Victoria’s Secret Stores, LLC (Victoria’s Secret) is an American company that sells lingerie, personal care products and apparel that specifically target women. Roy Raymond started the company in 1977 and it has since grown to become the largest retailer of lingerie in the United States. Since 1982, Victoria’s Secret has operated as a subsidiary of Limited Stores Inc. Some of the products that the company sells include nightdresses, pajamas, yoga wear, blouses, handbags, accessories, makeup, and skincare products. The company sells these products through an internet website and physical stores. Currently, Victoria’s Secret has over a thousand stores in North America and the United Kingdom. Other Victoria’s Secret stores are spread out around the world in more than sixty countries. The firm also operates using marketing campaigns that feature some of the world’s most popular supermodels and famous runway shows.
Victoria’s Secret started in 1977 when Roy Raymond borrowed forty thousand dollars from his bank and parents to open a dedicated lingerie store. Raymond felt the need to start such an establishment after he had an embarrassing experience purchasing lingerie for his wife from a department store (Barr 1). After its establishment, Victoria’s Secret proved to be popular, particularly with its focus of selling women’s lingerie to male customers. However, the idea proved to be unsustainable and in 1982, Raymond sold the firm to Limited Stores Inc (a company that later became a part of L Brands Inc) to avoid bankruptcy (Barr 1). Soon after, the new owners of Victoria’s Secret changed the model and started focusing their sales on women. Since then, the firm has grown with that model for several decades, with few variations to the target consumers such as an attempt to sell men’s lingerie that only lasted for eight years (Barr 1). The growth has also seen the company start scores of stores, with most of them located in the United States.
Victoria’s Secret has established the majority of its stores in North America, where most of its product’s consumers live. In the United States, the company has one thousand and sixty stores. An additional thirty-four stores can be found in Canada along with five in the United Kingdom. This brings the total number of Victoria’s Secrets stores in the three countries to one thousand and ninety-nine (“Proxy Statement for the 2014 Annual Meeting” 2). In addition to the stores in North America and the United Kingdom, Victoria’s Secrets also operates four stores in the Middle East and one hundred and ninety-eight other retail locations in over sixty countries around the world including South Africa, Australia, and Russia (“Proxy Statement for the 2014 Annual Meeting” 2).
The growth and expansion of Victoria’s Secret over the past three decades has translated into sales worth billions of dollars each year. However, financial figures over the last years indicate that the company’s growth is decreasing. In 2011, the firm posted net sales of 6.1 billion dollars, a fourteen percent increase from the previous year. In 2012, the company still recorded an increase in net sales, 6.5 billion dollars, but the margin of growth had reduced by half, from fourteen to seven percent between 2011 and 2012 (“Proxy Statement for the 2014 Annual Meeting” 37). The next financial year marked another decrease in the firm’s growth, as net sales grew by only three percent. While the firm recorded net sales of 6.5 billion dollars in 2012, 2013 only witnessed a marginal increase to 6.6 billion dollars (“Proxy Statement for the 2014 Annual Meeting” 28). Preliminary figures from the current financial year shows that the sales from the 2014 financial year may be even lower. As of August, the company had sales of only 1.7 billion dollars from its stores in the United States (Victoria’s Secret 1). However, these figures do not include online sales and they could still increase with the year’s holiday season yet to come.
Victoria’s Secret vision is to become the world’s leading retailer in women’s beauty care products, lingerie, and apparel (“About Us” 1). The company outlines this vision through the goals that it identifies for the different departments within it. The key focus for each of Victoria’s Secret’s departments is to become the world’s leading retailers in their specific areas of interest. For Victoria Secret Beauty, the area of interest is body care products and sensual fragrances. Conversely, Victoria’s Secret Direct and Stores focus specifically on lingerie and apparel targeting women (“About Us” 1).
