Alibaba Group
© Bloomberg

Alibaba has become the most valuable retail brand in the world, overtaking global behemoths Amazon and Walmart, according to the 2015 BrandZ ranking of the world's 100 most valuable brands.

The entrance of Alibaba at 13 propelled the value of the retail category upwards by 24 per cent, tying it with technology as the fastest-rising category in the BrandZ top 100.

Alibaba became eligible to enter the ranking after its record $25bn initial public offering in New York last September. But David Roth, chief executive of The Store, WPP’s global retail practice, says it is emblematic of broader trends, including the growth of electronic commerce in China, now the largest ecommerce market in the world.

Alibaba has also developed a strong bond with consumers, he says, by being a market linking buyers and sellers, and facilitating payment through its Alipay system.

According to Mintel market research, Alibaba’s online retail platforms, Taobao and Tmall, accounted for more than 70 per cent of Chinese online retail sales in 2013. “Alibaba has the most phenomenal bond with consumers,” says Mr Roth. “It fulfils an amazing need. It’s seen as very entrepreneurial. Alibaba itself, as a brand, has enabled probably millions of Chinese consumers not only to be consumers, but [to] be entrepreneurs and start their own businesses.”

He adds: “It is almost an indispensable part of daily life. That is a tremendous place for a brand to be.”

Alibaba is not the only Chinese electronic commerce business to enter the ranking., the largest Amazon-like direct sales ecommerce seller in China, boasting its own distribution and logistics network, has also entered the retail ranking at number 16.

Mintel says Alibaba acts as more of a facilitator for online vendors, whereas is the largest actual online retailer, with a 6 per cent share of the total Chinese online market in 2013. recently threw down the gauntlet to Alibaba, with the launch of a cross-border platform designed to bring foreign brands to the Chinese middle class.

But it is not just electronic commerce in China that is influencing the rankings of retailers.

Globally, the way consumers shop is changing. The march of online retailing shows no sign of abating. Meanwhile, in developed markets, consumers are moving away from doing a big weekly grocery shop, towards shopping locally, and more frequently. They are also experimenting with different formats, such as shopping in the no frills German supermarket chains, Aldi and Lidl.

The company that represents these trends the most is Tesco, Britain’s biggest retailer. The value of its brand has fallen 37 per cent, the biggest fall in the retail ranking, as it has sunk from sixth place in 2014, to 12th in 2015.

Tesco has suffered a disastrous 12 months, ousting its chief executive and revealing that its first-half profit had been overstated by £250m. In April, the company made a £6.4bn pre-tax loss, one of the biggest in British corporate history, after £7bn worth of writedowns and charges.

In contrast, the value of Lidl’s brand rose by 27 per cent, while Aldi’s brand value is up by 22 per cent. Aldi is now the eighth most valuable retail brand in the world. Lidl and Aldi are muscular retail groups with huge economies of scale and international reach.

“What is dangerous for the big players is that Aldi and Lidl are able to act locally and small . . . but they have got just as much, if not more muscle than the majors,” says Richard Hyman, an independent analyst who runs the Richard Talks Retail website.

Some “big-box” retailers have also seen the value of their brands fall, including Ikea, Target and Carrefour.

In contrast, reflecting the trend towards convenience shopping, the 7-Eleven group has entered the top 20 for the first time at number 17.

Meanwhile, some big retailers have seen the value of their brands remain stable or rise. Amazon, which like Alibaba and, has no physical store presence, remains the second most valuable retail brand in the world, trailing only Alibaba.

Costco, the warehouse club, which has been performing strongly, also saw the value of its brand rise 19 per cent, while Macy’s, which has been transforming itself from a tired department store brand to one focused on technology and teen and millennial shoppers — those born in the early 1980s to late 1990s — has entered the top 20 for the first time at 18, showing it is possible for a bricks and mortar retailer to reinvent itself for the digital age.

By contrast, Whole Foods, which should capture many of the trends towards more local shopping, and in stores whose foods have more clarity on where products are sourced from — a particular concern of millennial shoppers — saw the value of its brand fall 24 per cent.

Another enclave of the retail sector to enjoy a rise in its brand value is home improvement, with Home Depot and Lowe’s enjoying 25 per cent and 23 per cent rises respectively in their brand values. Home Depot is now the world’s fourth most valuable retail brand.

According to Mr Roth, this reflects a recovery in the US property market, and the fact that individuals increasingly want to express themselves through their homes. “[There are] lots of green shoots in the retail arena, but in different parts of the garden,” he says.

Ecommerce: Alibaba — icon of Chinese capitalism

While the inscription ‘Made in China’ has long been found on products worldwide, it has usually been overlaid by foreign brands, writes Charlotte Clarke. Ecommerce group Alibaba is changing this trend.

“Alibaba shows that you can make products in China and use a Chinese brand,” says Andre Spicer, professor of organisational behaviour at City University’s Cass Business School in the UK, emphasising its appeal in China. “It’s become one of those national, iconic brands just like Coke did in mid-20th century US.”

Prof Spicer says this success has been achieved primarily through trust. “By using an online platform, Alibaba was able to create trust between consumers and businesses,” he says. “It represents Chinese online capitalism in some ways, which establishes an emotional connection.”

Alibaba’s impressive entry to the rankings this year at number 13 echoes the success of its initial public offering last September, which hit a record $25bn on the New York Stock Exchange. The boom in business-to-business transactions and interest from foreign companies who want to work with Chinese companies have served the company well.

Founder and executive chairman of Alibaba Group Jack Ma gestures during a speech at the National Taiwan University (NTU) in Taipei on March 3, 2015
Founder: Jack Ma © Sam Yeh/AFP/Getty Images

However, even Chinese dominance has its limits. Group founder and chairman Jack Ma recently announced a hiring freeze. In a speech posted online he said: “The purpose is simple: we need to get into formation. I think 30,000 people is efficient.” This came after the share price dropped from $119 in November to $85 in April.

For some, Mr Ma is the reason Alibaba is successful, embodying the brand in the same way Steve Jobs did for Apple and Richard Branson for Virgin. Mr Ma himself and his employees cite Alibaba’s female workforce as a key asset.

“The six female founding partners have risen through the ranks, 40 per cent of employees are female, as are 35 per cent of management,” says Jennifer Kuperman, vice-president of international corporate affairs. “It’s a huge part of our business and helps us think about customers first.”

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