Apparel

Competitive and macro forces impact category

Consumers expect style, value and experience

Apparel category brand value flattened in the 2015 BrandZ™ Top 100 Global ranking, following a 29 percent rise a year ago when apparel led all categories in value increase.

Competition got tougher and consumers got smarter. Well-informed by store visits and online research, consumers shopped across brand repertoires, mixing and matching wardrobe elements looking for the best value, which they often found at the fast-fashion leaders: Zara, H&M and Uniqlo.

These brands refined the store experience to entertain and impress shoppers with product range and display, and to lengthen the duration of shopping trips. The fast-fashion leaders also expanded their online presence, as new exclusively e-commerce brands entered the apparel category.

Fast-fashion brands operated in the sweet spot for post-recession consumers – at the convergence of affordable style and convenience. Their ongoing assortment updates invited more frequent shopping compared with brands that renewed styles seasonally.

However, the fast-fashion brands also felt the impact of global economic pressures and currency fluctuations. H&M, for example, sourced primarily in Asia where the dollar was strong, but priced much of its merchandise in the weakening Euro.

Meanwhile, low-priced apparel basics appeared in non-apparel outlets, even supermarkets. The consumer's ability to find value for money at both the premium and budget ends of the market squeezed brands in the middle.

The fastest risers in the BrandZ™ Apparel Top 10 were not the fast-fashion brands, but Tommy Hilfiger, an affordable luxury lifestyle brand, and Nike, the leader in sportswear.

Store and online expansion

Zara continued to focus on the in-store experience, from the sales floor to the changing areas. The brand implemented an information loop in which store employees reported to management what they heard from customers, providing insights that enabled the organization to better understand, location by location, what articles sell, or don't sell, and why.

Zara added to its existing 2,000 stores worldwide and expanded its online business by introducing Internet sales to Mexico and South Korea and putting a Zara site on China's Tmall. As part of its strategy to increase its presence in the shopping districts of major European and US cities, Zara purchased a building in New York's Soho, an important shopping district.

H&M added 325 stores in 2014 and ended the year with 3,261 brand stores in 55 markets. It planned to add several hundred more stores this year. New markets planned for 2015 include Peru, Macau, South Africa and India.

The brand also increased its online presence in 2014. Adding France, Italy, Spain and China gave it a presence in a total of 13 countries, and it planned to add nine more European countries this year. In a brand extension, H&M planned to launch a personal care line called H&M Beauty in 900 stores in 40 markets and online.

Top 10 Chart

Shifting control to stores

Uniqlo planned to continue its aggressive expansion in the US and Europe, where it opened a Berlin store in 2014, its first in Germany. The brand also opened its first store in Australia.

Uniqlo experienced especially strong results in Mainland China, Hong Kong and Taiwan, where it operated around 374 stores and planned to open 100 annually. Sales for Greater China increased 66.5 percent for the fiscal year 2014.

At the end of its fiscal year, Uniqlo operated 633 international stores and planned to add about 200 in the next 12 months. It operated 852 stores in Japan. The company also announced plans to shift more management control to the stores, to better match the product mix to local tastes and drive sales per store.

Uniqlo continued to differentiate with a focus on functional fashion, emphasizing fabrics with innovative technology that provide comfortable warmth or coolness.

Lifestyle brands

While the fast-fashion brands succeeded around style, value and rapid inventory rotation, Tommy Hilfiger, an affordable luxury brand built around an aspirational preppy lifestyle, rose 29 percent in Brand Value, the fastest riser in the BrandZ™ Apparel Top 10.

The strength of the US dollar weakened Ralph Lauren's international business and its share price declined. The brand's US sales took a surprising dip in early 2015 because of aggressive discounting by competitors.

Ralph Lauren implemented a restructuring plan to create a global brand management model as the company continued international growth, and it opened a flagship Polo store on Fifth Avenue.

Several factors negatively affected the sales and the share price of Hugo Boss, including weakness in the luxury sector in some important European and Asian markets and a slowdown in Russian tourism.

