Luxury Fashion Brands: Observations and Reflections

I recall an earlier post in 2015 when I highlighted my confusion about “Adidas Going Ghetto.” This post is an addendum as Adidas still features prominently.

In teaching Brand Management to Undergraduate students, I had tasked them to undertake a brand audit any company of their choice. From the top of my head, I can recall brands ranging from BMW, Pandora, Greggs (the British bakers), Hermes, Sky (cable TV, internet broadband etc.), Zara, Burberry — and believe it or not, even person brands such as Eminen (aka Marshall Mathers, the hip-hop artist), among others.

Consequently, I became enthused about what exactly “Luxury Branding” was all about. So, out of curiosity, coupled with my reading of my students’ diverse brand audits, I sought to explore the concept first-hand, and at the time, it was the most recent Interbrand Top-100 most valuable brands that came to mind.

To my utmost surprise, only about nine (9) of the Top-100 in that list happened to be classed fashion brands — further broken down into “luxury” versus “apparel” in their respective categories. Yes neither Adidas nor Nike were categorised under this segment/sector or category, whichever works for you.

From an initial perusal of the nominees and candidates in the Interbrand Top-100, however, I noticed that some of the so-called luxury brands fared much worse than their siblings, which were, for some reason unknown to me, supposedly declassified. I am therefore, in dire need of your comments, observations, and explanations if you may, on the differences between these terms — luxury vis-a-vis apparel especially in the case where there is evident brand points-of-parity (POP).

Let me explain, especially for the purpose of those of you who are not particularly conversant with the “brand jargon.” The aforementioned POP refers to brands performing the same tasks (even thought they might be faring better than competition within their market segment/ category) and the POD (point-of-difference is a conferment of doing the job much better than competitors even with a shared POP).

So lets take the case of Nike and Adidas as an illustration. Both of these brands share the POP but compete along the POD.

In my last post Adidas was perceived as “Going Ghetto” with its tagline “There would be Haterz.” However, and more recently, it has become persuasive to argue that any comparison between Nike and Adidas might well be a case of comparing “Chalk and Cheese.” This might sound harsh at first glance, but if the 2015 Interbrand ranking is to be believed then you might begin to come to grips with the thrust of my argument.

While Adidas was ranked at an arguably dismal #62 with a brand value of US$6,811 million, Nike, valued much higher at US$23,070million ranked 45 places higher at 17th in the most recent brand value released by Interbrand — and this is just for starters. Interestingly while Nike’s ranking moved up 16% from the previous year (i.e 2014 Interbrand ranking), Adidas slipped by 8% over the same time period.

Based on these two pieces of evidence, it is obvious who the market leader is. Needless to add the following quote from Interbrand to put the “final nail to the coffin” of superiority:

After experiencing a drop in U.S. sales in 2014, due to its lagging golf segment, the Adidas Group made building upon its strong soccer roots a top priority. Through partnerships with teams (Real Madrid, Bayern Munich) and key players, as well as a FIFA World Cup sponsorship, the Adidas logo became pervasive on the soccer field and beyond. It even managed to secure contacts with Juventus (EUR €139.5 million) and Manchester United (USD $1.3 billion) after each ended their kit deals with Nike.

Irrespective of the evidence above, what behoves me is the nomenclature between apparel and luxury and especially so in instances of clearly more “POPs” than “PODs”. I am confident I would be forgiven to conclude that, on the balance of probability, Adidas seems to be picking up from where Nike left off, which clearly pits the former as a follower compared with the latter — in business strategy parlance.

Overall it looks like the accolades showered upon Adidas by the same Interbrand that ranked Adidas 45 places lower than Nike, might be nothing but pep talk. As Interbrand described the efforts of brand revitalisation attempts at Adidas there are yet “many rivers to cross”:

By continuing to develop clout among sports fans as well as innovation-savvy and socially conscious customers, Adidas is picking up speed as it pursues its new growth goals,” might not have compensated for the gap in rankings with the “daddy” of the category.

To sum up, I just wanted to highlight a few statistics that would inform my next post on Luxury Fashion Branding. Luxury and “just” Apparel are terms that need to be rationalised and especially so in the context of fashion brands and/ or branding.

Originally published at https://www.linkedin.com.