Value proposition refers to any innovations or strategies that a company uses to attract customers. For Victoria’s Secret, value proposition comes through the employment of some of the world’s most beautiful women to model the firm’s products and act as the face of the company. The key idea of the products that Victoria’s Secret sells is that they are supposed to make those who wear them look and feel attractive. Accordingly, by using beautiful women who fit the image that the firm wants to project, Victoria’s Secret is able to appeal to a wide range of women from different socio-economic classes.
Brand personality refers to the way that a company adds character and an identity to its product and trademark (Batra, Myers & Aaker 356). Victoria’s Secret brand personality is attached to its value proposition as the firm uses the same supermodels to identify itself as a young, sexy, and attractive company. Brand personality is important for consumers because they assume the same identity when they use a company’s products (Batra, Myers & Aaker 356). Accordingly, Victoria’s Secret shapes its marketing campaigns and programs in a manner that sustains this brand personality and make the consumers of its products assume the stylish, young and attractive identity of the firm.
Brands are normally composed of several elements that help form the identity of a firm and its products. Victoria’s Secret has several key elements within in its branding that make crucial contributions to the creation of the firm’s brand personality. One key element of the firm’s brand is the group of supermodels that the company uses to model its products, specifically the lingerie. Victoria’s Secret current group of supermodels includes Candice Swanepoel, Karlie Kloss, Alessandrio Ambrosio, and Adriana Lima (“Supermodels” 1).
Target Consumer Profile
Victoria’s Secret’s products and promotional campaigns specifically target young women belonging to the middle classes. The company’s target market is evident in the agents it uses to model the products as well as the designs of its promotional campaigns. Even though the target consumers are specifically women, Victoria’s Secret also markets its products in a way that they will appeal to men seeking to buy them for women. Victoria’s Secrets markets its products to women from that specific group by using models that will appeal to their target consumers.
Business and Market Environment Trends and Issues
Analysts have noted several key emerging issues in the lingerie industry over the past few years. Firstly, the internet has become an important variable in the industry as more firms turn to it for their marketing needs. This has enabled various firms to sell their products online access clients with ease. Another issue within the industry is the growth of various companies to oppose Victoria’s Secret and become strong competitors. Firms such as Hanes have emerged as competitors with the potential of overtaking Victoria’s Secret although that could take a few years (Lutz 1).
Victoria’s Secret currently faces competition from several companies in the United States. Three of the firm’s key competitors include Gap, through the subsidiary Hanes, Warnaco and Maidenform (Lepore 1). The three brands are specifically challenging Victoria’s Secret’s lingerie department, where the firm directs most of its attention. However, a comparison of the firm shows that Victoria’s Secret is still the dominant player in the market. Firstly, Victoria’s Secret still commands the largest share of the lingerie market in the United States. The firm controls more than thirty-five percent of the market, with its subsidiary, Pink, also a powerful player (Lepore 1). This means that Victoria’s Secret is capable of dealing with the competition it is receiving from other players. Secondly, Victoria’s Secret is the most recognizable and popular lingerie brand in North America and other parts of the world (Lepore 1). The strength of the brand and the success of promotional campaigns such as the Victoria’s Secret Fashion Show mean that the firm’s competition will have a hard time gaining ground on it. Thirdly, Victoria’s Secret still has a lot of room for expansion, space that it could exploit should the need arise. Even though the company dominates the lingerie industry, it has only focused on a limited demographic, meaning that an expansion of its target market would make it difficult for other firms to keep up with it. This is especially the case for companies like Hanes and Warnaco that already sell lingerie to large target markets that include male consumers.
One of the strengths that the company currently has is a strong brand name that is known in the entire United States popular and other parts of the world. Victoria’s Secret is undisputedly the leading lingerie retailer in the United States and this prestige helps the firm promote itself with relative ease (Lutz 1). Another strength that Victoria’s Secret has is a successful promotion campaign through the Victoria’s Secret Angels and fashion show. The two promotional campaigns have allowed the firm to have some of the world’s most famous people help it sell its products, and do so on popular television channels.
