Branding

What will 2011
bring?
Interbrand predicts the year to
come for brands by sector

Interbrand | Pg. 2

What will 2011 bring?
Interbrand predicts the year to
come for brands by sector

Airlines from environmental groups, not to mention percent of arrivals, up from 18.3 percent
by Stuart Green volcanic ash clouds and of course the now. Asia Pacific will also account for nearly
As we enter 2011 we are witnessing a weather! On top of all of this, airlines will 32 percent of all travel spending, up from 21
stronger than expected recovery in the have to get used to being in a constant state percent today.
global airline industry with increased of flux driven by evolving demographics,
A huge potential revenue stream will come
demand and more stable cost structures. the influence of technology and changing
from catering to travelers from emerging
After numerous profit upgrades, the world’s customer demands.
markets, particularly Brazil, India, Russia
airlines anticipated a profit of $US 15.1 billion Post-recession strategies and China. However, a key challenge for
in 2010. Consolidation has continued as airlines many international airline brands will
However, the current recovery remains struggle to adapt to a post-recession era be how they cater to very different
fragile with Europe lagging behind with of lower profits and price competition. customer tastes.
expected losses of US $1.3 billion in 2010 and Following the merger between Delta Airlines
Cross-selling opportunities
Asia and Latin America surging, indicating a and Northwest Airlines in 2008, United
We continue to see an increase in the
very divergent global picture. Furthermore, Airlines and Continental Airlines announced
growing importance of ancillary revenues
net margins in the airline remain extremely a merger in May 2010, and Southwest
and earnings from non-core operations with
low at 2.7 percent (and are expected to fall has announced its planned acquisition of
airlines increasingly unbundling products
further to 1.5 percent in 2011) because AirTran to increase economies of scale and
previously included in the ticket price,
airline recession strategies often centered competitiveness. In 2011, expect to see
such as seat assignment and passenger
on realigning to deliver value to customers more of the same. British Airways and Iberia
preferences for meals, entertainment,
through low prices, co-branding, have already agreed to a five billion pound
and internet access. Longer-term, we may
and packages. merger in order to expand their international
even see greater variety of cabin classes
presence and airlines in the Asia Pacific.
This is an industry that already contends catering to differing customer tastes and
with many factors out of its control such as Emerging markets affordability.
huge capital requirements, high operating Global travel will continue to expand with
There is also a huge opportunity for the
costs, government policies, a reliance on the main growth coming from Asia and
more “trusted” airline brands to further
ground operating systems, strict aviation emerging markets. It’s estimated that by
cross-sell services provided by third parties
regulations, strong labor unions, pressure 2020, Asia-Pacific will account for nearly 22

What will 2011 bring?: Interbrand predicts the year to come for brands by sector Interbrand | Pg. 3

