Victorias Secret

Lauren Clark & Moriah Lutz-Tveite

October 18, 2011
LXFM 501

Table of Contents
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About Victorias Secret

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History of Victorias Secret

Roy Raymond, a Stanford Graduate School of Business student, founded
Victorias Secret in 1977. Raymond felt embarrassed when shopping for lingerie for his
wife in a department store setting. Raymond opened the first Victorias Secret store in
Palo Alto. The store was meant to create a comfortable environment for both men and
women with wood-paneled walls, Victorian details, and helpful sales staff. Instead of
racks full of lingerie with every size, Victorias Secret featured single styles hung on the
wall in frames. After men picked out the style, sales staff would pull the correct size out
of the back inventory.
In 1982, just five years after the first store opened, Raymond sold the Victorias
Secret company to The Limited. At the time of the sale, Victorias Secret had six stores, a
42-page catalogue, and grossed $6 million a year. The Limited rapidly expanded
Victorias Secret into U.S. malls during the 1980s. Victorias Secret started offering a
wider range of products including shoes, evening wear, and perfumes through its
catalogue, which was issued eight times a year.
By the early 1990s, Victorias Secret was the largest American lingerie retailer
and sales reached $1 billion. Victorias Secret gained notoriety in the 1990s when they
started using supermodels in their advertisements. The Victorias Secret Fashion Show
began in 1995 and was broadcasted on primetime television. The annual show has
elaborate custom lingerie, music, and set designs. Celebrities and entertainers attend the
show every year.
In 2007, Limited Brands sold 75 percent of The Limited clothing chain to Sun
Capital Partners in order to focus more attention to Victorias Secret and Bath & Body
Works, which accounted for 72 percent of revenue in 2006. As of January 2011, there
were 1,028 Victorias Secret stores.

mission statement
Limited Brands is committed to building a family of the worlds best fashion
brands offering captivating customer experiences that drive long-term loyalty and deliver
sustained growth for our shareholders (Our Company).
Victorias Secret strives to deliver a best in class, captivating, branded customer
experience that builds loyalty and enables consistent sales and profit growth (Our
Company).

N"

1. Customer Service

Vision & values

Victorias Secret company believes in putting the customers first and

always fulfilling their wishes and desires.

2. Passion
Victorias Secret believes in being emotionally, intellectually, and
spiritually engaged in their work, which will lead to higher quality
products and customer service.

3. Inclusion
Victorias Secret values diversity and tries to always include others
thoughts, experiences, and ideas in their company.

4. Doing the Right Thing

Victorias Secret wants to do the right thing, even if no one is watching,
because they place importance on their beliefs of loyalty, integrity, and
responsibility.

Victorias Secret Angels

Adriana Lima

Alessandra
Ambrosio

Doutzen Kroes

Miranda Kerr

O"

Company Structure

Intimate Apparel
Clothing
Swimwear
Accessories
Beauty

Victorias Secret

Intimate Apparel
Loungewear
Swimwear
Accessories
Beauty

PINK

Victorias Secret
Beauty

Fragrance
Body Care
Hair Care
Skin Care
Make-Up
Self Tanners & Bronzers

Victorias Secret is divided into two main

segments- stores and direct. Stores are
actual brick and mortar stores located in
malls or stand-alone locations. Victorias
Secret direct includes the catalogue and
website.

M"

Company Size
As of January 29, 2011, Victorias Secret operated 1,040 domestic stores (Our
Company). There are only 12 stores located in Canada. There are also four
freestanding Victorias Secret Beauty stores located in the US.
The first Victorias Secret store located outside North America opened in Kuwait
and the United Arab Emirates but are owned and operated by M.H. Alshaya Co, a
Middle Eastern company (Victorias Secret). There are currently 267
international Victorias Secret stores, which make up 20 percent of total stores.
Victorias Secret Direct includes the company catalogue and website. The
catalogue reaches more than 390 million customers each year (Our Company).
Victorias Secret website is one of the fastest and profitable e-commerce sites on
the Internet (Our Company).

