Ideations

A Retail Publication Issue 1 2012

How Design Drives Retail Brand Value

Design has ascended to great importance in the 21st century. Its practically taking over the marketplace with its influence. We could argue, in fact, that design is the retail experience since design is both sensorial and cognitive in nature. Because shoppers make purchase decisions every day based on sensory experience, a strong design sensibility is a vital component of a healthy brand experience. Design enhances communication and identity. It conveys meaning and values, says Scott Jeffrey, Chief Creative Officer, Interbrand Design Forum. There are brands that clearly value design, both expressing and protecting it across every touchpoint. There are other brands where design takes a back seat to operational effectiveness or efficiency, says Justin Wartell, Executive Director, Strategy and Analytics, Interbrand Design Forum. But regardless of how an organization views it, weve seen clear connections between a strong, compelling design and brand value creation. By studying the companies that do it best, the Interbrand team has identified five principles that when applied bring the relationship between design and value to life. Simplicity wins Although jumble and intrigue has its place, complexity doesnt work in retail, says Jeffrey. Simple intuitive design wins every time. You may think simple equals boring, but thats not how human sensibility works. Use design to tell your brand story as simply but as compellingly as possible, and the audience your shopper will provide its own interpretation. Japans Uniqlo apparel store is an excellent example of zen-like simplicity. Shoppers get it. The environment asks the shopper to slow down, become aware of the offerings quality, variety, affordability and beauty. The store in total is a powerful medium for communication through forms, materials, textures, light and color, says Jeffrey. If Uniqlo didnt speak in a unique and recognizable language through these universal forms, it would be just another trendy college clothing store. Shopper empathy Design succeeds best when it is conceived and delivered through the eyes of the shopper. They naturally respond to gestures of empathy. Does your customer need inspiration or enlightenment? Provide it through design and merchandising. Do they need new ideas to address the day-to-day challenges of modern life? Create a store organized by solutions or offer ultra convenience at every touchpoint. Shoppers will credit your brand for its relevance and responsiveness. Think of how beautifully The Container Store speaks to the shoppers need for life-improving organization. Retailers are learning to respond quickly to consumer behavior changes induced by technology, economic and time pressures. Last season, Sears gave the overburdened, harried holiday shopper a break by putting virtual toy shopping walls in airports, malls and movie theaters. QR code purchases made from smartphones were delivered to the doorstep. Empathy raises a brand above commodity status to true relevance.

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Retail Observations

Almost Human: The Four Internal Factors of Brand Strength

Protection: proprietary elements, scale and geographical spread help secure the brand. It wont surprise you that the brands that score highest on these four internal attributes are the most valuable brands in the U.S., according to Interbrands 2012 list of Best Retail Brands. Take clarity. Targets brand partnerships and house brand developments all revolve around the notion of Expect More. Pay Less. Its clear the brand intends to stay strong in this rite. Walmarts high score on commitment translates directly into shopper loyalty. The merchants 2010 media spend was $869 million. The culture fits the brand. Walmart thoroughly communicates its beliefs and values internallyrespect, service and excellence. CVS/pharmacy is a great example of a brand strong on scale, geographical spread and the proprietary elements of protection. The drugstore takes care to protect the equity of its banner brand as it continues to expand its portfolio of private labels. Its new urban format is helping it compete in denser markets. Amazon.com is tops in responsiveness, built to transform when it finds opportunities to compete in new markets or serve new customers through technological innovation, more convenience and better prices. Studying a company through the lens of brand is incredibly enlightening. Its a holistic and accurate way of understanding how brand makes money for business. The ten components of brand strength provide a multi-faceted perspective that help you focus and recalibrate. The marketplace keeps changing, but the principles of strong brands hold true.

Great brands, like great people, start from within. The friends you most admire are most likely smart, self-aware, honest and live their lives with integrity. According to Interbrands study of the nations top retailers, the brands Americans rely on most have a similar strength of character. But at Interbrand we refer to it as brand strength. While we dont measure the character of individuals, we do apply our very useful valuation methods to brands. Why? To determine a brands ability to generate demand for the future. Even though a brand has intangible attributes, it can be valued as an asset, often worth millions. And like any asset, it can be put to work to drive business. But first, a company must understand the way its brand works. Thats where we come in. Interbrands valuation methodology uses three elements: financial performance, the Role of Brand (the portion of the purchase decision attributable to brand) and Brand Strength (the ability of a brand to secure future earnings). There are ten Brand Strength factors. Six are externalmeaning they are defined by public perception. Think about these factors in regard to your favorite retail brand:

Relevance: does the brand fit you, its customer? Authenticity: is the brand based on a defined heritage or truth? Differentiation: the degree you perceive it to be different from its competitors. Consistency: across all touchpoints, not just in every store. Presence: is it seen and talked about positively everywhere? Understanding: do you have an in-depth knowledge of its distinctive qualities? With just that brief exercise, you can see that even your favorite brand has room to improve. But the factors I find most interesting most humanistic are internal to an organizations workings. They serve as the foundation of brand strength. Remember how Toyota disastrously abandoned its fundamental internal principles in pursuit of market share? Thats how important this is. Clarity: Everyone from the CEO to the mail clerk knows what the brand stands for and understands its values, positioning and proposition. Commitment: the company invests in its brand. Responsiveness: the brand is able to evolve and renew itself despite shifts in the marketplace.

