Retail Roundup

• The retail industry ranks third in our 2022 Brand Intimacy Study. Trader Joe’s is the top-ranking retail brand with a Quotient Score of 59.9.
• The retail industry’s dominant archetype is fulfillment.

In this year’s Brand Intimacy Study, the retail industry placed third with an average Brand Intimacy Quotient Score of 47.5, well above the cross-industry average of 36.8. Historically, the retail industry has performed well, often ranking in the top five industries overall. Retail also placed third in our 2021 COVID study, and the category has improved its Quotient Score by 4% since then.

As people and companies begin to return to normal following the pandemic, the retail industry continues to find success in connecting with consumers. Despite volatile markets, pandemic-focused campaigns and empathetic messaging enabled retail brands to maintain close relationships with customers (to learn more about the effects of the pandemic on the retail industry, read our article The Growing Dominance of Retail). The wide variety of brands that fall under the retail umbrella gives us the opportunity to look closer into the specific subcategories of retail brands—namely, clothing, supermarkets, and furniture. Comparing this year’s brands to those of previous studies shows significant movement among the top-performing brands. Most notably, Amazon, last year’s top-performing retail brand, fell to 4th place this year whereas Costco rose from 4th place to 2nd.

With surging inflation, supply chain issues, and over one million retail jobs unfulfilled, predictions about the future of the retail industry have seemed relatively negative over the past year.¹ However, despite these disruptions, retail sales in the United States have continued to rise, with total retail sales reaching approximately 6.6 trillion US dollars by the end of 2021, around a one billion US dollar increase from the year before.² The continued shift away from physical shopping and towards e-commerce is strengthening. This year, worldwide retail e-commerce sales will exceed $5 trillion for the first time, accounting for more than a fifth of overall retail sales.³ Moreover, the pandemic has also prompted retailers to restructure their business models, shift priorities, and reconsider how to remain stable and profitable in the long term.⁴

Perhaps as a result of industry uncertainty and volatility, fulfillment remains the dominant Brand Intimacy archetype this year, which refers to a brand exceeding expectations delivering superior service, quality, and efficacy. Indulgence, which centers on creating moments of pampering and gratification, also increased considerably, which suggest that after several challenging years, consumers were seeking opportunities to satisfy and treat themselves. In terms of Brand Intimacy stages, which measure the intensity of brand relationships retail was similarly strong, with 17% of its users in sharing, the first stage of Brand Intimacy; 8% in bonding, the middle stage; and 6% in fusing, the most advanced stage. Notably, across all industries, retail has the highest percentage of users in the bonding stage, which centers on acceptance and trust. Of those consumers who write about retail brands, 31% are in some stage of intimacy, as compared to 23% of users in the overall study.

Interestingly, the growth of apps and social platforms has had a significant influence on the way consumers shop. For one, in-app shopping features, like the shopping tab on Instagram and the shopping ads on Tik Tok, connect users to products more directly than ever before.⁵ Similarly, public opinion on these platforms, specifically Tik Tok, gives content creators the ability to become tastemakers, persuading followers to make or not make certain purchases and support specific companies. Moreover, growing public sentiment, specifically among younger generations, to shop sustainably has effectively pushed many retail brands to create more sustainable development plans to incorporate greener policies and campaigns into their branding. Adidas, for example, has been a leader in sustainable activewear for the past few years and has committed to eliminating all virgin plastic from its pieces by 2024.⁶ Newer, successful brands, like Girlfriend Collective and Reformation, have centered their entire brand promises around their commitment to being climate positive, prompting fast-fashion brands like Forever 21 and Zara to feel pressure to do the same.⁷

Trader Joe’s was originally the brainchild of Joe Coloumbe, a convenience store owner in Los Angeles, who founded the grocery chain in 1967 to appeal to a specific, yet growing, demographic: young, well-educated, and well-traveled consumers. The store’s branding initially drew on nautical themes and took naming inspiration from Trader Vic’s, a Tiki Bar restaurant in California.⁸ The chain expanded to the East Coast in 1996 and has expanded to more than 530 stores in 2020, with an estimated $16.5 billion in sales.⁹ Serving its intended audience, studies show the average Trader Joe’s shopper is young, college educated, and married and earns around $80,000 a year.¹⁰ Unlike other larger grocery chains, Trader Joe’s sells nearly all of their products under a private “Trader Joe’s” label. By doing this, the brand limits the overwhelming option of choice by providing one brand of most products and also uses its unique, “artsy” branding to make widely available and well-known products seem more appealing.

