How Victoria's Secret controls 62% of the lingerie market
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It comes weeks after news of a red-hot, stellar quarter.Sales had skyrocketed, for both Victoria's Secret and its parent company, L Brands. Comparable store sales went up an impressive 7%. (This time last year, they only went up 3%.)
Additionally detractors have denounced the company for its limited size range and its thin models, but the company is invincible to the criticism. (This might be because many of the people criticizing Victoria's Secret never shopped there in the first place.) These might seem like massive threats, especially when the over-the-top show - which is subject to both admiration and criticism - is about to air.But ultimately, L Brands holds 61.8% of the lingerie market, according to IBIS World.
Here's why Victoria's Secret remains in control of the lingerie marketplace.
1. It entices customers with new products on a regular basis.
"I think the success of Victoria's Secret really lies in the brand's ability to entice its consumers into visiting stores and to spend on new product. This is, in large part, achieved by a constant refresh of the range which follows a variety of ever changing themes," Neil Saunders, CEO of consulting firm Conlumino, said in an email to Business Insider.
An example of this is how on a recent earnings call, the company stated that it would be pushing its semiannual sale from January to late December, to make way for the spring selection.
2. Its marketing schemes appeal to women - the people who shop there.
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Even though the company was founded with the goal of appealing to men (and it sometimes get criticized for its super sexy shows that do, indeed, appeal to men), it still makes sure that its advertising campaigns capture women's attention spans.
One crucial tenet? Its models need to be appealing to women. The brand's advertising team carefully selects models they believe female customers will relate to.For this year's fashion show, the company tapped Gigi Hadid and Kendall Jenner, two models who are very popular with young women.
These marketing schemes are obviously working - when Goldman Sachs and Teen Vogue polled fashion forward girls ages 13-29 to see what brands they loved, the retailer came in at #7, bypassing popular stores like H&M, Forever 21, and Urban Outfitters. (Its younger sister brand, Pink, came in at #5.)
3. It has promotions, but it's not as promotional as other mall staples are.
The company is selective with its promotions.There are continued plans to keep up this pace. On a recent conference call with analysts discussing third quarter financials, the company iterated that next quarter, the company will be scaling back its promotions even more - by having fewer, but better, promotions.
4. The brand engages its consumers.
Saunders called this a "club type atmosphere among its customers which helps to keep them loyal and engaged with the brand," adding that this setup "really sets it apart from other players."
Victoria's Secret engages with its consumers in a variety of ways on social media. For its most recent fashion show, the company's Instagram posts took fans backstage with its top models.
5. It's expanding, and in the right places.
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On a recent earnings, call, the company explained that when it selects locations for new stores, it looks for the best locations, rather than the lowest rents.
And the company has plenty of opportunities to continue to expand."I also think that given the high productivity of its existing stores, L Brands has the scope to add significantly more Victoria's Secret and Pink fascia across the US - which they have been doing, and which further aids growth. Given that there are a large number of outlets which are not able to carry the company's entire range, there are further opportunities for store enlargement and expansion over the next few years," Saunders said. "Then, looking beyond the US., L Brands also has significant scope for international expansion. Given the success of the company the international store count is surprisingly low. However, we [Conlumino] believe this expansionary route holds enormous potential over the next few years."
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