The global apparel sector is likely to be one of the most heavily impacted by the coronavirus (Covid-19) pandemic, new figures show, with brand value likely to tumble by around 20%.
According to the ‘Brand Finance Global 500 2020‘ report, the brand value of the world’s 500 biggest companies is set to potentially lose up to an estimated US$1trn as a result of the coronavirus outbreak.
“The Covid-19 pandemic is undoubtedly going to hit the apparel sector hard,” says Richard Haigh, managing director, Brand Finance. “As brands negotiate store and factory closures, broken supply chains and a customer base that is facing unprecedented economic uncertainty, they will have to prepare for a tough and turbulent journey ahead.”
The report suggests agile brands are likely to 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.
For the sixth consecutive year, Nike has claimed the title of the world’s most valuable apparel brand, recording a 7% increase in brand value to US$34.8bn, as of 1 January 2020. The US sports giant has focused on implementing a pivotal distribution strategy move, drastically reducing the number of retailers selling its products, with the aim of regaining control of the brand customer relationship and improving profit margins.
Rival Adidas, however, has had a less successful year, recording a 1% drop in brand value to US$16.5bn.
Both companies have been forced to close stores following the Covid-19 pandemic and sales are going to take a hit. Adidas is expecting to lose over $1bn from sales in the first quarter of 2020 from greater China alone.
Levi’s, meanwhile, is the fastest growing brand in this year’s ranking, increasing by 38% to $4.1bn. While it has traditionally relied heavily on its men’s clothing range, it now boasts womenswear as the fastest-growing segment of its business.
In contrast luxury label Valentino (brand value $1.4bn) and specialty clothing retailer Gap (brand value $1.6bn) are the two fastest-falling brands in the ranking – both recording a 39% drop in brand value. Gap, in particular, has seen declining sales, the abrupt exit of CEO Art Peck, and plans to close 230 of its stores to try to counteract its sharp drop in earnings.
With a brand value of $14.6bn, Spanish retailer Zara has slipped down the ranks to sixth position following a 21% drop in brand value. Fellow Inditex Group brand Bershka has suffered a similar fate – its brand value dropping 26% to $1.6bn.