such as insurance, car hire and hotel Key markets likely to catch up will begin to kick-in across many developed
rooms—providing a more seamless Most global manufacturers will markets, stimulating the industry to
customer experience. continue to focus their growth on Asia, produce vehicles with significantly lower
specifically China. However, some CO2 emissions. Companies such as GE,
Technology adoption
markets such as the U.S. and Southeast which are looking to convert their fleets to
Adoption of mobile technology for both
Asia, are demonstrating some level zero emission vehicles, will also
entertainment and business needs
of stability and confidence. Indeed, if provide momentum.
will continue to transform the in-flight
experience, for better or for worse. Brand the economic signs continue to tread Additionally, the thought of driving your car
owners need to have a clear strategy that positively, there could be a mini surge anywhere from 35-90 miles on one charge
aligns all aspects of the customer experience on the horizon, as a downturn tends to per day at just US$ 1.50 per charge may be
around their brand promise to determine drive up the average age of vehicles on enough for customers to overcome their
what and how technology is implemented. the road. And yet, while all signs point range-anxiety and skepticism over the initial
to an upswing in key markets, the 2010 cost of the vehicle and the fee for setting
On the ground, the travel industry continues expiration of government incentive up their charge station. And who can argue
to be transformed by social media, with programs in a number of European and against the cool navigation systems and
large numbers of consumers choosing to Asian markets could lead to a drag in smartphone apps that allow you to control
book accommodation, flights and activities Japan, Germany and China, which have a number of vehicle functions in the palm of
directly online, based on the advice of fellow benefitted from these subsidies. your hand? By the end of next year, expect
holidaymakers and travelers.
Setting the new normal to see the EV infrastructure gain broader,
Twitter, Facebook, Flickr, YouTube and online In 2011, expect to see a continued push public visibility and demonstrate that EVs
blogs have been used as advertising and and pull between old habits and new. are a viable alternative. Also expect to
promotion platforms, and some airlines have The Electric Vehicle (EV) movement see this year’s trailblazers, the Chevrolet
developed iPhone apps for online booking seems to heating up, even while light Volt and Nissan Leaf, joined by other
and check-in, targeting specific market trucks, including SUVs, crossovers, alternatives — lower emission vehicles, such
segments and developing brand loyalty to minivans and pickups, have been the as Fiat’s methane-propelled Punto and a
the carrier. fastest growing vehicles in the U.S. plug-in Toyota Prius. While the conversion
in 2010. While EVs are legitimately to EVs may not be immediate given the
Ultimately, airlines will increase profitability
gaining momentum, if petrol prices complexities of getting these new vehicles
in a sustained way by creating unique
remain within a reasonable range, to market, the EV is likely to be
customer experiences that are meaningful
U.S. producers could revert to their old the innovation that redefines the
and relevant, with a clear understanding of
image as big, bold and not so good for automotive landscape.
which touchpoints are genuine drivers
of purchase. the environment. The survival of the fittest
Still, there is much in favor of a mass- For the few auto suppliers with a global
Airlines that continually question their
market adoption of electric cars in the footprint, 2011 will be more stable. But
business models and adapt to constant
next few years, as global manufacturers for 75 percent of the industry, it may
changes in customer behavior will be those
continue to invest in newer, cleaner be a challenging year that permanently
that prosper most in 2011 and beyond.
technologies, infusing these efforts into seals their fate. Many auto suppliers have
Automotive their core brand foundations. While exceedingly high debt levels, and the market
by Andrew Martschenko adoption by the mass market is likely can expect a number of bankruptcies and
to take more than a year — prolonged more intense consolidation among smaller,
After a year of structural realignment and
due to a fair share of naysayers — the less diversified businesses.
incentive-driven sales, the forecast for the
automotive sector looks more optimistic. difference between now and the first Global manufacturers will also continue
While consumers’ value-driven mindset attempt with EVs is that carmakers, to focus on developing products that
appears to be more or less permanent, 2010 policymakers and infrastructure are designed for their home market
showed signs that the overall health of the providers are working together to align as well as key international markets.
market has been getting stronger. their roles and objectives. Over the Deploying one global platform for compact
next five years new emission standards vehicles appears to be the strategy that


The global economy is by no
means in full recovery mode,
and business consulting
organizations stand to benefit.

a number of North American, European Regulatory navigation Global oneness
and Asian manufacturers are betting on. The crisis provoked governments into The top services players are massive global
The technological complexity and tight sweeping legislative reforms. The Heritage organizations. Accenture has 200,000
configuration of vehicle components will also Foundation estimates that in the U.S. employees. Deloitte has 170,000. KMPG,
breathe life into dealer service bays but may alone, the cost for new regulations in the smallest of the big four, has roughly
do so at the expense of local installers and 2010 is over US $26 billion. Making sense 140,000 employees. And unlike product
traditional distributors of aftermarket of these new regulations falls squarely on organizations where people work behind the
auto supplies. the shoulders of the lawyers, accountants, scenes to build brands, services are delivered
consultants and financial advisors of the directly to clients through nearly every
2011 should carry over a significant number
professional services sector. After Enron, one of these employees. It’s impossible to
of challenges in the industry, but the
business consulting firms evolved their deliver a consistent promise and experience
automotive sector overall is poised for a more
roles to provide greater transparency and across such vast networks of ambitious
prosperous year.
compliance services. Post-crisis, they and autonomous employees. Most large
Business Consulting will evolve further to become regulation business consulting employers can’t even
by Josh Feldmeth navigators, steering boards and managers communicate to all their employees, let
through the thicket of government reform. alone orchestrate behavior and team
Talent and navigation
selling strategies—but they must. They may
The global economy is by no means in full Talent test
have grown up in partner and specialist
recovery mode, and business consulting Because of the first two trends, everyone
models, but the new role of the post-crisis
organizations stand to benefit. Ambitious wants to work for business consulting
navigator demands client-centered thinking.
long-term hiring and growth plans are taking firms. According to Universum’s study of
The partners that wrap their advice and
shape as business consulting providers gear the world’s most attractive employers,
services around clients holistically will be
up to play the role of post-crisis navigator in 2010, KMPG was the second most
best positioned to lead their clients into the
to CEOs looking for growth. Businesses attractive business employer in the world,
cloudy yet thrilling markets of the future.
that build distinctive employee brand E&Y was the third, PwC was the fourth
propositions and integrate across silos and and Deloitte was the fifth: All ahead of Businesses that progress in 2011 will be
borders will win. Here are four trends that prestigious bonus factories Goldman Sachs those that craft a richer experience with the
will define the category in 2011. and J.P. Morgan. Do you see a pattern? brand in the digital space. With distractions
BCG, McKinsey, Bain and Accenture are like device, interface, application, and
The growth challenge
also in the top 50. Being one of a small platform, it’s easy to lose track of the
Most CEOs predict growth for their
number of ideal employers is a good importance of a meaningful message and an
businesses in 2011. It’s easier said than
problem to have. But it’s still a problem. on-brand journey. Therefore there are five
done. Major economies are still structurally
These firms have ambitious hiring targets related areas for brand owners to focus in
unsound. The Eurozone is teetering.
over the next five years. And they will likely 2011 and beyond.
Technology and innovation is moving
fill those spots. However, the brands that
rapidly and sure-bet growth markets (think
develop the strongest employee value
India and Brazil) are a mystery to Western
propositions will win the best talent.
managers. Business consulting firms will
And talent in this business is just
play an essential role in defining strategies
about everything.
for achieving growth within this challenging
operational environment.


