Amazon has just been announced as the world’s most valuable brand with its brand value increasing to US$150.8 billion. According to Brand Finance Global 500 report, which considers the total financial value a brand contributes to its owner, this puts Amazon ahead of Google and Apple. The world’s largest online marketplace started as an online bookstore but 2018 cements its status as a digital powerhouse in e- commerce and cloud computing software.
For the first time since the annual Global 500 report was created back in 2007, tech titans have nabbed the top 5 spots showing the dominance and power of technology sector in this digital age. It only reflects that Amazon’s online retailing has unlimited size and scope with the proven ability to enter almost any Internet market and succeed through its internet growth.
Closer to Home
Amazon has made headlines since it’s Australian launch in December 2017, putting further pressure on department stores like Myer and David Jones, and electronic specialty stores like JB Hi Fi that have already faced the pressure of online retailers. Myer has already faced the diminishing returns of their department stores after reports show net profits dropped by 80% over 2017. After these disappointing results, Myer stated it will reduce their physical space by up to 20% over the coming years and have plans for closure for up to 19 of its 59 stores.
Yet after seeing a further deterioration in sales over the Christmas period, the Board announced a fresh change and direction was critically needed for Myer as shares hit a new low with the news of 56.5 cents on February 9th. On February 14th, Richard Umbers stepped down from his CEO position only five days after the latest profit warning, after months of the declining performance. Garry Hounsell has been appointed the current executive chairman of Myer for the time being as he attempts to ‘turbocharge’ their turnaround strategy.
What’s to Come
It seems an inevitable challenge of retail stores. Myer isn’t alone with these threats as JB Hi Fi also faces similar pressures with fears that as Australians become more comfortable with the Amazon interface they will lack the need for the customer service JB prides itself on. However, the physical sites and amount of staff is incomparable to the financial strength and independence online retailers have in regards to costs and pricing.
The Brand Finance Global 500 report, acknowledges the key strategies that these power players have put in capitalising their value is through their brand awareness and brand performance. Ultimately, stores like Myer and JB Hi Fi must be innovative in the way they engage their market to entice customers to choose them ahead of online retailers. It will be interesting to see whether a new CEO can capture a new market for Myer or how it can revise their current performance to improve customer retention. Amazon’s growth over 2018 in Australia will continue to test consumers to whether brand loyalty and physical customer service can win out or if customers will continue turning to the internet for the best deal on the market.
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