Discount chain Aldi has been valued higher than Britain’s largest supermarket Tesco, in Brand Finance’s Brand Finance Retail 50 Report 2015.
The Brand valuation and strategy consultancy evaluates thousands of the world’s top brands annually to determine which are the most powerful and the most valuable. UK brands have been left counting the cost of the intense competition engulfing the retail industry. The worst performance came from Tesco which has become something of a magnet for bad news lately and dropped brand value by 37%. The setbacks began with unsuccessful US expansion efforts leading to wasted resources and a loss of focus at home.
Towards the end of last year it was hit by a huge accounting scandal, with profits overstated by hundreds of millions and its latest setback is the announcements of the first ever investigation by the grocery ombudsman over unfair treatment of suppliers. Tesco will be hoping that this year’s steep fall in brand value brings it to a low point from which it can now begin to recover.
It would seem however, that almost all UK retailers are struggling. M&S is down 1%, Sainsbury’s brand value is down 16% and Morrisons is down 25%. All are struggling as a result of the price war that has developed although perhaps the recently appointed David Potts can help reverse fortunes at Morrisons.
Competition from discounters is adding to the pressure. Lidl and Aldi have rapidly won over once sceptical customers with clever advertising to highlight that negative brand perceptions are misplaced. Aldi’s brand value is up 11% to $14.3 bn (£9.2 bn).
Asda has registered more modest growth of 2% but there are signs that the $8 bn brand may soon disappear. The recent adoption of Walmart’s ‘Save Money, Live Better’ slogan and integration of its ‘sunshine’ logo could foreshadow a full scale retirement of the ASDA brand.
Unsurprisingly, online giant Amazon is at the top of the retail league, followed by Walmart.