01 November 2007

Westfield tops global property brand charts.

Global property companies are increasingly acknowledging the value of their brand as a primary value driver.

Certainly DIFFUSION's experience working with companies Grosvenor and the Simon Property Group seems to demonstrate that building a brand centric culture will increasingly yield better bottom line results.

UK brand valuation company Brand Finance, acknowledged as one of the world's leading brand valuation companies, rated Australian property group Westfield at the top of its recent global property brand index report with a brand value of US$1.0bn (A$1.1b) alongside fellow Australians Stockland, the Goodman Group, GPT and Mirvac in its top 30.

According Brand Finance's estimates brand value contributes up to 3% of what they define as enterprise value (defined as the combined market value of the entity and debt of a business less cash and cash equivalents), and averages 1.6% of enterprise value. While it's report states this is low compared to heavily branded FMCG categories like Coca Cola, it describes the resulting brand values as "still highly material".

What's apparent with the index and in a sense explains the rise and rise of property brands like Westfield is that our perceptions are usually based on the brand's functional attributes - such as access and location. Something that Westfield has concentrated on with it's deliberate nodal location strategy (see map above). This is best illustrated by drawing from HG Well's War of the Worlds, which described how the Martian fighting machines would dominate an area by combining into a group. This is pretty much what Westfield does - visibility and dominance - and why the brand has proved so pernicious in the daily lives of people in Australia, New Zealand the US and soon the UK.

Interestingly, Brand Finance raises two questions I think companies like Westfield and other dominant property groups need to grasp:

1. What brand architecture will prove to be most effective in the future?
2. How can a coherent and effective brand message be communicated ?

As far as DIFFUSION is aware, none of these major property groups have a head of brand addressing these important issues, instead continuing to rely on their marketing and investor relations departments to be the sole determinants. The absence of a real brand strategy is palpable.

In a recent visit to Tokyo, DIFFUSION was struck by how its shopping malls had evolved to become much more experiential, with customer service emphasised at every touch point. Something that is mostly ignored by the majority of western mall owners, more content to wring as much income from both retailers and consumers through a turnstile mentality. Sure Westfield might have magazines and a valet service, but why do some of its suburban malls want to start charging for Sunday parking? Doesn't this run counter to functional attributes of the brand, like access.

It's a simple thing really. And I might add a third question:

3. What is the brand promise?

DIFFUSION hopes it will be seeing some answers at the mall soon.

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