Digital interaction needs to
move beyond functional and
branded look-and-feel to a full
experience reflective of the brand
throughout the user’s journey.

Digital Ideally as brands launch new products or employing artificial intelligence or behavioral
by Robin Rusch services, the consumer will intuitively adapt tools — you have the opportunity to
and adopt because he or she is programmed either delight or disturb with the uncanny
The journey defines the brand
to know it from all other interactions with knowledge of a user’s behavior.
Brand owners need to be asking themselves:
the brand.
Is the digital experience delivered on brand? It’s the message not the medium
I don’t mean usability (which ensures a user Personal access without the burden of It’s easy to get caught up in the medium and
achieves his goal), but rather user experience. ownership forget content and message. Whether it’s a
So, was the user delighted by his or Spotify, Zipcar, cloud storage — all wildly social media opportunity or a 3D depiction,
her experience and was that journey popular despite the consumer ceding the the content must be reflective of the brand.
reflective of what one would expect from this privileges of ownership. Turns out we don’t In fact we can argue that there will always be
particular brand? always need to own things; we just want a new thing on the horizon — five years ago
to feel like it’s ours when we want it and for Twitter, iPads, and 3D television weren’t on
Interface draws an audience in, but the
the duration of the interaction. That can be the scene, but the value and importance of
user’s experience throughout the interaction
achieved by weaving personalization and what is actually communicated will never go
is critical to the impression of the brand.
individual preference into the service out of fashion.
Offline this would take the form of an on-
or product.
brand experience: from the shop front to the Energy
merchandise, from the dressing room to the Providing a feeling of “mine” could involve by Tom Zara
store employee, from the cash register to programming an individual’s unique settings,
In 2010, the momentum of innovation and
the packaging, from returns to the customer but it also applies to smart services built in
initiative was blunted. The core tenants of
service hotline, direct mail promotions, and for general population groups. For example,
powerful brands, such as trust and relevancy,
so forth. tying in related interests based on typical
were compromised by the notoriety of greed
population profiles, providing alternative
Digital interaction needs to move beyond and ignorance in the Gulf of Mexico and
functionality for low-bandwidth locations,
functional and branded look-and-feel to a full partisan politics and indecisiveness at the
or recognizing special needs groups with
experience reflective of the brand throughout Copenhagen Climate Conference. In the
features appropriate to their abilities.
the user’s journey. Is this the experience one past 18 months, we have been witness to
should expect from this brand? Getting to know the consumer the fact that neither regulatory nor political
One way to deliver that individual experience might has had a material effect on energy
Next generation convergence
in a shared service is by capturing user management and global energy policy. But
It’s a term we’ve heard for years in regard
preferences and tailoring the journey. the temptation to dwell on the negative
to devices. When applied to brands,
Employing artificial reality (AIML) or must be resisted.
convergence does not just ask do different
intelligent behavior personas, a system
interactions look the same, but rather do 2011 will be the antidote to 2010. More
learns the user and tailors paths, content,
different interactions also act the same? so than ever before, brands will be the
and experience to the level of a user type or
Whether your customer is engaged with lightening rod that forges new relationships
specifically for the individual.
the website, app, podcast or dashboard, the with consumers, both educating and
entire experience should be recognizable and This personalized experience helps foster rewarding smart energy living. The power of
reminiscent of all other previous points of brand loyalty as the consumer feels that the brands will invoke new behaviors. A change
interaction with this brand. brand gets him or her. Of course, consider in perceptions and attitudes will contribute
your audience and don’t end up defining
your brand as “creepy.” It’s a fine line when

