over the past decade – sometimes radically.”

Ten years ago, consumers may have expected a trade-off between price, selection and convenience, but now they want it all. They want the broad range and sharp pricing that big-box stores offer, but with more personalized products and services plus supreme convenience, according to the report.

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“We are at the threshold of the new normal,” researchers reported.

Anne Zybowski, Kantar Retail’s VP of retail insights is calling today’s normal “retail rationalization,” or the idea that fewer brands will meet broader needs.

For retailers, it’s now all about gaining share of life.

“To succeed, retailers need to build and sustain loyalty at a new level,” Zybowski said. “They must start with a shopper-first mentality that’s more than a slogan on the wall.”

Mining big data to drill down into more than just general demographic categories and working toward the kind of personalization that goes a step further to deliver on convenience and streamline the individual shoppers’ routines will be what keeps retailers relevant.

Claire Capeci, global president of retail for J. Walter Thompson, said multichannel shoppers are better customers. For today’s consumers, the point is simply to make shopping easy from anywhere at any time, but retailers need to not only make omni-purchasing possible, they also need to expose customers to experiences that create desire.

“It shouldn’t matter whether the customer purchases online or in-store, if they are doing both, they are buying more,” Capeci said.

Looking ahead, successful retail will be about four key points, according to the BrandZ report:

  • As successful retailers gain a greater share of the consumer’s life, consumers will shop at fewer big retailers. To remain in consideration, retailers need to personalize their offerings and service, improve convenience, and provide a compelling and differentiating brand experience.
  • Big data will be critical to understanding individual shoppers and providing a personalized service that edits the product range into a manageable and relevant selection. While there will be fewer big retailers, new start-ups that meet specific needs are likely to appear
  • Store experience will increase in importance as a place to express the brand. The social aspect of shopping will continue to be important. It needs to work harmoniously with the shopping consumers do online when looking for a wide range and convenience.
  • Mobile will be critical, especially the location-based apps that enable the retailer to interact with the shopper in real time and offer purchasing opportunities that are personalized to fit the shopper’s product preferences and budget.

Download the full BrandZ report here.