By focusing on women from a select demographic, Victoria’s Secret has missed the opportunity to sell its products to other potential buyers and groups. For instance, Victoria’s Secret does not sell lingerie to older demographics and men. In doing so, the firm is missing a large market and providing competitors with the opportunity to gain ground (Trefis Team 1). Another weakness that the firm has is a reluctance to expand its retail network to other countries in the world. The company currently has a thousand stores in the US and approximately two hundred in the rest of the world. This means that it is not accessing large potential markets in Europe and Asia as well as it could.
One opportunity that Victoria’s Secret has is to expand in the largely untapped markets found in Asia and Europe. Though other lingerie companies operate in those markets, Victoria’s Secret could enter the regions and use its brand personality and prestige to secure large portions and become a strong competitor. Another opportunity that Victoria’s Secret has is to expand its online presence. Currently, the firm sells its products through its main website and uses social media accounts to promote them. An increased presence on the internet would see the firm open new websites specifically targeting people in regions such as Asia, Europe and Latin America. This would provide a safer expansion alternative to the firm than the opening of physical stores. It would also be more convenient for clients.
Victoria’s Secret currently faces two key threats. Firstly, the number of firms in the lingerie market is increasing, with the internet providing them with increased avenues of sales and promotion. These independent sellers and firms currently pose a greater threat to Victoria’s Secret than companies like Hanes and Warnaco do (Lepore 1). However, the small nature of their operations makes them a threat that Victoria’s Secret can cope with. A second threat to Victoria’s Secret is the emergence of firms that purposefully target consumers that are unwilling to purchase expensive lingerie from Victoria’s Secret. Firms such as American Eagle’s Aerie have emerged with a plan to sell cheap lingerie with quality that matches that of Victoria’s Secret (Trefis Team 1).
Victoria’s Secret has curved out its own niche in the lingerie and apparel industry by specifically targeting young adult women from the middle class. The company reflects this focus through promotional campaigns that appeal only to people from that demographic. Additionally, the company’s decision to create the Pink program has helped it gain access to a younger demographic and expand its reach in the lingerie and apparel markets. Victoria’s Secret decision to focus on a specific demographic has helped the company establish its brand name within that target market and become the leading lingerie retailer in the United States. The firm currently commands the largest portion of the lingerie market (35%) and records the highest sales among the firms in the industry (Lepore 1).
Victoria’s Secret’s products fall under three main categories. The first, and most important, category in the brand’s portfolio contains lingerie. Lingerie is an important department for Victoria’s Secret because the company started by selling the products and this still forms the backbone of its brand and reputation. Currently, Victoria’s Secret sells different kinds of lingerie, bras, panties, “sleepshirts” and pajamas under this department. The brand is most famous for the women’s undergarments that it has within its portfolio, specifically various types of bras and panties. These include push-up, perfect shape, unlined, wireless and strapless bras along with thongs, “cheekies”, bikinis, briefs, no lines and other kinds of panties. The second product category that Victoria’s Secret deals with is apparel. The company sells different kinds of apparel that specifically target young women from the middle classes. These products include shoes, swimwear, sportswear and clothing such as yoga pants, sweaters, dresses and jackets (“Site Map” 1). Lastly, Victoria’s Secret sells beauty care products for women. These beauty products include makeup and skincare, hair care and body care products. In addition to these three departments, Victoria’s Secret started Pink in 2002 to promote its main products to a younger demographic, particularly girls between the ages of fifteen and twenty-two. The company considers Pink to be an entirely different program and runs it separately from the rest of Victoria’s Secret. Using Pink, Victoria’s Secret markets lingerie, sleepwear, beauty products and apparel to the younger demographic, with the intention of slowly introducing them to adult products as they mature (“Site Map” 1).
Victoria’s Secret’s products normally vary in price depending on the season, type and location. However, the pricing structure that the firm uses has been noted to be unfavorable to many buyers, even in the United States. Market analysts have noted that Victoria’s Secret specifically targets the middle class and prices its products accordingly, with many of them being expensive. To counter this issue, Victoria’s Secret uses a range of marketing strategies to reduce the products in a manner that wins the customers’ loyalties. Firstly, the company regularly offers coupons that allow consumers to pick out products within a certain price range and have them for free. The company also holds sales during certain seasons, during which it offers discounts for a wide range of products. Lastly, Victoria’s Secret offers customers discount vouchers as a way of winning their loyalty and making some products more affordable to them (“Site Map” 1).