What will 2011 bring?: Interbrand predicts the year to come for brands by sectors Interbrand | Pg. 6

In 2011, we can expect
a continued antagonism
between the state and banks.

to a broader awareness that the reduction Financial Services Expect more CEO’s in select committees and
of dependence on diminishing fossils fuels is by Julian Dailly punitive reporting requirements of banker
both a personal and societal choice. bonus allocations. Also expect challenges
Banks will keep a low profile as they
Shell, Exxon Mobil, IBM, GE, EDF and to the assumption that banks must be
aggressively rebuild
Pacific Gas & Electric, are just a few of the profitable and are too big to fail. In 2011,
In 2011, we can expect a continued
global energy and technology brands that banks will be challenged with making the
antagonism between the state and banks.
are investing significantly in developing case to society that they need substantial
innovation to better manage and distribute The events of the last few years have required freedom to operate sufficiently.
energy in responsible and efficient ways. the state to play a larger role in creating
Challenger brands will take on the
The collective brand building efforts of stability through bailouts and legislation.
dominant players
the category will ultimately change the Consumers continue to be outraged at banks’
With large parts of the retail banking model
regulatory and consumer landscape resistance to disclosure and their complicated
commoditized and product innovation
to embrace new and responsible answers and defense of the status quo.
deemed “not worth it” there is a space in the
energy behaviors. Overall, in many consumers’ minds, the sector
market for consumer retail oriented banks
appears unwilling to change its attitudes
Climate change is no longer debated as glib to enter and differentiate when it come
or behaviors. Still, despite public opinion,
sentimentality from a misguided scientific to service. Those that focus on service can
financial service brands have continued to
community. The changes to our planet are steal share from traditional banks that can’t
profit and grow. This and their quick return
poignantly documented in the headlines deliver. Expect to see this occur primarily in
to pre-downturn bonus culture are evidence
each day where record highs and lows are the developed work world. This challenge will
that cultural reform may not be required
commonplace and the new norm is the expand out from core banking services based
to safeguard shareholder returns. In 2011,
unexpected. For brands in this sector, there’s on clients’ requests.
expect traditional banks to lie low as the
a new urgency to address the consequences drama continues to play out. Also expect Also expect to see criticism of pan-regional
of a global population explosion, mass opportunities for genuinely ethical, service payment brands like Visa and MasterCard.
urbanization, and geo-political unrest. and end-user oriented brands to enter Customers will see fees as too high, share too
And yet, brands in the energy sector will the fray. dominant, and competition as ineffective. As
need to do more than simply broadcast their a result, payment methods that claim ease
Banks will become the scapegoat if
intentions. In the end, they will be measured of use will be developed. Innovations linked
governments can’t fix economic problems
by their actions. Look to 2011 as the year to web payment and low-cost, peer-to-peer
The legislative framework through which
when innovations in automotive, home and money transfer are also likely.
financial services sector gains its license
industrial energy consumption will herald a to operate may become more difficult to
new movement in smart energy living. Basel II driven consolidation will drive
navigate if the recessionary climate hardens.
out risky activities by banks looking to be
There are high expectations that the ills of Politicians are keen to sidestep their own
bought and decrease local communities’
the recent past will fuel the energy sector to responsibility for the situation and are likely to
access to credit
lead a global campaign that encourages and reframe their own economic mismanagement
Compliance with new balance sheet stability
rewards responsible energy consumption. as the greed of the financial services sector
rules means large, unstable banks will buy
Now is the time for brands to change the — as the recklessness and misalignment with
and integrate many smaller, less risk-hungry
world for the better. society in general.
banks to improve their overall asset mix.


Attracting younger “digital
native” consumers demands
that many historic brands
immerse themselves online.

