Notably, the brand values of both companies fell in the new “BrandZ Top 100 Global Brands 2015.” Amazon’s dropped 3% to $62.3 billion, putting it 14th among all global brands based on value. Wal-Mart, in the number 26 place, had a brand value decline of 0.2% to $35.2 billion. The results were especially bad since the value of the top 100 rose 14% compared to the 2014 study.
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Speculating, the Wal-Mart brand has been eroded for two primary reasons. The first is that its global sales have flattened. In its most recently reported quarter, global revenue fell 0.1% to $114.8 billion, compared to the same quarter a year ago. The second is that experts believe whatever bright future the retail industry has is based on online sales, which do not depend on the costs of thousands of stores, and the cost of the hundreds of thousands of employees that run them. But Wal-Mart’s online sales are not impressive for a company of its size.
Amazon’s weak showing in the BrandZ survey may be because, while its revenue continues to explode up, its profits have not. In its most recently reported quarter, revenue rose 15% to $22.7 billion. Amazon posted a net loss of $57 million for the quarter. The forecast for sales in the current quarter was weak, up between 7% and 18% compared to the same quarter last year. Taking into account its traditional revenue growth, 7% would be a disaster.
The market also has been disappointed by the endless experiments of Amazon founder and CEO Jeff Bezos. Amazon has recently announced its plans to expand food sales. It has also contracted with companies to offer local services like home repair and car battery replacement. The project is called Amazon Home Services. It puts Amazon in a position in which it has to prove it can step into a business very different from its core one.
Amazon’s foray into consumer electronics, which began with the Kindle e-reader, has extended to smartphones with the release of its Fire Phone. It was a disaster from the beginning. It has served to prove Amazon’s occasional inability to enter businesses that already have established, dominant competition. In the case of the Fire Phone, this was smartphone products from Apple Inc. (NASDAQ: AAPL) and Samsung Electronics.
The brand valuations from BrandZ do tell one thing. Retail, in general, has hit a rough patch.
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