develop the benefits of subscribing to its Prime service. Google, Apple and Microsoft retain the top three positions, growing their brand value +7 per cent to $245.6bn, +3 per cent to $234.7bn and +18 per cent to $143.2bn respectively over the past year, while Facebook, at no. 5, grew +27 per cent to $129.8bn. Given the propensity for media commentators to say Coles and Woolies are always in trouble, Inside Retail asked Jarrod Payne, a quantitative market research & insight specialist at Kantar Millward Brown, to explain the factors behind Coles and Woolworths positions in the top-tier of global retail. He said Coles has performed well in FY 2016, generating earnings of AUD $1.86 billion, a 4.3 per cent increase on 2015 financial year results and that Wesfarmers reported it has been investing in lowering Coles prices with nearly 1,000 products added to its ‘every day’ low pricing scheme in June and July. The supermarket has also invested in improving its fresh produce offering; staff training to help improve customer service; and expanding its online shopping service. “I would think that the media response to both Woolies and Coles is a response to changes in the sector, notably the introduction of Aldi which challenges the duopoly,” he said. “They remain exceptionally strong brands in Australia though, together they make up 64 per cent of the survey based market share in BrandZ.” At a local level, both Woolies (30 per cent) and Coles (34 per cent) are much bigger than Aldi (13 per cent) in terms of survey based market share. “Aldi’s key advantage is that it is seen to be different while Woolies and Coles are not,” said Payne. “It is also seen as much lower priced which is an advantage in the current price sensitive environment. “Where Aldi loses out is in its ability to fulfil all of its equity, that is, the amount of people that are pre-disposed to shop at Aldi but end up shopping and Woolies or Coles is quite high. This is likely driven by a smaller store network for the brand.” Coles’ sales growth in food continues to be led by the fresh food categories. This also marks the 7th consecutive year that Coles has lowered prices for customers, with its online channel achieving over 25 per cent growth in avg weekly transactions. “Importantly Woolies have maintained their rank rather than gained in the rankings,” said Payne. “They have also lost some brand value (12 per cent) over the last year. This is what the media commentators are likely referring to.” When asked if media were harsh on Aussie retailers in general and if local brands are actually punching above their weight on a global basis, Payne said it was important to put things into perspective. “Coles is at 20 on the retail list, Woolies at 18,” he said. “They are much smaller than say Amazon at number one or Alibaba at number two. “Understanding of course that the brands are Australia focused and that the domestic market is much smaller – that said the GDP per capita in Australia is exceptionally high which makes for a strong retail environment. “I would think that the way they are perceived in the media is due to their response to category disruption rather than strict performance. They are big businesses that between them consume the lion’s share of the market here but Woolworths in particular seems to have lost some value with the Aldi entry and Coles’ response to that entry.” Commenting on the report, Payne said the research defines brand equity as a predisposition to purchase a brand in the absence of in-market factors – and this contributes to a brand’s ability to drive volume and value share. “The importance of the brand on the BrandZ valuation differs by category and brand, i.e. a brand like Coca-Cola has a greater brand contribution to its value than a brand like Oracle. “We also see that investing in brand, as opposed to product or price driving, leads to greater long term results for shareholders and better levels of growth over the long term. In terms of heritage and size, these are factors. “Retail in Australia is driven primarily by salience [coming to mind readily for consumers] and both Woolies and Coles are very salient. They are also meaningful to consumers through meeting consumer needs and having an emotional connection. The combination of these factors drives their brand equity levels, even though they are not fundamentally seen to be unique or different.” Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.