"Discount retailers are holding up pretty well, and that's logical and expected," says James Gregory, CoreBrand's CEO. "What surprised us was seeing how beaten up many of the specialty and luxury retailers were."

Among the brands that tumbled sharply from their Brandpower ranking the prior year: Abercrombie & Fitch, Macy's, and Tiffany & Co. Among those that gained the most: Foot Locker, Zale Corp., and Limited Brands.

The Gap, Tiffany -- despite its slide -- and Saks were ranked highest among specialty retailers, in the same ranking as last year. Among discounters, Wal-Mart Stores again came in highest -- with Bed, Bath & Beyond moving into second place, pushing Target Corp. down into the No. 3 spot. "Target is a great brand and great company," said Timothy Robinson, CoreBrand's managing director. "Little bounces are less important than consistency over time." Other highly ranked brands included Barnes & Noble, Lowe's, and the Home Depot.

Rankings are based on CoreBrand's Corporate Branding Index, a quantitative study among 400 business decision-makers from the top 20% of U.S. businesses, spanning 49 industries. Over 12,000 telephone surveys are conducted annually, and more than 1,200 companies are measured. The rankings reflect business leaders' familiarity with and favorability ratings of companies, including assessments of overall corporate reputation, management and investment potential.

"Certainly, the market is, in general, reacting more positively to companies with a value proposition than those in the premium tier," says Robinson. "So companies like Tiffany and Nordstrom got hit the hardest."

But that doesn't mean that rushing in with lower-priced goods is necessarily the best option. While Robinson says he wasn't surprised to read that Neiman Marcus, for example, announced this week that it would start selling lower-priced goods in an effort to boost sales, he says it's all too easy to compromise or dilute a brand's overall image.

"There needs to be some very careful crafting, and they run a real risk of diluting the origin and the value of the brand. The important thing is to survive the recession, and to do so in a way that doesn't do damage to your long-term prospects."

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