Unfortunately, the losers here will be small- Food and Beverage Coffee in QSR channels (Burger King and
and medium-sized businesses looking for by Bill Chidley Taco Bell for example) bodes for overall
credit lines. As smaller banks try to avoid revenue. Meanwhile the crowded QSR
looking bad in their quest to attract picky Seeking social equilibrium category will continue to promote breakfast
buyers, expect continued frustration from Stalwart brands McDonald’s and Coca-Cola as a new occasion to drive brand relevancy
small business folk unable to get credit, represent a new challenge as we enter the and frequency. With chains like Subway and
expand or start new and risky businesses. next decade: How to be socially responsible Wendy’s adding breakfast fare, it will be
when you have persistent demons. interesting to see if the majority of growth
Life insurance companies will be
comes from switching McDonald’s customers
increasingly seen as attractive choices for As Coca-Cola rolls out its plant bottle (partially
or bringing their loyal lunch users into the
a wider range of financial services needs comprised of polymers from sugar cane) it is
new day part. If the later is the case, the
Insurance companies are getting better at under escalating attack from governments
conundrum is whether core lunch customers
presenting themselves as credible suppliers for causing obesity. In an attempt to curb
will “double dip” and visit these chains more
of more financial services products — consumption, The New York City Health
often or just trade lunch visit habits for
from savings and mortgages to complex Department continues to air PSA’s promoting
breakfast habits.
investment products. The blurring of the the excessive amount of sugar in soft drinks.
boundaries in the sector means banks will Spirits on the move
Meanwhile as McDonald’s seeks to provide
have to work harder to secure the deposit In December, Fortune Brands announced
healthier alternatives such as oatmeal on its
balances required for lucrative lending. its intent to split into three businesses so it
menu, San Francisco’s board of supervisors
Nevertheless, there continues to be a lack can better focus on developing its distilled
voted to ban the majority of McDonald’s
of delivered surplus needs in either sector beverage brands and face off with Diageo
existing Happy Meals, claiming that it is illegal
— personal identity, usage experience or globally with a stronger bourbon portfolio. In
to offer free toys with meals that exceed
aspiration — leaving the door open for a mature markets, all spirit brands will seek to
certain limits on calories, fat, and sugar and
challenger brand to enter the market. drive consumption to fuel growth and bring
do not include fruits or vegetables.
new users into their franchises.
Banking will continue to be viewed as a
These two examples reflect the tensions
dirty business Attracting younger “digital native” consumers
inherent in transitioning a brand to a new
The bonus culture rolls on, but at what cost? demands that many historic brands immerse
age of social responsibility in the age of
Large investment banks continue to attempt themselves online and in the mobile
omnipresent media attention. In the coming
to please and sustain their employees environment. New offerings — like green tea
year these stories and others will likely
even as general public perceptions grow Vodka from UV — use product innovation to
overshadow responsible initiatives.
more negative. attract these younger consumers.
Fueled by coffee
As the world teeters on the edge of another In-store promotions remain a critical volume-
Starbucks is committed to staying relevant,
recession, people are wondering, “How come building tool across a fragmented and
driving growth, and grabbing headlines in
we’re still in their mess and they are back to regulated distribution network. Increasingly
2011. The coffee icon seeks to expand its retail
their old ways?” Consequently, bankers are the spirits business is looking to developing
business even if it means battling long-time
increasingly seen as disconnected and aloof. markets for growth, but the challenges are
partner Kraft Foods in order to control its
This threatens the employee proposition many; for example, adapting to local tastes
lucrative packaged coffee distribution. As
at the graduate and middle manager level. and determining how luxury beverages may
Starbucks continues looking to Asia for store
Expect lower trust scores, less effective need to integrate into old consumption
growth, the battle in North America is against
corporate citizenship investments, and less patterns and palates. As access to alcohol
McDonald’s for share of coffee occasions.
corporate citizenship activities overall. and Western style marketing hit developing
Watch to see how Starbucks’ strategy to
nations, look for governmental regulations
leverage recently repositioned Seattle’s Best
and pressure from organizations like the


As demonstrated in this sector,
the best innovations often
come during lean economic
times.

