Digitization drives category growth
Coronavirus and geopolitics impact the results
Only six of the 14 categories examined in the 2020 BrandZ™ Global Top 100 increased in value, led by retail, up 21 percent, following a 25 percent increase a year ago, and technology, which rose 10 percent compared with a 4 percent increase a year ago.
For most of the categories—both those that increased and decreased in value—the gain or loss was modest and influenced by shopping behavior during the pandemic. In all categories, the economic repercussions of Covid-19 accentuated the impact of ongoing trends and dynamics.
Retail’s surge in value indicated how the category leaders have successfully transformed from exclusively bricks and mortar merchants to integrated online-offline, all-the-time operators. Both retail and technology reflected the impact of digitization and the ability of brands in those categories to both shape and meet the needs of people’s everyday lives.
Similarly, e-commerce and delivery or pick-up options helped moderate the impact of home quarantining and the closure of physical stores, restaurants, bars, and sports and entertainment venues on the apparel, fast food, and beer categories.
The lack of physical retail also hurt telecom providers as people purchased fewer mobile phones, which slowed revenue and subscriber growth for some network operators. The telecom provider category declined 4 percent. Responding to changing consumer attitudes about carbonated soft drinks, the beverages category rose 4 percent in value, but down from a 9 percent rise a year ago.
Brands most adept at digitization and closely aligned with consumer trends outperformed their categories. Although the apparel category remained unchanged in value, Lululemon increased 40 percent. Domino’s Pizza increased 12 percent, while the fast food category declined 2 percent.
The performance of brands based in Asia, including Ping An and AIA buoyed the insurance category, which rose 8 percent in value. Strength in China helped Estée Lauder rise 15 percent in value and Lancôme increase 11 percent, surpassing the 4 percent rise of the personal care category.
The shutdown of China’s economy hurt the luxury category, which continued to grow in value, but by only 3 percent compared with 29 percent a year ago. Luxury sales resurged with the pent-up demand unleashed after China’s economy reopened.
Of the seven categories that declined in value, the four that declined by the greatest percentage—cars, regional banks, global banks, and energy—encountered fallout from geopolitics as well as the pandemic.
Responding to regulatory pressure to reduce carbon emissions, car brands had planned to introduce extensive ranges of electric vehicles. But reduced driving and economic uncertainty chilled interest in big-ticket purchases.
Already struggling to balance stakeholder interests and produce a return on investment while evolving away from fossil fuels, energy brands were caught in a perfect storm when demand evaporated because of Covid-19, but global oversupply created an oil glut that drove the benchmark price of oil to zero.
Covid-19 compounded challenges for banks, already struggling with the low interest rate environment and fintech competition. Important revenue streams slowed overnight, including cross-border mergers and acquisitions, IPOs, and corporate borrowing.