BrandZ™ Analysis: Category Changes
Value of every category
grows for the first time
Brand-building initiatives counter disruptions
Every category grew in value for the first time in the history of the BrandZ™ Global Top 100. The retail category again led the growth, increasing 35 percent, more than doubling the 14 percent rise of a year ago. Several categories rebounded significantly. Insurance increased 34 percent, after declining 1 percent a year ago. Similarly, global banks rose 24 percent from a 1 percent decline. Brand-building Initiatives to contend with ongoing disruptions helped propel value growth as the economy improved.
Retail was a bellwether, the clearest example of a category disrupted by technology. The category was the first to be severely battered by technological change, with the advent of e-commerce in the early 1990s, and the smart phone a decade ago. The survivors transformed, the most successful becoming vast ecosystems, linking online and offline with sophisticated data collection and analysis to ensure consistent customer experience from the start of the circuitous path to purchase to pick-up or delivery.
Two of the e-commerce leaders, Amazon and Alibaba, drove much of retail category value growth. And they represented the poles of retail and technology development—the US and China. Because vast ecosystems enabled Chinese consumers to conduct extensive aspects of their lives on mobile platforms, the China became a vision of future consumer behavior across many categories. And Chinese consumer spending influenced the growth of many categories, including retail, insurance, luxury, technology, regional banks, fast food, personal care, cars, apparel, and beer.
Technology which rose 28 percent in value, disrupted all categories, including technology. The business-to-consumer brands continued to achieve massive scale but also encountered more consumer skepticism because of that scale and the compromise of personal data, which posed a threat both to consumers and to the business models of many of the tech brands that depend on vast troves of personal data to improve their products. The border between business-to-consumer and business-to-business became more porous. And the B-to-B brands moved further along in their efforts to adapt their businesses to the cloud.
Trends and disruption
Propelled by astute branding and the rebound of China’s economy, luxury also rose 28 percent in value. Bright colors and fun streetwear styles appeared both in luxury and apparel, as consumers sought comfort and escape from unremitting negative news reports about wars, natural disasters, and threatening political changes. The interest in indulgence also touched personal care. These three categories, especially apparel and personal care, also experienced the disruptive effects of small brands, or non-brands, with convincing stories, competitive prices, and easy availability on the internet.
Fast food also benefited from the interest in indulgence as consumers reconciled their preference for healthy eating with their desire for taste and comfort food. Burgers were back. The fast food category increased 13 percent, compared with 7 percent a year ago, having upgraded its restaurants, improved menus, and figured how to provide meals that were healthier and authentic to the brands. The soft drinks and beer categories were harder hit by consumer concern with health, and the changing drinking preferences of young people. Those categories rose 4 percent and 3 percent, respectively.
The financial services categories—global banks, regional banks, and insurance—progressed in their use of technology to improve customer experience, add efficiencies, and reach new, younger consumers. Its 34 percent rise in value made Insurance the highest category gainer after retail. Chinese and Asian-focused brands drove much of that gain because of local economic growth and rapid adoption of fintech.
Regional economic strength drove the 16 percent value rise of regional banks. BCA, an Indonesian bank, entered the BrandZ™ Global Top 100. Almost a decade after the financial crisis, the global banks reported strong results, with value rising 24 percent after a decline of 1 percent a year ago. However, the banks contended with the prospects of open banking and blockchain, and a changing regulatory environment.
Both the oil and gas and cars categories contended with the uncertain future of carbon, and the need to sustain their businesses today while preparing for a future based around different energy sources. The large integrated oil companies shifted their investments from oil to gas. The European companies focused more attention on alternative fuels, while the American companies were preoccupied with developing enormous shale reserves at home.
Car brands sold big SUVs, the consumer model of choice throughout the world, while at the same time the brands developed car-sharing businesses and other mobility options. Driven by consumer interest in SUVs and luxury, car sales grew in most regions, although at a slower pace, even in China. On the strength of a new luxury model, Maruti Suzuki, an Indian car brand, entered the BrandZ™ Cars Top 10.