Controversial Kaepernick ad sees Nike pull way ahead of adidas in brand value

Nike is worth US$32.4 billion, the highest apparel brand value in the world, revealed the "Apparel 50 2019" report by global brand valuation and strategy consultancy Brand Finance. Its brand value has risen 16% since last year on the back of healthy sales growth. While sportswear rival Adidas showed similar growth at 17%, it still has much catching up to do with a brand value of US$16.7 billion.

Ahead of adidas in the second position is Spanish fast-fashion retailer Zara with a US$18.4 billion. It surpassed fashion competitor H&M, which saw a 16% drop in brand value to US$15.9 billion, putting it in the fourth place.

According to the report,

Nike's branding success is lifted by several of its marketing campaigns that made the front page.

This included last year’s “Dream Crazy” ad featuring Colin Kaepernick that sparked a social media backlash in the United States, with some customers going as far as to burn their Nike products. Despite controversy, Nike’s sales reportedly went up in the weekend following the ad’s release. More recently, the Oscars’ night saw the premiere of a powerful follow-up, “Dream Crazier”, which celebrates inspirational female athletes.

“Nike’s bold marketing makes it stand out in a busy marketplace of sportswear apparel brands. In a time when customers look for experiences and emotional connection, Nike’s offering comes with unambiguous messages and values that people can rally behind,” said Richard Haigh, managing director of Brand Finance.

Comparing Zara and H&M

Meanwhile, the report said that Zara's integrated store and online business is what gave it an edge over H&M. While Zara gained access to an additional 106 countries, H&M "struggled with a mounting stack of unsold inventory. The reported also noted H&M's change of UK women's wear sizes after repeated complaints from customers that the clothes are smaller than expected.

The effects of Zara’s controversial rebranding on customer loyalty remain to be seen in next year’s valuation.

Haigh said that brand value growth has been particularly strong among brands aware that consumers who shop both in-store and online spend significantly more than those who buy in bricks-and-mortar boutiques alone.

He added, "It pays to create a robust omni-channel shopping experience for clients. Collaboration with celebrities, the digital age, and an ability to feed fast-fashion habits whilst being ethically aware will continue to benefit brand value.”

Moreover, the report points to Japanese retailer Uniqlo as the one to look out for. With a massive 48% growth to US$12.0 billion, it is the fastest-growing apparel brand in the top 10. Besides Uniqlo’s international expansion and recent collaboration with tennis ace Roger Federer, the report also attributed the success to a robust supply chain and high-quality, innovative, affordable clothes that transcend gender, age and ethnicity are also supporting sales growth.

Brand Finance calculates the values of the brands by estimating the likely future revenues from royalties charged for its use when the brand is licensed in the open market. This is aligned to a brand valuation method compliant with the industry standards set in ISO 10668. Brand Finance analyses four aspects, namely brand strength index, brand royalty rate, brand revenues, and brand value.