UK brands facing major crisis – and it’s not the one you’re thinking of
Top 75 brands fall in value, and COVID-19 is not entirely to blame
The leading 75 brands in the UK have a combined brand value in 2020 of $229,288 million (around £181 billion). This represents a 13 percent fall since a year ago, and is the second consecutive year of decline in brand value in the UK. At this rate, there will not be a single UK brand in the Global Top 100 within three years. Yes, these results come against the backdrop of a global pandemic and with the cloud of Brexit still casting a shadow over consumer and business confidence. But the extent of the decline in value far outstrips that seen among leading global brands and points to a bigger, deeper challenge for UK brands – one that getting “back to normal” will in no way resolve.
UK brands lack differentiation – the key to long-term growth
Potent new analysis of brands from over the world shows that being perceived as very different to the rest of a category is the key factor behind long-term growth in brand value. What’s worrying for UK brands is that there is a general lack of differentiation – brands frequently focus on becoming well known at the expense of being well known for something that really matters to consumers. Being different is not just about the product or service being offered, but also the experience consumers have of a brand, and it increasingly relates to how brands are responding to environmental and social issues.
Challenges huge, but bold brands show what’s possible
Shops have been shut, supply chains interrupted, travel brought to a standstill and people confined to their homes for months at a time. That all makes for incredibly tough market conditions. But even in this climate, brands that held their nerve and have been bold enough to invest in innovation and brand-building have been reaping the rewards, with five of the Top 75 posting double-digit growth. There are big, urgent lessons to be learned from those businesses that are bucking the trend, and brands should be encouraged by the fact that there are sparks of brilliance from a range of sectors.
Confidence the key to recovery and growth
Brands need to fuel a new cycle of confidence if they are to grow brand value, sales, and shareholder returns. They must be bold, transforming their businesses to meet changing consumer priorities and values, and to create all-important differentiation in their category. In this way, they can inspire consumer confidence that will deliver sales and loyalty, which in turn will provide brands with the means to continue to invest. The starting point for this cycle is now, and it won’t happen by itself.
Ranking reflects variety of UK daily life
There are 25 categories represented in the Top 75, spanning every aspect of consumers’ daily lives. From the retail brands that populate our High Streets to the clothes we wear, what we eat and drink, how we travel, how we entertain ourselves, how we stay connected, power our homes and treat ourselves. Some categories have clearly benefited from this year’s events as a result of more eating, drinking and entertainment taking place in the home, while luxury, retail, gambling and car sales have inevitably taken a hit. But in most cases, the crisis has been a catalyst for growth or decline, rather than the sole cause of it.
Big business dominates ranking, but remains vulnerable
The Top 5 brands in the UK ranking are unchanged since last year; all have experienced double-digit declines in brand value so retain their relative positions, and they keep their places at the top of the list because their scale is so much more vast than other brands in the country. But all of the Top 75 need to be wary; size and prominence are no guarantee of success, especially at a time when many consumers are rethinking which brands are right for them. As this year’s new entries perfectly illustrate, smaller, more agile businesses can have a disproportionate impact on consumers’ lives – and reap the rewards.
Change provides opportunity to get closer to consumers
The fact that so much has changed this year means people are looking afresh at the brands that they make part of their lives. They see brands as being able to provide comfort and creativity, meaning, reliability and leadership. Brands that invest in showing they have these attributes stand to gain considerably from a world in flux. The ability to win consumer trust will be a powerful driver of growth in the current conditions.
Top Takeaways for Marketers
Seismic shifts in the business landscape and consumers’ attitudes mean there are tough times ahead, but also big opportunities for brands to engineer growth in the months and years ahead. Brands should focus on the following:
- Trust will be at the heart of post-2020 success. Retaining and inspiring consumer confidence is critical as brands strive to return to growth and establishing and defending consumer trust will be a vital part of this.
- Investment in brand is a powerful form of defence in tough times. Strong brands decline less and bounce back faster from recessions. But UK brands need to invest more in building the brand equity that provides this cushion if they and their shareholders are to take a quick route to recovery.
- Ethical behaviour is no longer an optional extra. Environmental and social concerns have become increasingly mainstream, and consumers want brands that reflect their views. Brands must take care to ensure their policies and behaviour match expectations; hollow PR stunts will be called out for what they are.
- Innovation starts with the right mindset. To truly stand apart from the competition, brands must strive to be innovative, whether that’s through their products, their policies, their behaviour or all three. Then they must use smart marketing to ensure consumer perceptions keep pace with brand reality. This requires not just big ideas, but also the courage to turn ideas into action.