WHO to intervene and set the policy on Business model innovation into question user-generated reviews and
consumption and distribution. In developing As demonstrated in this sector, the best their objectivity and authenticity. The big
markets, fashion and trendiness are still alive innovations often come during lean economic question is how many of these are biased
and well as drivers of trial and consumption. times. Rent-by-the-hour businesses (Streetcar reviews or paid-for reviews on these sites.
Off the back burner and ZipCar) and community-based share They often fall into two extremes: either
Lastly, as the economy crawls back, the schemes are giving conventional car rental extremely positive or deeply negative. In
casual restaurant sector is seeing signs of dealerships a run for their money by catering some cases, writers may be hotel staff
life, and chains like Cheesecake Factory are more effectively to customers. City dwellers commenting under pseudonyms or a writer
looking to add units after a long period of enjoy the freedom of booking a car for a solicited by a hotel through a professional
belt tightening. As more consumers eat out, couple of hours for their trip to IKEA to pick review writing service. To get around this
expect to see deals on prepared and packaged up furniture, or for an afternoon drive to issue, some sites like Expedia and Priceline
foods continue in an effort to retain the the countryside. Meanwhile, websites like require hotel reviewers to be customers
windfall share of food spending. Whether or www.drivemycarrentals.com are enabling who’ve stayed at a property. While others
not the eat-at-home austerity habits take communities to rent out their own private like Oyster.com, send anonymous reviewers
hold will determine how long the restaurant cars during the week when it usually sits to produce detailed inspection reports. Peer
industry takes to rebound and how long outside their home. This makes marvelous review and recommendation issues raise the
packaged food brands can continue to build financial sense; individuals can gain additional debate on how internet content is policed
on their momentum. income, rather than watch their cars and will result in consumers shifting closer to
depreciate. It also has a great environmental friend’s recommendation sites or those from
Hotels and Hospitality benefit, in that it results in fewer cars on more trusted sources than the open market.
by Iain Ellwood the roads. Friend’s word of mouth endorsements are
Loyalty programs target exclusive access increasingly critical in navigating many of
Several hotel chains like IHG have looked at
To most customers, a wallet full of loyalty these decisions.
fractional usage by guests. Rather than paying
cards offers little value in return. In 2011, for 24-hour periods, you pay for exactly how Volunteer vacations on the rise
hotels will be picking up on this, rewarding us long you stay. So if you arrive mid-day and Given the economic pain of the past couple
with exclusive access as a loyalty incentive, depart before breakfast the next day, you pay of years, countless people are searching
rather than financial points. Gone will be the for that time, rather than being charged for for a more meaningful and enriching type
days of incomprehensible point quotients. the generic 4 PM to 11 AM slot. The back office of vacation. Volunteer vacations cater to
New and improved loyalty programs will give operations to achieve this are difficult in full- this, with people travelling and giving their
us access to museums and art galleries when service hotels, but the growing sector of “sleep time and skills to a local community. These
they’re closed to the general public. Also and go” hotels with a smaller staff is ideal volunteer vacations range from providing
expect tailor-made incentives like talks with for processing this more flexible, consumer- humanitarian aid and historic restoration
artists at galleries, famous archaeologists centric operating model. building to farm work and teaching. National
at a history or science museum, or chefs at Geographic is a big advocate of the trend,
famous restaurants. Hospitality businesses explaining that, “We think adding ‘giving
will begin to recognize that their valuable Objectivity of peer review travel sites
back’ to your vacation ‘must-do’ list is the
assets are not just what they sell — but more The increasing influence of travel peer review
best way to make the memories last a
importantly, who does the selling of their sites such as TripAdvisor and Yelp or book
products or services. reviews on sites like Amazon.com has brought


In 2011, retail will continue
to undergo some of the most
dramatic changes the industry
has seen in half a century.

