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Apparel sector may lose 20% in brand value: Brand Finance

Apr '20
Pic: Shutterstock
Pic: Shutterstock
The brand value of the world’s 500 biggest companies is set to potentially lose up to $1 trillion because of the COVID-19 outbreak, with the apparel sector being one of the most affected facing a risk of losing a fifth in brand value, according to the Brand Finance Global 500 2020 report. Agile brands may fare much better than their inflexible counterparts.

With new consumer behaviour habits likely to be borne out of the pandemic, brands will look towards greater innovation in their e-commerce businesses and the potential reassessment of their store business models, it said.

For the sixth consecutive year Nike has claimed the title of the world’s most valuable apparel brand, recording a 7 per cent increase in brand value to $34.8 billion, as of 1st January 2020. Nike’s rival Adidas has seen a less successful year, recording a 1 per cent decrease in brand value to $16.5 billion.

Both brands, however, have been forced to close stores following the pandemic and thus sales are going to take a damaging hit. Adidas announced that it expects to lose over $1 billion from sales in the first quarter of 2020 from greater China alone. Both brands will need to rely heavily on their e-commerce businesses to protect themselves as much as possible, a press release from London-based Brand Finance said.

Denim brand Levi’s is the fastest growing brand in this year’s ranking, increasing an impressive 38 per cent to $4.1 billion, as of January 1. Last year was a solid year for the brand, as it celebrated its highest growth rate in more than 25 years and undertook an extremely successful initial public offering after trading privately for over 30 years.

In contrast Italian luxury fashion brand Valentino (brand value $1.4 billion) and Gap (brand value $1.6 billion) are the two fastest falling brands in the ranking both recording a 39 per cent drop in brand value.

With a brand value of $14.6 billion Spanish retailer Zara has slipped down the ranks to 6th position following a 21 per cent drop in brand value. Fellow Inditex Group brand Bershka has suffered a similar fate, its brand value dropping 26 per cent to $1.6 billion.

Brand Finance has assessed the impact of COVID-19 based on the effect of the outbreak on enterprise value, compared to what it was on January 1 this year. Based on this, the company estimated the likely impact on brand value for each sector.

Fibre2Fashion News Desk (DS)

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