P"

Financial Statistics
Below is financial information for Limited Brands for the last five years. Limited
Brands income statement shows an increase in net income of 8.4% within the last
year. For the last three years Limited Brands has been growing, in regards to net
income. Fiscal year ending January 29, 2009 saw a decrease in net income, most
likely due to the beginning of the worldwide recession. These figures are for
Limited Brands as a whole, not Victorias Secret.

In fiscal year 2010,

Victorias Secret stores
had $4,018 million in
net sales, a 15 percent
increase from 2009
(10-K). Victorias Secret
Direct had $1,502
million in net sales, an
8 percent increase (10K).
Additionally, Victorias
Secret had $663 sales
per average selling
square foot (10-K). This
was a 14 percent
increase from the year
before."

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Products Offered
Victorias Secret offers bras, underwear, sleepwear, clothing, shoes, swimwear,
and beauty products. Products range from basic underwear and T-shirt bras to
special occasion lingerie. Clothing ranges from professional suiting to yoga wear.
Victorias Secret products cover all occasions that their customers may need
undergarments or clothing for. The beauty segment includes make-up,
fragrances, body care, skin care, hair care, and tanners.

S"

Fashion Level & Pricing Strategy

Victorias Secret can be considered somewhere between the categories of
moderate and better fashion levels. Its cotton and lower priced items are similar
to what could be found in an average department or retail store; however, many
of Victorias Secrets higher priced bras and lingerie are more similar to products
offered by brands at stores like Nordstrom.

Victorias Secret implements a

high-low or promotional
pricing strategy. The brand
sets a first price that is not
outrageously high; however, it
allows for plenty of room to
allow for markdowns.
Permanent markdowns are
rare as there is generally only
a small clearance area in each
store. Instead, Victorias
Secret utilizes many
temporary markdowns
through promotions like 5 for
$25 panties and holiday sales.
"

The Semi-Annual sale is the one event that

showcases items permanently marked down
from the previous season. During these sales,
the store is still full of new items not
promotionally priced as Victorias Secret
always keeps a mix of merchandise that is
offered at first price and a reduced price.
"

V"

Distribution

This factory in Sri

Lanka is Victorias
Secret largest supplier.
The factory is known
for being a progressive
company that takes
good care of their
workers. The factory
offers health and
educational programs.

Victorias Secret uses 20

vendors who manufacture
in 50 factories across the
globe to produce lingerie
(Kumar). Two factories in
Sri Lanka and India
produce about one-third of
Victorias Secret bras
(Kumar). Victorias Secret
products are also
produced in China,
Thailand, and Indonesia.

Limited Brands headquarters in Columbus, Ohio

also house seven distribution centers, one of which is
dedicated to Victorias Secret stores and one to Victorias
Secret Direct (Kumar). The store warehouse prepares
items to be shipped to the stores by tagging, steaming,
and hanging (Kumar). They also coordinate matching
sets for in-store displays. However, some items go
straight to stores without being prepared in the
warehouse.
Victorias Secret Direct has its own warehouse
where products are picked as single items based on
orders, whereas in the store warehouse, products are
shipped in cases to stores (Kumar). It takes, on average,
two days for products to get to customers (Kumar).
!R"

Marketing & Promotion Strategies

Television & Print Ads

Online/Digital Advertising

Semi-Annual Sales

!!"

Annual Fashion Show

In-Store Window Displays

!#"

Technologies & Innovations

Victorias Secret bases a great deal of their business around

innovating new bras that offer better support or larger cleavage.
One such recent innovation is the BioFit bra, which offers a
unique level of padding for each cup size.

Victorias Secret also created

an iPhone app. The app is free
through iTunes and users get
insider access to photo shoots
and model secrets. Users can
also shop from their phone,
locate the closest store, scan a
barcode, and share favorites
with friends.