lifetime.” Additionally, volunteer vacations Retail information on customers, transactions and
offer the truly authentic way to deep dive by Bruce Dybvad operations than they know what to do with.
into a local community and avoid the They will seek to find ways to separate the
In 2011, retail will continue to undergo some
voyeurism associated with guided tours. wheat from the chaff in terms of metrics, by
of the most dramatic changes the industry
So rather than speeding through a Mumbai way of refined research into the shopper’s
has seen in half a century due to underlying
slum in a rickshaw with a Lonely Planet guide path to purchase.
drivers that have permeated society and
open and the camera clicking, travellers
shopping behavior. The most powerful, of The art of the deal
can gain the rich human benefit of working
course, is digital. Less immediate but also While technology has allowed consumers
alongside Indians in these areas of Mumbai
highly significant are demographic, economic to become increasingly savvy, skilled and
to educate children and
and cultural value changes that are having an sophisticated shoppers who gleefully drive
help others.
impact at both the local and global level. deals, it also makes them susceptible to
In-store promotions remain a critical volume- impulse purchases. The group bartering
Consumers’ digital domination
building tool across a fragmented and trend has been formalized through programs
Nielsen predicts one in two U.S. consumers
regulated distribution network. Increasingly such as Groupon, where stores grant deep
will own smartphones by the end of 2011.
the spirits business is looking to developing discounts if enough people sign up for
And yet, despite the rapid adoption of digital
markets for growth, but the challenges are them. Members only clubs for apparel like
technology, the majority of retailers have
many; for example, adapting to local tastes Gilt Groupe, are being adopted by other
been slow to respond to the opportunity.
and determining how luxury beverages may categories. Flash sales, or time-limited
The coming year will be one of catching
need to integrate into old consumption offers via text or Twitter, will continue to
up. The lion’s share of capital budgets will
patterns and palates. As access to alcohol trigger impulse buying and give shoppers the
be allocated to the online channel and its
and Western style marketing hit developing smart feeling of having scored a great deal.
optimization for mobile use, while marketing
nations, look for governmental regulations Traditional retailers like J. Crew are already
departments will try and crack the code for
and pressure from organizations like the learning to use the flash sale: It recently
connecting with customers through social
WHO to intervene and set the policy on opened an online factory store only on the
media. To truly connect with shoppers who
consumption and distribution. In developing weekends for deal-happy shoppers.
are adept at controlling the interaction, retail
markets, fashion and trendiness are still alive
brands will continue to discover innovative Brick and mortar transcends itself
and well as drivers of trial and consumption.
ways to be invited into consumers’ Despite the fact that the point of purchase
Off the back burner closed loop. is now highly mobile, retailers are going
Lastly, as the economy crawls back, the to find that the physical store still needs
At the same time, consumers are increasingly
casual restaurant sector is seeing signs of significant investment. Shoppers expect it
more willing to allow access to their private
life, and chains like Cheesecake Factory are to be the epitome of the brand experience
information. Amazon.com now allows
looking to add units after a long period of and the embodiment of all that is unique
users to link their Amazon account to their
belt tightening. As more consumers eat out, about the way a merchant does business.
Facebook account, so that the subjects in
expect to see deals on prepared and packaged Otherwise, why go to the store? Stores will
their social posts can be integrated into their
foods continue in an effort to retain the incorporate new services and experiences
Amazon recommendations. Keep in mind
windfall share of food spending. Whether or into their concepts to remain relevant and
that in exchange for access, customers will
not the eat-at-home austerity habits take provide emotional engagement. This will be
expect to receive more value.
hold will determine how long the restaurant key to the increased importance of word-of-
industry takes to rebound and how long As retailers rush to take advantage of mouth as great service and experience will
packaged food brands can continue to build digital’s new channels for customer insight, be actively compiled, commented upon and
on their momentum. interaction and engagement, they will shared by wider audiences.
also be faced with data overload — more


Technology brands have
been going through
transformations in their
struggle to differentiate.

In the past, the 80/20 retail rule of thumb Corporate philanthropy and good citizenship That’s why we’re likely to see increased
said that 20 percent of a store’s SKUs will also be a growing expectation. Brands will brand partnerships in the category.
equaled 80 percent of sales. That rule will learn to strengthen customer loyalty through Together, brands will play together to deliver
be turned on its head. In a digital world generosity and acts of kindness, such as Dutch against an ever-increasing set of consumer
with almost infinite choice, shoppers will KLM’s campaign of spreading happiness by expectations. While a partnership approach is
be drawn to stores with a personalized surprising passengers with unexpected gifts more likely to yield success for both parties, it
focus. Physical store concepts will become at the airport. also is true that consumers may have difficult
smaller, better executed and highly tailored. discerning which brand delivers what portion
Expect retail expansion into China and India
Assortments will become relevant and finely of the experience. As a result, if a product fails
to continue. Retail spending in China has
curated as they evolve toward true demand. to meet expectations, the brand with the
risen by double digits the last two years and is
As shoppers buy less of what’s mainstream greatest equity and loyalty base is likely to
expected to maintain that pace. Merchants,
and more of what suits them individually, carry most — if not all — the risks.
seeing manufacturers’ succeed by launching
80 percent of units will earn 80 percent of
new products and brands that are culturally Balance and authenticity
profits. Additionally, private labels, localized
right for emerging markets, such as Levi’s Technology brands have been going
sourcing and cultural influences will be
dENIZEN jeans and Hermès’ Shang Xia, will through transformations in their struggle
further differentiators, as shoppers demand
adopt a similar strategy and create store to differentiate. Many are attempting to tap
simplicity, convenience and closeness.
concepts inspired by native culture. Barriers into the emotional space, claiming that they
Urbanization, empathy and to global trade will continue to come down, are responsible for life changing experiences.
emerging markets which will encourage retailers to think Results so far have been mixed. In some
Two big demographic trends have arrived and work towards a global customer base, cases, the pendulum may have swung too
that will affect the retail industry’s long- sources, talent and reach. far. The key to long-term success will be to
term planning outlook. The first is a striking examine the relationship between functional
population shift. Today, half the world’s and emotional attributes and communicate
Technology
population lives in urban areas. Nearly this with balance and authenticity.
by Federika Judica
180,000 people move into cities daily, which
will impact the retail landscape dramatically. Cloud computing and education Mergers & Acquisitions
Retailers will concentrate less on traditional The adoption of cloud computing continues Growth in the category continues to be
malls in favor of heading back into the city. to surge. While its relevancy is no longer spurred by mergers and acquisitions. More
Real estate will become more of a challenge, in question, the need now is for an than ever, the emphasis is on aligning
as city lots require clever adaptations understanding of its characteristics and internal cultures and clarifying what the
of core concepts. We are already seeing benefits. Companies have started to assume brand stands internally. A survey Interbrand
arguably more creativity from retail brands the educator role in the category, clarifying conducted in 2010 across a variety of
as they incorporate existing and sometimes the differences among the spectrum of sectors showed that while 82 percent of
historical architecture into the shopping offerings on the market and what are public, companies regularly measure internal brand
experience, discovering new aspects of their private and a hybrid cloud. While growing the engagement, 21 percent of them actually
brand personality in the process. The dense category means growing a piece of it, unless link it to customer satisfaction. In the
living and working environment will also tech brands are able to bring clarity to their technology sector, internal activation is key
spawn new retail business models, such as complex offerings, it will be hard for them to to loyalty growth.
pay-to-share for large expensive items, like capitalize on their investments.
Zipcar and B-cycle car and bike sharing. As
Increased partnerships
consumers, city dwellers tend to be more
In mobility, a single brand can’t arguably
open to new concepts, so expect merchants
deliver a complete end-to-end experience.
to react accordingly.