Bruce Dybvad

Lessons from the Best

Five takeaways from Interbrands 2012 Best Retail Brands
Interbrands annual study of the worlds move valuable retail brands provides some keen insight into matters at the heart of the retail industry. Here are the leading thoughts around five top issues: Be less predictable, more agile Now that commerce is available all the time, any place, online or off, levels of business predictability have been reduced. For retailers, a fluid and uncertain market is the new normal. Responsiveness now trumps efficiency. When a brand is responsive to its shoppers behaviors and expectations, it adds value to its goods and services. Added value allows a brand to earn more. Location is redefined as reach and responsiveness through store count in combination with online impressions and mobile transactions, as well as real-life social interactions. Its a major challenge for an agile brand to keep all touchpoints connected and aligned. So is maintaining the expected level of customer service, which in todays competitive landscape becomes exponentially more critical in helping every shopper interaction lead to brand adoption. Use digital to simplify Just because youre digital doesnt mean youre helpful. The prevalence of low-utility apps, and gimmicks like augmented reality fitting room mirrors are usually short-lived experiments. Consumers find that such things merely complicate their lives. However, digital tactics used in the service of targeting and segmentation can help deliver something shoppers value as much as price; such as advance notices, personal reviews or recommendations from peer shoppers. Todays customers gravitate toward simple solutions and more efficient shopping. In that respect, most retailers still have unrealized opportunity to delight their customers with or without digital. Improved customer service, easier merchandise returns and a reduction in out of stocks, which still reach up to ten percent in stores on average, could have far more relevance. Understand the new pathway to purchase For many years, marketers had a distinct way of examining consumers decision process. In theory, when need arose, the consumer would consider a range of brands and methodically narrow their options to a final choice. In response, brands addressed their points of awareness and purchase through advertising and promotional spending. The pathway today is more complex as consumers connect digitally with myriad brands through channels outside the marketers influence. They spend significantly more time in the research phase. Thanks to social media and online reviews, consumers remain engaged with products for an extended period of time after the purchase, evaluating and sometimes advocating for the brand. Smart retailers are studying this path to find leverage and insights they can profitably act on. It requires devoting resources to identify the pathway and study its intricacies, then applying the insights to revise strategy, media spending and organizational roles. However, simply watching and listening to shoppers still works because despite all the digital research, many decisions are still made in the store. Be multidimensional Over time every brand achieves a level of maturity and reliability that gives it less surprise and relevance. Where do you go after that? How does a brand develop, year after year, a renewed experience with enough depth to triumph? By developing beyond a shoppers need for function and identity by adding more emotion, richer texture and dimension. Brands can revive their relevance by going deep into their original attributes to find a fresh connection that turns the ordinary into something meaningful. Its been said, if shoppers were only interested in price, there wouldnt be much retail. The variety of retail we have today proves that different people value different things when it comes to acquiring goods. The trick is to find the value beyond the transaction. The worlds best brands know what the customer values, and work relentlessly to provide it for them. Think omnichannel Many a traditional retailer has treated its e-commerce operation almost as an afterthought, leaving it without resources or commitment. The typical state of cross channel commerce remains poor, plagued as it is by information silos, organization issues, and non-interoperable programs that frustrate customers. The best retail brands are taking steps to fix the problem, but there is a long way to go and not much time. Its estimated that by 2014, almost every mobile phone will be an internet-connected smartphone and 40 percent of Americans will use tablets.

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How Design Drives Retail Brand Value

Brand voice Apply your brand personality or voice consistently and in a compelling way, says Wartell. Even if its unexpected. Even if it defies convention. Weve seen plenty of missed opportunities to connect with and engage the customer because brand touchpoints have been overlooked or underestimated. Great brands have presence. They are able to generate excitement, even love. They are talked about because they find ways to become part of the visual landscape of our lives. Target has amazing discipline and consistency with its beautiful whimsy. Touchpoints are playful and distinctive. Target has a history of defying convention, such as its vertical fashion show on a skyscraper, and buying out all the ads in The New Yorker. Its passion played out in design creates anticipation and generates buzz. Design abhors a vacuum, warns Wartell. What is not designed with an eye to managing and crafting the experience will inevitably be designed by the shopper, a supplier or by accident. Provoke the audience Humans seek novelty and entertainment. But novelty has a habit of wearing off. Design has the obligation to provide newness and entertainment, says Jeffrey. While maintaining the integrity of a great brand idea, design can surprise, delight and push boundaries. It can push so far as to break paradigms of tired categories, allowing a brand to take ownership of a unique, protectable experience. Australias health and beauty chain, Aesop, believes good design can improve your life. The brand collaborates with designers and architects to create stunning product showcases akin to art installations. By doing so, it has managed to break out of the chain mentality to create distinct branded environments that defy categorization. Find your truth Lastly, great brands exist for a reason beyond the transaction. Retailer T2 stops just short of a crusade when it comes to converting people to the sensory experience of tea. To enter a T2 store with its striking design and colorful modern edge is to have a sensory experience. Shoppers perceive the brand as rich in character, credible and distinct, says Wartell. The authenticity of its claim, the clarity of its message and the companys internal commitment to the brand make it a powerful contender. Any retailer thriving today knows its competing on experience as much as product. Brands must devote themselves to delivering value tirelessly through the pursuit of remarkable experiences. Brand value is too important an asset to leave to chance.

Lessons from the Best

The challenge omnichannel represents is great, but so are the rewards. Retailers will find that the digital and physical arenas complement each other instead of competing, increasing sales and lowering costs. But to achieve that, entrenched antidigital retailers will have to overcome their shelf-centric way of thinking and pick up the pace of change. Brand-led companies will have an advantage when it comes to adopting a new perspective that allows them to integrate disparate channels into a single profitable presence.

To download the full 2012 report on the most valuable retail brands in the world, go to www.BestRetailBrands.com.

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7575 Paragon Road, Dayton, Ohio 45459 P +1 937 439 4400 F +1 937 439 4340 retail@interbrand.com Bruce Dybvad, CEO Jill Davis, Editor James Bacon, Design/Production 2012