BoF can exclusively reveal Interbrand’s Best Global Brands 2018. The value of luxury brands is increasing faster than any other sector, with Louis Vuitton, Chanel and Gucci leading the pack.
NEW YORK, United States – Louis Vuitton, Gucci and other luxury houses are climbing the ranks in Interbrand’s annual ranking of the world’s most valuable brands.
Apple, Google, Amazon, Microsoft and Coca-Cola top the list, which measures financial performance, the ability of a brand to influence purchases and competitive strength. But luxury was the fastest-growing sector, with the value of the nine brands included in the 100-company list soaring by 42 percent over the last year. That was reflected in the rankings, with Louis Vuitton climbing one spot to 18 and Gucci leaping from 51 to 39. Chanel entered the list in 23rd place (the privately held company was included after releasing financial results for the first time earlier this year).
Luxury is growing at a pace not seen since 2004, when conglomerates were first flexing their muscles by expanding their brands into emerging markets. The sector is benefitting once again from rising spending in China and other developing economies, and brands like Gucci have won over younger consumers with updated designs and savvy marketing campaigns.
“It is astonishing. Luxury is the biggest story of the report,” said Rebecca Robins, global chief learning and culture officer at Interbrand. “It’s their ability to connect to cultures and next generations. They have cracked the code by having a point of view in the market. Luxury is a space of excellence, whether its fashion, leather or jewellery.”
Louis Vuitton has held on to the top spot among luxury brands, as it continues to respond to a new generation of millennial shoppers by staying at forefront of fashion’s adoption of streetwear. Gucci and Louis Vuitton are among the fastest growing brands, alongside Amazon, Salesforce and Netflix, according to the ranking.
“Louis Vuitton’s strength of point of view runs through everything they do. They have been relentless with their engagement with millennials, they’ve gone a lot deeper with their appointment of Virgil [Abloh] and they’re investing in people. You see a similar thing at Gucci,” Robins said.
The luxury market’s continued ascent increasingly depends on China. The sector’s brands took a hit in 2017 after the Chinese government cracked down on corruption. The US-China trade dispute and signs of an economic slowdown in China has tempered forecasts but to date luxury executives have been upbeat on Asian demand.
After Chanel, whose cult-like following and new fiscal openness amid demand for ethical transparency from younger shoppers, placed the brand at 23 comes Hermès, holding steady at 32. The French brand is the third largest by value in luxury and continues to maintain a double-digit growth in brand value. “They still command a place of power as a meta luxury brand,” Robins said.
Gucci, whose trajectory from 51 to 39 is the biggest mover in the luxury sector, marks them as “a benchmark of a modern legacy brand” Robins said. The pairing of chief executive Marco Bizzarri and creative director Alessandro Michele “who not only connect together as a management team but also with the cultural zeitgeist” helps them outpace the sector. Kering said first-half sales at Gucci climbed 36 percent.
Jewellery and watch brands slipped in the rankings. Richemont-owned Cartier, who has been buying back unsold stock in Asia to prevent it leaking out to discounters, fell two places to 67. Tiffany, whom chief executive Alessandro Bogliolo is seeking to turn around by luring millennials with new products, advertising campaigns and overhauled stores, fell two places to 83.
Rounding out the rankings were Dior, another LVMH owned-brand whose sales have surged under Maria Grazia Chiuri’s creative leadership. Dior climbed from 95 to 91. “Dior was always about having a bold vision of the world, the point of view Chiuri has carried forward, the innovation with the Joy fragrance, reinventing the saddle bag,” Robins said.
Burberry dipped from 86 to 94, the biggest decliner in the sector, as its shifts gear with a new management team and works to elevates its positioning to a true luxury brand. “It’s still a time of transition but it seems to be a lot of positive change,” Robins said, citing the lauded catwalk show from Riccardo Tisci and their pledge to stop burning unsold goods and using fur. “They’re definitely one to watch as they regain their point of view as a true luxury brand.”
Prada also fell, dropping one place to 95, as it works to engage shoppers digitally after previously downplaying e-commerce. The brand is expanding its product and price ranges, including a revival of the Linea Rossa collection of sportswear.
“Certainly what Prada has held on to is the strength of its character and maintaining that differentiation,” Robins said. “Now it needs the strength of its business model to reconnect with its character and point of view of the creative. There’s certainly much more love for Prada. One to watch.”