Victoria’s Secret sells its product through two main fronts. Firstly, the company has a chain of retail stores located primarily in the United States and other countries in the world. In total, Victoria’s Secret has one thousand and ninety-nine stores in North America and the United Kingdom, with more than a thousand of them located in the US alone. In addition to these stores, the company also sells its products using more than two hundred shops that it has established in different countries in other parts of the world. The company operates solely as a retailer and does not work through any middle parties in the transaction process. This means that the firm itself manages every one of its stores. The second front through which Victoria’s Secret sells its products is the website www.victoriassecret.com. The website acts as both a shopping brochure and an online store as visitors can browse through the company’s portfolio and purchase products using credit and debit cards. The website is particularly convenient for customers who do not live in close proximity to any physical store. Additionally, potential clients can use the website as a tool for identifying the locations of various Victoria’s Secret stores if they prefer to shop physically (“Site Map” 1).
Victoria’s Secret runs a series of extensive promotional and marketing campaigns that it uses to advertise to the various consumer groups that it targets. One of the company’s most famous and iconic promotional campaigns is the Victoria’s Secret Fashion Show. The company started the show in 1995 with the purpose of establishing a high profile setting in which it could market its products (Mau 1). The fashion show started modestly in 1995, with a budget of one hundred and twenty thousand dollars. Since then, it has grown steadily in both popularity and scale. In 2011, the Victoria’s Secret Fashion Show featured thirty-eight models. It was worth twelve million dollars and was broadcasted on primetime television (Mau 1). This popularity has translated into increased sales for Victoria’s Secret as the fashion show draws the attention of both men and women (“Site Map” 1).
In addition to the Victoria’s Secret Fashion Show, the firm also promotes its products using a group of supermodels that it refers to as the Victoria’s Secret Angels. Victoria’s Secret carefully selects the “angels” from different countries around the world, making sure that the models represent an image that will sustain the brand’s personality. The world’s leading fashion magazines such as Elle, Vanity Fair, Vogue, New Woman and Victoria normally feature these supermodels as they promote Victoria’s Secret lingerie and apparel. The Victoria’s Secret Angels promotion campaign has proven to be quite successful for the company, as many of the supermodels have become immensely popular in the West. In the last Fashion Show (2013), supermodels such as Candice Swanepoel, Karlie Kloss, Behati Prinsloo, Adriana Lima and Lily Aldridge featured as the Victoria’s Secret Angels (“Supermodels” 1).
Lastly, Victoria’s Secrets carries out a comprehensive digital marketing campaign that includes internet websites and accounts on social networking sites such as Facebook, Twitter, Pinterest and Google Plus (Lutz 1). Victoria’s Secrets uses the website as a catalogue that shoppers can use to browse through the firm’s products. The social networking sites help the firm gain access to its clients in a direct and personal way. Using websites such as Facebook and Twitter, the company is able to interact with other users and obtain client feedback while also generating interest in its new products and for upcoming sales. This strategy is usually quite useful when the firm is gearing up for crucial periods such as the holiday season.
Using effective sales and marketing strategies, Victoria’s Secret has grown to become the dominant player in the American lingerie industry. The fact that the brand is easily recognizable is a result of this success. However, decreasing margins of growth over the past four years show that the company’s competition is improving. This situation is also an ominous sign of tougher times to come. One thing that Victoria’s Secret should consider is an expansion of its target market to include older women and consumers outside their current price range. Other players in the lingerie industry are already focusing on these demographics meaning that Victoria’s Secret needs to act fast. Another course of action that the firm should take is an expansion into markets in other regions that it has so far ignored. With only two hundred stores outside North America, Victoria’s Secret has plenty of room for expansion into new markets that could give the firm’s revenues a sharp boost.
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