!N"

Customer Profile
Victorias Secret target customers are women between the ages of 18 and 49 who
want to own fashionable undergarments and lingerie. As seen in the diagram, 44
percent of Victorias Secret customers are between the ages of 18 and 34
(Quantcast).
The majority of Victorias Secret shoppers, 75 percent, are Caucasian, while only
5 percent are Asian and 8 percent are African American (Quantcast).

Victorias Secret target

market includes people
who live in cities with
malls and have access to
the Victorias Secret
stores. Recently however
with Victorias Secret
website, they have
increased their target
market to customers who
live in small towns
without proximity to an
actual store.

Most shoppers dont

have kids between the
ages of 0-2 and 13-17.
On the other hand,
most shoppers do have
kids between the ages
of 0-17.

Another important target market for

Victorias Secret is males. Especially
around Valentines Day and
Christmas, men shop for lingerie for
their significant others. This diagram
shows that 39 percent of shoppers
are males. Thats a high percentage
for a company that primarily sells
products for women.

!O"

With an average income of $50,000, Victorias Secret consumers have money to purchase
trendy lingerie several times a year. The diagram above shows that 32 percent of shoppers
earn between $60,000 and $100,000, which is higher than the average. Just below 32
percent at 31 percent are shoppers who earn more than $100,000 a year. With disposable
incomes, shoppers have money to spend on trendy lingerie, beauty products, and clothing
items on a seasonal basis.

Because the majority of

Victorias Secret stores are
located in malls, their
shoppers are frequent mall
shoppers who dont
necessarily go to the mall
with Victorias Secret as their
destination. Shoppers
probably go to the mall with a
group of friends and see it as
a socializing opportunity as
well as a chance to shop.
Victorias Secret shoppers are
typically women who enjoy
shopping and go to the mall
several times a month.
Customers are interested in
fashion and follow new
trends each season. They also
care about their appearance,
which includes their lingerie
and undergarments.

!M"

Competitor Analysis
Fredericks of Hollywood is the companys closest
competitor. Fredericks had 2010 net sales of $1.3
million while operating 127 stores (Fredericks of
Hollywood). Like Victorias Secret, Fredericks also
operates through catalogue sales and e-commerce.
Fredericks of Hollywood focuses on sexy lingerie that
can come off as a bit raunchy and sleazy. While
Victorias Secret definitely sells sex, they have found a
way to promote themselves in a more wholesome
manner by also selling practical undergarments.

Another important competitor for Victorias Secret is

aerie, a brand owned by American Eagle that primarily
serves as competition for Victorias Secret PINK line
geared toward college-aged adults. Currently there are
only 137 aerie retail stores that helped create nine
percent of American Eagles $2.68 billion in net sales
for 2010 (American Eagle). While American Eagle
doesnt have the same kind of legacy in the lingerie
business, the aerie brand may have some advantages
over PINKs line. Since aerie is not tied to an overtly
sexual brand, some parents may feel more comfortable
purchasing their teenage daughters items from aerie.

There are an endless number of bra and lingerie companies in the market. However, the majority
like Wonderbra, Vassarette, and Bali are sold primarily in department stores. As such, these brands
dont offer a one-stop shop for customers to view all of their products. Agent Provocateur and La
Perla are the most well-known luxury lingerie brands. Victorias Secret doesnt stack up to these
luxury companies and they target a completely different market.

!P"

SWOT Analysis

STRENGTHS

WEAKNESSES

Legacy
Brand identity
Niche market
Advertising strategy

Overly sexual brand

Lack of plus size options
Lack of global presence
Lack of luxury items

OPPORTUNITIES

THREATS

Domestic expansion
International expansion
Market position
Social media network

Competitors
Economic recession
Brand image
Production & material prices

!Q"

Trend Analysis

Ive Red All About It

!
Miraculous Bra

Very Sexy Bra

3.1 Phillip Lim

Classic Push-Up
Michael Kors

Sexy Little Devil

Burberry

Prada

The Dreamer

!S"

Bejeweled

Oscar de la Renta

Alberta Ferretti

Carolina Herrera

Tracey Reese

Diane von Furstenberg

Miraculous Full Coverage

Sexy Tee

Incredible Demi

Halter Babydoll

The Lacie

!V"

Jungle Book

Chlo!

