Wednesday, 15 April 2020

Apparel firms to lose up to 20% of brand value post Covid-19




The coronavirus pandemic is radically impacting many industries around the world, and among the sectors that will be hit the hardest is apparel, with clothing firms facing a potential 20% loss in brand value.

According to business valuation consultancy Brand Finance, which assessed the impact of Covid-19 based on the effect of the outbreak on enterprise value, the apparel sector will be one of the most affected after the crisis subsidies.

“The Covid-19 pandemic is undoubtedly going to hit the apparel sector hard – Brand Finance has predicted that apparel brands could face up to a 20% drop in brand value. As these brands negotiate store and factory closures, broken supply chains and a customer base that is facing unprecedented economic uncertainty, they will have to prepare for a tough and turbulent journey ahead,” said Richard Haigh, managing director of Brand Finance.

But as with most sectors, the damage that will ensue will greatly depend on how brands respond to the challenges. Agile companies are likely to fare much better than their inflexible counterparts, and retailers with innovative e-commerce ideas will come out stronger.

The warning coincided with the release of Brand Finance’s ranking of the most valuable apparel brands in the world.

Nike wins again

For the sixth consecutive year, Nike has claimed the title of the world’s most valuable apparel brand. The sports brand enjoyed 7% increase in brand value in 2019, reaching $34.8 billion. This was achieved by a shift in its distribution strategy, with the firm choosing to drastically reduce the number of retailers selling its products to regain control of customer relationships.

Gucci followed as the second most valuable apparel brand, growing its brand value by 20.2% to $17.6 billion, while Nike’s bitter rival Adidas ranked third with a value of $16.5 billion, down 1% on the previous year.

Louis Vuitton, with a brand value of $16.5 billion, and Cartier with $15 billion complete the top five.

Zara, H&M and Uniqlo slip down

After a 21% drop in brand value, Spanish retailer Zara slipped down the ranks to 6th position with a brand value of $14.6 billion. H&M also suffered a 12.7% decline to $13.9 billion, coming in at 7th. With a brand value of $13.7 billion, Chanel is featured in the 2020 ranking for the first time at number 8, followed by Uniqlo ($12.9 billion) and Hermes ($12 billion).

Levi’s is the fastest growing brand in this year’s ranking, increasing 38% to $4.1 billion, while Rolex ($7.9 billion) is the world’s strongest apparel brand, being included in the catch-all title of 'apparel', even though it's best known for its luxury watches.

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