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Discount retailers get big boost in brand value (Study)

No Frills is the only new entrant on top 40 most valuable brands list, while Food Basics and Dollarama had big jumps

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Consumers’ quest for value has boosted the brand value of those in the grocery space, according to the second annual “BrandZ Top 40 Most Valuable Canadian Brands” study.

The study, by market research firm Kantar and marketing holding company WPP, ranks brands based on financial analysis and in-depth consumer research to measure brand value, and determine how much the brand contributes to the overall business value of the parent company.

Overall, Lululemon (no. 4) and Canada Life (no. 21) had the largest percentage gains in brand value, but the next two top growers are Metro-owned Food Basics (no. 36, $419 million), up 24% compared to last year, and Dollarama (no. 15, $1.9 billion), up 21%. Dollarama (which sells general merchandise, shelf-stable foods and seasonal items) also had the largest jump in the top 40 ranking, moving up 15 spots.

Loblaw’s discount brand No Frills is the only newcomer on the top 40 list (no. 39, $370 million). Also among the six fastest climbers are Sobeys (no. 34, $466 million) up 19% and Shoppers Drug Mart (no. 20, $1.7 billion) up 17%.

“The over-performance of discount retailers is hardly surprising,” the report states. “With unemployment spiking and uncertainty abounding, Canadians are looking for value.”

The question for discounters is: how do they keep new customers when the good times return? “The answer may be brand building,” the report states. The data shows discounters have some of the lowest brand contribution scores—meaning how well a brand differentiates itself from its competitors, generates desire, and cultivates loyalty—of any brands. “Any investment improving the brand experience could pay dividends down the road.”

While the pandemic is stretching consumers’ wallets, that’s not the only reason No Frills made the list. “No Frills has greatly strengthened its equity in the past three years with its successful outreach to savvy value shoppers, which it has termed ‘haulers,’ the report states. “It is also the number one brand in the top 40 for fair pricing.”

While no grocery retailers cracked the top 10, 43% of the retail brands in the top 40 are grocery brands.

Here’s how all the grocery and pharmacy brands ranked on the top 40 list:

#19: Metro, $1.72 billion
#20: Shoppers Drug Mart, $1.7 billion
#24: Real Canadian Superstore, $1.24 billion
#32: Foodland, $508 million
#33: President’s Choice, $505 million
#34: Sobeys, $466 million
#35: Super C, $425 million
#36: Food Basics, $419 million
#37: Jean Coutu, $410 million
#39: No Frills, $370 million

The top five brands overall are RBC, TD, Bell, Lululemon and Scotiabank.

The full report can be downloaded here.

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