Incredible Push"Up

Very Sexy Push"Up

Marc by Marc Jacobs

The Dreamer
Dolce & Gabbana

Betsey Johnson

The Nakeds Full Coverage

YSL
Cosmetic Bag

#R"

Merchandising Analysis

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NR"

Sales Plan & Financial Goals

The major financial goals of Limited Brands, of which

Victorias Secret is a part, is to improve operating margins to
above 15 percent within the next year. In order to achieve this
goal, Victorias Secret plans to implement a continued sales
focus on bras and panties. They plan to increase sales of
these items by emphasizing newness and innovation within
the product category. The brand plans to rely on their very
large mailing list culled from catalog, online, and in-store
customers to encourage repeat business through direct
marketing techniques.

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Merchandising Calendar

Victorias Secret merchandise calendar is broken up into a

Fall/Winter Collection, which is introduced in the
beginning of July and a Spring/Summer Collection, which
is released at the beginning of February.
However, there are several other important dates on the
brands merchandise calendar. First, the Fashion Show,
which will take place this year on November 30. The
Fashion Show showcased the latest and greatest
merchandise.
Halloween, the winter holiday season, and Valentines
Day are the three most important holidays for Victorias
Secret. The company releases special collections for all
three of these occasions.
Finally, the Semi-Annual Sale, which runs twice a year
just prior to the release of the new collections, is an
essential way Victorias Secret gets rid of excess
merchandise.

Semi Annual Sale

Valentines Day Merchandise Introduced
Spring/Summer Collection Introduced
Semi Annual Sale
Fall/Winter Collection Introduced
Halloween Merchandise Introduced
Holiday Merchandise Introduced
Fashion Show

January 4 January 18
Mid January
Early February
June 14 June 27
Early July
Early September
Mid October
November 30

N#"

Product Origins & Sourcing

Victorias Secret sources its

materials from many different
places in the world.*The
majority of sourcing and
manufacturing include China,
Sri Lanka, Thailand, and
Indonesia. Victorias Secret
has good relationships with
their factories and encourages
safe working conditions as
well as health and educational
opportunities for factory
workers.
"

Marketing Analysis

Victorias Secret releases new

advertisements every time a new
collection of bras is introduced.
This year, the new Very Sexy and
Showstopper bras were released.
Victorias Secret also does
television and print ads for their
annual fashion show.

NN"

Victorias Secret has

recently expanded into
digital marketing with
online videos and
backstage access through
their website. VS All
Access gives you videos,
pictures, behind-thescenes information that
isnt available to the
public. You can go to your
favorite VS Angels site and
see what events and
commercials shes been
apart of. All Access also
gives you breaking news
on Victorias Secret such as
whos performing at the
upcoming Annual Fashion
Show.

Victorias Secret also released their own app

available through iTunes. Billboards can be
seen on buildings, bus stops, and other
locations with a barcode on one of the angels.
If you take a picture of the barcode it revels
the angels secret.

NO"

Works Cited
10-K. Limited Brands, 18 Mar. 2011.
http://www.limitedbrands.com/investors/company_info/sec_filings.aspx
American Eagle Outfitters Annual Report. April 2011. http://phx.corporateir.net/phoenix.zhtml?c=81256&p=irol-reportsannual
Fredericks of Hollywood Annual Report. July 2011.
http://www.fohgroup.com/investment.asp
Kumar, Sumit Supply Chain Strategies in the Apparel Industry: The Case of Victoria's
Secret. June 2005.
http://dspace.mit.edu/bitstream/handle/1721.1/33324/62314026.pdf?sequence
=1
Our Company. Limited Brands.
http://www.limitedbrands.com/our_company/about_us/default.aspx
Quantcast, Sep. 2011. Web.
http://www.quantcast.com/victoriassecret.com/demographics
Victoria's Secret. Wikipedia. http://en.wikipedia.org/wiki/Victoria's_Secret

NM"

Appendix

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Victorias
Secret

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