With an impressive Quotient Score of 59.9, Trader Joe’s not only is the most intimate retail brand, but it also ranks 7th in our overall study. Unlike the industry overall, Trader Joe’s dominant archetype is indulgence, which centers on brands creating moments of pampering and gratification. One reason for Trader Joe’s success in this archetype can be traced back to the brand’s business model. The relatively low price point of food and wide array of preprepared and frozen foods offers shoppers highly convenient options at competitive costs. With this, consumers may be more likely to treat themselves to try something new or outside of their normal comfort zones.¹¹

Trader Joe’s really shines in the Brand Intimacy stages, where it has 25% of users in the sharing stage, 11% in bonding, and an impressive 14% in fusing. Of the consumers who write about Trader Joe’s, half are in some form of intimacy with the brand.

Ranking 3rd in the industry, H&M beat multiple big-name department stores like Nordstrom, Bloomingdales, and Neiman Marcus to become the most intimate clothing retail brand. Second only to the Spain-based Inditex, the parent company of Zara, H&M is one of the biggest international clothing retailers in the world. Based out of Sweden, the H&M Group operates in 75 geographical markets with over 4,800 stores under various company brand names.¹²

Like Trader Joe’s, H&M boasts a high Brand Quotient Score and still manages to rank in the top 20 brands overall at 17th. Differing from both the industry’s and Trader Joe’s dominant archetype, H&M’s strongest archetype is identity, which refers to a brand reflecting an aspirational image or admired values and beliefs that resonate deeply. This, combined with the brand’s keyword “cool,” suggest consumers appreciate the brand’s image and look. H&M also outperforms Trader Joe’s in bonding, the middle stage of intimacy. Of the consumers who write about H&M, 43.3% are in some form of intimacy with the brand.

H&M’s core beliefs and values are strongly reflected in the brand’s marketing and image.

The brand’s commitment to being “cost conscious” and “keeping it simple” is a hallmark of its brand identity and appeal. Consumers often praise the store’s affordability while still reflecting trendy, modern styles. The simplicity of offering decent quality clothes at a competitive price point combined with the brand’s expansive variety of clothing make it an attractive choice to a large demographic.

Started in 1942 by Ingvar Kamprad, IKEA has been the world’s largest furniture retailer since 2008. Aimed at providing affordable, modern furniture, the group is responsible for approximately 1% of the world’s commercial-product wood consumption. In 2021, IKEA was the eighth most valuable retailer in the world, making it the most valuable furniture retail brand, valued at over 21 billion US dollars. The business operates 458 stores around the world, has 50 e-commerce markets, and serviced roughly 775 million customers in 2021.¹³

IKEA ranks 10th and comes in 46th in our overall Brand Intimacy Study. The furniture brand shares its dominant archetype, indulgence, with Trader Joe’s. IKEA is particularly strong in the first stage of Brand Intimacy, sharing, in contrast to bonding and fusing. Of the consumers who write about Ikea 32.1% are in some form of intimacy with the brand. Like both Trader Joe’s and H&M, IKEA’s affordability and relatively decent quality of goods make it a fan favorite among consumers looking for chic, budget-friendly furniture options.

Since its inception, IKEA’s marketing strategy has relied heavily on its annual catalogue, first published in 1951. In 2016, IKEA distributed over 200 million copies of its catalogues to over 50 countries. However, IKEA ended the publication of the catalogue after 70 years, citing a shift to online marketing and sales, with the 2021 edition being the final edition. In an effort to digitize the brand’s marketing, IKEA launched the. IKEA Place app, which helps consumers use virtual reality to visualize true-to-scale furniture in the users’ own space.

By examining more than 1.4 billion words and phrases from social media, our 2022 Brand Intimacy Study provides us with valuable insights into how consumers feel about brands.

One of the most common keywords connecting these three brands is “affordable.” Trader Joe’s consumers are 1.6 times more likely to mention the brand’s affordability or cheapness as compared to other retail brands.

Despite its low price point, the brand still exceeds expectations on quality and taste. This sentiment translates to H&M and IKEA consumers as well.

Aside from being affordable, consumers of all three of these brands had many things to say regarding the brands’ sustainability initiatives.