Athletic performance is mixed

The FIFA World Cup in Brazil presented an important opportunity for athletic apparel and footwear brands. Nike did not officially sponsor the World Cup, but instead provided kits to 10 of the teams. It also introduced new products at the Sochi Olympics and the Super Bowl.

The brand also focused on its digital presence, expanding the Nike ecosystem, which includes its digital fitness-monitoring devices. Nike's women's business grew at a faster rate than the men's business. A new advertising campaign called "Better for It" motivated women to exercise and improve fitness and health. Online business grew 42 percent.

Adidas officially sponsored the World Cup. Its profit declined sharply in 2014, however, because of difficulties in the Russian market and its US golf division. The brand planned to accelerate growth by concentrating on key world capitals, including New York, London, Paris and Shanghai. Over the next few years, Adidas planned to add 55 more US stores.

Despite increased competition, the overall strength of the athletic leisurewear category helped Lululemon slowly recover from negative publicity around the recall of a line of yoga stretch pants that were immodestly sheer.

Brand Building Action Points

1.

Build a total brand experience that's exciting and consistent across all touch points.

2.

Truly know your customer, his or her needs and behaviors, and cultivate a deep connection, showing through your actions that you value the relationship.

3.

Offer the consumer a combination of value for money that differentiates and emphasizes more than price alone, a less compelling proposition.

10-Year Trends & Analysis

Apparel brands score high in differentiation

The BrandZ™ Apparel Top 10 caught up with the Global Top 100 in differentiation during the past 10 years. That rise led to a big increase in Brand Value – 139 percent for apparel compared to 126 percent for the Top 100. Differentiation is one of the key drivers of brand success. An average brand scores 100.

Over the same period, consumers showed a greater interest in value. Consumers choosing to buy on price alone declined from 13 percent to only 6 percent, whereas the importance of the brand increased from 55 percent to 63 percent.

The Apparel Top 10 appear to have successfully persuaded consumers that they offer fair value for money, with pricing that sometimes even justifies a premium. The Fairness score of the Apparel Top 10, an indication of value, rose sharply in 2011, suggesting that brands listened to consumer spending concerns coming out of the recession and adjusted prices effectively. At the same time, the Premium measure also increased.

Six of the Apparel Top 10 brands – Adidas, Nike, Ralph Lauren, Lululemon, Hugo Boss and Tommy Hilfiger – tend to have a more premium offer. These brands are high Difference, scoring 139, while the successful value brands score 113 on Difference, still well above the average. Both sets increased over the period.

Among the value brands, Uniqlo and H&M ranked highest in Fairness, scoring 137 and 112 respectively. These brands compete on more than one dimension. They offer low price and perceived added value: for Uniqlo, clothes engineered for climate comfort; style in the case of H&M.

Apparel Top 10 exceed Top 100 in Fairness and Premium

Insight

Consumers seek store and online brand experience

Consumers are looking for the total brand experience. On one hand, there's the experience in the shop, where consumers want more than just the racks of clothes. They're looking for ways to experience the brand outside the products being offered. Those experiences can include interactive screens and being inspired by how people wear clothes and many other things. The same need for experience applies to the digital world – not just plain advertising, but total brand experiences, which are of course in line with the in-store experience.

Marieke van den Toorn
Partner
Millward Brown Vermeer
Marieke.Vandentoorn@mbvermeer.com

Future View

  • Lower prices and more competition will make it more important to engage consumers with the brand in stores and online.
  • Brands will not be able to ignore ethical supply chain practices following the Bangladesh factory disaster.
  • Online shopping will continue to increase as a proportion of total apparel spending.
  • The fast-fashion brands will continue aggressive global expansion with both physical and virtual stores.

Up 0.1%


Apparel - Top 10 Total Brand Value
$99.7 BILLION


Category Definition
The apparel category is comprised of mass-market men's and women's fashion and sportswear brands, but excludes brands viewed by consumers as luxury.


BrandZ Top 100 2015

BrandZ Global 2014 Report Top 100 Report

Top 100 Chart

Top 100 Infographic


Methodology and valuation by Kantar Millward Brown


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