Telecoms continue to face
significant challenges to break
out of the commodity,
price-driven space they
typically hold.
Telecommunications their wireless phones, unless fixed-mobile truly evolve internally and drive customer
by Kevin Perlmutter convergence solutions allow them to keep choice and loyalty though improved
both affordably. customer experiences. They will be the
In the coming year, mobile dependency
ones to seize the opportunity to be better
will continue to rise as people rely on their To address these challenges — and retain and
aggregators, integrators and simplifiers —
handheld devices, tablets and laptops for attract customers — telecoms must ensure
trusted brands that help integrate the many
many aspects of their work and personal superior network quality. They’ll need to
aspects of their customers’ lives. ■
lives. Telecoms will focus on speed, rolling address pricing structures for increased data
out 4G networks that have the capacity to usage and converged services. They’ll also
move data many times faster than current need to launch more loyalty-engendering
3G networks. Increased network speed offerings that simplify and integrate the many
and capacity will make video — from video aspects of people’s on-the-go lifestyles.
conferencing to HD movies — as easily
In 2011, government regulation negotiations
sharable as the photos we currently share on
around net neutrality will continue. Telecoms
3G networks. Customers’ satisfaction with
will to fight against being legally responsible
telecom brands will primarily be determined
for massive network infrastructure
by network quality.
investments, while at the same time losing
Industries will also continue to evolve how full control or pricing authority on how their
they conduct business and serve customers networks are used.
thanks to wireless connectivity and devices.
Telecoms continue to face significant
Cloud-based services will increasingly
challenges to break out of the commodity,
impact businesses. More of their technology
price-driven space they typically hold. The very
capabilities, business applications and
networks that telecoms run are fueling new
proprietary data will be housed and accessed
consumer and business behaviors, and people
remotely. The same will be true for personal
are forming brand relationships differently
files, address books, music, videos
and photos.
across all product and service categories. To
VOIP services like Skype will gain in earn the love and loyalty of other brands in the
popularity, as consumers and businesses technology ecosystem, telecoms must evolve
avoid paying a telecom for interaction their cultures and customer experiences as
that is free over the internet. Unlocked aggressively as they evolve their network
SIM cards will emerge and allow people to infrastructures. Business unit silos that once
choose devices and networks separately. naturally existed must now be converged
Mobile payments will also continue emerge like the products they support. Cultures that
as historical infrastructure and behavioral were once government-owned or have a long
barriers are broken down by technology. history of break-ups and mergers must come
together as one. Customer service models
Expect to see many consumers increasingly
that frustrate and often infuriate people need
look for bundled phone, TV and internet
to be improved to better serve customers.
solutions, especially as home entertainment
becomes more easily accessible on mobile The brands that will see the most success will
devices. Even more consumers will eliminate clearly define the role that they play in the
their wire line home phones in favor of ecosystem without overpromising. They will

Andrew Martchenko Josh Feldmeth Robin Rusch

Tom Zara Julian Dailly Bill Chidley

Iain Ellwood Bruce Dybvad Federica Judica

Kevin Perlmutter Stuart Green

Creating and managing
interbrand.com brand valueTM

Branding

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