So... What Happened to Victoria’s Secret?
Once upon a time, the outstanding success of Victoria’s Secret was due to a particular key ingredient - a not-so-secret spice shared among all cult-status fashion brands: The ability to sell a dream. A welcome escape from the mundane, an occasion to be part of the spectacular and incredible. Despite (or perhaps because of) oodles of polyester, twinkling sequence and hot pink, Victoria’s Secret has earned a dominant position in the global lingerie market, subsequently bringing the fantasy of fashion to the masses.
Victoria’s Secret has grown into a global phenomenon, mainly thanks to its gigantic show - the most watched fashion show in the world. The first VS show dates back to 1995 and has since featured a remarkable roster of supermodels including everyone from Naomi Campbell to Heidi Klum prowling down the catwalk. Since 2001, the VS show has taken place in November, just in time for the holiday season. “Christmas is the single biggest commercial opportunity of the year” says Ed Razek Chief Marketing Officer of creative services of L Brands (the parent company of Victoria’s Secret).
Thanks to social media and TV specials, the show is seen in over 200 countries and has become a case-study example in fusing content and commerce. Each year the show incorporates popular music acts (For example: Taylor Swift, The Weekend, Lady Gaga, Ariana Grande, Harry Styles among others…) and takes place in front of a live audience before it is meticulously edited for broadcast a week later, resulting in valuable brand equity and a powerful driver of sales. This year’s show was aired on November 28th on CBS, one of the three major American broadcast television networks, and took place for the first time in Shanghai - following last year’s collection set in Paris.
The decision to show in China was motivated by its largely untapped lingerie market presenting a hugely attractive opportunity. The Chinese women’s lingerie market (worth $18 billion) is estimated to increase in value by 55 to 60 % from 2015 to 2020. To put the Chinese market in context, the United Kingdom lingerie market is worth about $2 billion and the United States at around $12 billion…
While intentions to expand are justified, the lingerie giant's latest show staged at the Mercedes-Benz Arena in Shanghai suffered a few unfortunate setbacks, leaving many outsiders puzzled at the event’s organisation. Firstly, several models and celebrities who were expected to appear in the show, including supermodel Gigi Hadid and Katy Perry, were denied entry to Shanghai as their visa applications were denied by the Chinese authorities. Additionally, numerous international influencers were also denied entry. Moreover, with Facebook and other social media platforms banned, (not to mention state surveillance) social media coverage and organic content was kept limited. Also, the much hyped after party, which took place next to the show venue, came to a crashing halt just before midnight when police intervened and shut down the event.
While the show was less than par, its biggest troubles were reported in disappointing third-quarter results. Parent company L Brands, which depends on Victoria's Secret for about 60 percent of its annual revenue, reported that earnings per share, for the quarter ended October 28, 2017, decreased 29 percent to $0.30 compared to the quarter ended October 29, 2016. Third-quarter operating income decreased 18 percent to $231.7 million compared to $283.6 million last year, while net income was $86.0 million compared to $121.6 million previously. Also at Victoria's Secret itself, sales were down 11% compared to the same period last year.
While competition has indeed expanded rapidly, I argue Victoria’s Secret faces 3 main problems which need to be quickly addressed in order to survive.
First, VS is not adapting to current trends within the women’s underwear market, which today emphasises functionality and comfort. According to research from Mintel, seamless and T-shirt bras have grown in popularity and have overtook enhancing bras such as padded and push-up styles. Even specific to the Chinese market, the VS “bombshell” image doesn’t seem to fit the bill as the female Chinese consumer prefers traditional and less showy looks.
Secondly, its branding and marketing message has not changed in the past 20 years. With its cookie-cutter “Angel” aesthetic of long legs and trimmed tummies, interpreted at best as repetitive, VS only demonstrates a single note in female beauty which within a creative industry is simply uninspiring. VS relentlessly pushes the image of its Angels being overly sexualised and is out of sync with the views of women today on beauty.
Lastly, VS suffers a “stuck in the middle” price point, which when it comes to the bottom line is probably its greatest problem. The product in terms of quality and design is too cheap to compete with luxury, yet too expensive for a routine everyday purchase. While this season, it has collaborated with Parisian maison Balmain, suggesting a shift towards haute luxe, the VS image remains mass (dangerously tiptoeing around tacky I might add) and may risk alienating loyal customers.
Victoria's Secret is in desperate need to pivot (!) and adapt to current trends. It must modernise its image, because at the moment it is two-dimensional and leaves a cringeworthy taste on the tongue. Let’s expect a significant strategy shift in 2018 where hopefully VS will again showcase a product offering suited to the demands of their customer… not the fantasies of her boyfriend.