As a part of the the fast-fashion industry, H&M has often come under fire for its role in contributing to global warming. Because of this, the brand has committed to reducing plastic packaging, recycling clothing, and decreasing its carbon emissions, all detailed in its annual sustainability report.¹⁴ Compared to other retail brands, H&M consumers are 2.4 times more likely to mention the brand’s environmentalism and sustainable initiatives.

Unfavorable reviews of Trader Joe’s sustainability practices also prompted the company to up its sustainability commitments. As of this year, Trader Joe’s sustainability framework is dedicated to reducing and removing unnecessary packaging, eliminating food waste, and recycling any waste materials.

IKEA went through a similar transition after it faced criticism for unsustainably sourcing wood from protected forests. Now, IKEA has laid out its eco-friendly ambitions for 2030, which includes phasing out non-rechargeable batteries, using more renewable and recycled materials, and eliminating waste.

Changes like these indicate how social discourse can influence brands and their business models.

Although all three of these brands dominate different corners of the retail industry, they are connected by the way their consumers talk about them. Customers across the board are drawn to retail brands that combine affordability and quality, offering an elevated product at an accessible price point.

Concern for environmentally conscious business principles has further led to a growing focus on corporate sustainability. Ambitious sustainability frameworks and reports show effort being made to incorporate this new priority, but it is yet to be confirmed if these goals will actually be reached.

As inflation worsens and people prepare for another potential recession, we anticipate these three brands will weather the storm, being essential and having strong connections with their customers. By linking to (affordable) moments of pampering and gratification, shared values, and reliable performance, Trader Joe’s, H&M, and Ikea are deepening their customer relationships, crucial in times when consumers feel disconnected from and dissatisfied with prices and products.

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Get an overview of Brand Intimacy here.

Read our detailed methodology here. Our Amazon best-selling book is available at all your favorite booksellers. To learn more about our Agency, Lab, and Platform, visit mblm.com.

¹ “2022 retail industry outlook.” By deloitte.com
https://www2.deloitte.com/us/en/pages/consumer-business/articles/retail-distribution-industry-outlook.html

² “Total retail sales in the United States from 1992 to 2021.” By statista.com
https://www.statista.com/statistics/197576/annual-retail-sales-in-the-us-since-1992/

³ “Retail trends: 2022 retail industry stats, trends and forecasts.” By insiderintelligence.com
https://www.insiderintelligence.com/insights/future-retail-trends-industry-forecast/

⁴ Ibid

⁵ “TikTok streamlines social commerce with 3 new ad formats.” By marketingdive.com
https://www.marketingdive.com/news/tiktok-social-commerce-ad-formats/629990/

⁶ “Inside adidas’ journey towards a more sustainable future.” By dazeddigital.com
https://www.dazeddigital.com/fashion/article/52447/1/adidas-end-plastic-waste-sustainability-future-marwin-hoffmann-parley-oceans

⁷ “31 Sustainable Fashion Brands You Can Shop Confidently.” By glamour.com
https://www.glamour.com/story/sustainable-fashion-brands

⁸ “Wait, Trader Joe was a Real Guy?” By cnn.com
https://www.cnn.com/2022/05/07/business/trader-joes-history-joe-coulombe/index.html

⁹ Ibid

¹⁰ “Meet the typical Trader Joe’s shopper.” By businessinsider.com
https://www.businessinsider.com/typical-trader-joes-shopper-demographic-younger-married-earning-80k-income-2021-9

¹¹ “7 Reasons Customers Are More In Love With Trader Joe’s Than Ever.” By forbes.com https://www.forbes.com/sites/blakemorgan/2020/03/12/7-reasons-customers-are-more-in-love-with-trader-joes-than-ever/?sh=d29ee4d3c1fd

¹² “Annual and Sustainability Report 2021.” By hmgroup.com
https://hmgroup.com/wp-content/uploads/2022/03/HM-Group-Annual-and-Sustainability-Report-2021.pdf

¹³ “IKEA – Statistics and Facts.” By statista.com
https://www.statista.com/topics/1961/ikea/#:~:text=In%202021%2C%20IKEA%20was%20the,visited%20IKEA%20stores%20in%202021

¹⁴ “Annual and Sustainability Report 2021.” By hmgroup.com
https://hmgroup.com/wp-content/uploads/2022/03/HM-Group-Annual-and-Sustainability-Report-2021.pdf