The 5 Most Valuable U.S. Retail Brands

With a new year comes a new report from brand-marketing experts Interbrand. Less than two weeks ago, the company released a list of its top 50 most valuable U.S. retail brands. Today I want to look at their top five choices and see if there's merit to their selections.

First things first -- we need to know what goes into Interbrand's rankings. Pardon the extreme simplification, but Interbrand requires prospective companies to have easily visible financial data, generate at least 50% of their sales from retail stores, and be profitable.

Once they pass this initial test, Interbrand looks at a combination of financial performance, the role of a company's brand, and the strength of its brand name to assign a "brand value." It's one of the few methods that look at both tangible and intangible aspects of brand strength.

Here are Interbrand's top five most valuable U.S. retail brands:

Company

Brand Value

Change Since 2011

Wal-Mart (NYSE: WMT  ) $139.2 billion (2%)
Target (NYSE: TGT  ) $23.4 billion 1%
Home Depot (NYSE: HD  ) $22 billion 8%
CVS Caremark (NYSE: CVS  ) $17.3 billion 5%
Best Buy (NYSE: BBY  ) $16.8 billion (11%)

Source: Interbrand.

1. Wal-Mart
If you've ever been curious as to just how dominant Wal-Mart is, then look at the gap between it and the No. 2 brand name on this list, Target. With a brand value nearly six times higher than Target, Wal-Mart uses its enormous balance sheet to undercut competitors' prices and instill in cost-conscious consumers the idea that it is the low-cost leader. Boasting $260 billion in U.S. sales, Wal-Mart accounts for 1.7% of the national GDP.

2. Target
Target benefited from revamping its image in the 1990s under the leadership of current J.C. Penney CEO Ron Johnson and former executive vice president Michael Francis, who made the brand cool once again. Target doesn't have the 180-million-consumer cult following that Wal-Mart has amassed, but its loyalty rewards program headed by the REDcard and its larger move into the grocery aisle has cemented it as a brand favorite among many Americans.

3. Home Depot
You'll get no argument here from me with regards to America's do-it-yourself superstore. I recently profiled Home Depot as a great dividend stock you could buy right now, and for good reason --the company will benefit regardless of the outlook in the housing sector. Its business feeds off both the home remodel market and those who are unable to sell their home, as well as the commercial building market and those seeking to buy a new home.

4. CVS Caremark
I was personally surprised to see the CVS brand name ahead of Walgreen, to be honest. Walgreen recently slowed its growth rate to focus on retaining customers and increasing brand loyalty, so I figured that'd put it over the top -- but alas, no! CVS is betting heavily on mobile applications for the future and is streamlining its pharmacy and pharmacy-benefits management business to allow users easy access to placing prescription orders. I personally still prefer the Walgreen brand, which came in at No. 6, but can understand CVS appearing here.

5. Best Buy
Talk about hanging on by a thread. The slow death of the big-box retailer has been well documented of late and Best Buy's show-and-tell sales floor has been losing business to Amazon.com for years. Still, this is a company with a solid balance sheet, that's generating strong cash flow and a healthy dividend, and has grown revenue in each year over the past decade. Certain aspects of its business may be struggling (ahem... televisions), but there's strength in those numbers.

Foolish roundup
Do you agree or disagree with the above brand value rankings? Let your fellow Fools know in the comments section below and consider adding these five brand-name powerhouses to your free and personalized watchlist.

If you're interested in three more American brands that are set to dominate the emerging markets, then I suggest you download our latest free report, "3 American Companies Set to Dominate the World." Did I mention it's free?

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He loves lists that factor in intangibles. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Wal-Mart, Best Buy, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Wal-Mart, Home Depot, and Amazon.com, as well as creating a diagonal call position in Wal-Mart and writing covered calls on Best Buy. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's always the leader of the pack in transparency.


Read/Post Comments (4) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 02, 2012, at 11:02 PM, funspirit wrote:

    My bet is that Best Buy will be out of business within a few years. The value of that brand will drop precipitously.

    This article describes how Amazon is chopping down Best Buy

    http://www.richmakesyourich.com/2012/02/best-buy-lost-in-ama...

    Walmart is the goliath. It will be interesting to see how online retailing will displace physical stores.

  • Report this Comment On March 03, 2012, at 10:15 AM, capitalapprecia8 wrote:

    I disagree 100%. Nordstroms is the best brand in the United States, period. Your efforts wont be wasted if you shop there, and its mostly timeless. Customer service and class in boadloads too.

  • Report this Comment On March 03, 2012, at 11:39 AM, jlogsdo wrote:

    BBY had been a great opportunity for last quarter purchase/spring time sell for nice returns the past two holiday seasons (ex., 11/24/08 @ 20.71 and 04/06/09 @ 41.09 = 99% gain and 09/28/09 @ 36.41 and 04/19/10 @ 48.58 = 33.5% gain). Plus timing with a nice dividend kicker made Best Buy a good short term investment. This past season is like 2007/08 all over again but now its due to its business plan - not the economy. I held it long enough for a 10% gain and dumped it after the all the bad press. Too bad...

  • Report this Comment On March 05, 2012, at 9:34 AM, brokeassbroad wrote:

    I guess Walmart will stay #1 as long as approximately 15% of Americans are on food stamps.

    Personally, I've reduced the number of times I go to Walmart from weekly (in 2010) to less than monthly. The few pennies saved are truly not worth the dreadful experience of shopping there. Empty shelves, lackluster customer service...

    From everything I've read, it appears to be a good investment. I wonder how long that will last if everyone who has two nickels to rub together starts avoiding it like the plague.

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