The International Retail Race

Shopping is shopping regardless of country of origin—right?

All retail brands are created equally—right?

Not really.

As the internationalization of retail continues to grow who will win the global race?

The majority of retailers are stronger in their local markets. Analysis of the value created by retail brands shows that the 10 Best Retail Brands in the U.S. generate anywhere from 10 to 45 times the value generated by their relative international counterparts.

There are some brands that have been able to create global interest and appeal outside of their countries of origin: Amazon, H&M, IKEA and Zara all hold leading positions on Interbrand’s 2014 Best Global Brands ranking. Clearly, there is a major opportunity for other retailers to expand beyond their countries of origin to create businesses that connect with consumers across the world.

In reviewing the sizable discrepancies in value creation amongst retailers, it is clear that differences in GDP, business models, revenue and employee headcount play a role. Yet, even when we isolate for these elements, U.S. retail brands create more value for their owners than their international counterparts. Why?

In a review of Interbrand’s Best Retail Brands analysis over the last 3-5 years, we have isolated the role the brand plays in choice as a key differentiator amongst retailers. In the U.S., retail brands play up to 50 percent more of a role in consumer choice on average. For American consumers, the brand of the store plays a much larger role in determining where people shop. An indication of just how strong many U.S.-based brands are, it stands to reason that these retailers have incredible opportunity to build their brands abroad as well. The challenge, of course, will be ensuring an internationally relevant offer.

In comparison, many international players have gained success in recent years by creating more adaptable business models. A good example is German retailer Aldi, which has been setting supermarket trends and topping consumer satisfaction surveys with its sister brand, Trader Joe’s, in the U.S. Carrefour and Tesco, by contrast, have struggled recently. Both retailers still have relatively strong business models, but taking a few lessons from Aldi might not be a bad idea. From overall experience to offering a well-edited assortment of goods, non-U.S. retailers need to ensure that their brands play a larger role in the lives of shoppers. As geographical barriers continue to be broken down, consumers will be drawn to brands they can relate to and with which they can identify—and, in that case (at least in the near term), U.S. retailers will maintain the advantage.

U.S. retailers are, simply put, further along in terms of integrating their selling platforms and pushing the boundaries of various channels to ensure consistent and holistic consumer experiences. Once international retailers shift to a brand-led business strategy and ensure the brand plays a larger role in their customers’ lives, then we will begin to see a retail world that is far more international.

If you would like to contact Sarah White about any of the opinions or insights expressed in this article, please send an email to hello@interbrand.com.

Contributors

Brand Analytics Director