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Victoria's Secret: Commerce

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by

Varun George

on 5 September 2014

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Transcript of Victoria's Secret: Commerce

F.Brooks, V.George, B.Roles
A subsidiary of Limited Brands
Victoria's Secret
Company Overview
> Largest American retailer of women's intimate apparel.

> Over 1000 stores across the USA as well as 200 international locations.

> Apart from retail stores , products are also available through the catalogue and online business, Victoria's Secret Direct.

> Generates over $4 billion annually.
Limited Brands
> Owned by L. Brands Inc.

> L. Brands founded by Leslie Wexner in 1963.

> Fastest growing L. Brands subsidiary.

> Contributes to nearly 50% of L.Brands profits.
A History:
> Founded by Roy Raymond in San Francisco.

> Targeted at men as a result of his personal embarrassment when purchasing "exotic" lingerie for his wife.

> The business made $500,000 in its first year.
> Expanded to four stores and a mail-order operation.

> By 1982, there were 6 stores, a 42-page catalogue and the business was grossing $6 million annually.

> Philosophy of selling to male customers became unsuccessful.

> Sold to Limited for $4 million.
> Shift in product line.

> Expansion into new products

> Fashion show success.

> By 2006, the 1000 stores across USA accounted for one third of Limited's profits.
Today
> Valued at $6 billion.

> Largest player in lingerie market.

Fashion Show
Lingerie
> Roy Raymond saw the opportunity to introduce fashion to lingerie.

> Combines European elegance with erotic concepts.
PINK
> Lingerie/clothing line launched in 2002.

> Targeted at 15-22 year olds.


Beauty & Accessories
> The face of Victoria's Secret international stores.

Other Products
> Also deals in swimwear, sportswear and casual clothing.
Methods of Expansion
Starting a Chain
> After a successful first year, founder Roy Raymond expanded by establishing a chain of four Victoria's Secret stores in 1978.

> Today, there are over 1250 stores across the globe.
Victoria's Secret Direct
> Provides online service 24/7.

> Expanded business by increasing sales in existing markets.

> Records $870 million annually in sales.
Franchising
> Expanded internationally with franchises in 2010.

> 6 franchised clothing stores and 123 franchised beauty & accessories stores across the globe.


Going Global
> In 2005, its first boutique was opened at Heathrow airport.

> Purchased La Senza in order to learn about Canadian market.

> By the end of 2013, the company projected that it would have 780 stores across the globe.


Cash:
The Reason for Expansion
New Customers
> Ability to attract and retain new customers.

> PINK range developed a loyal customer base.

> Increased customers = Increased market share.
Economies of Scale
> Spread risk of business.

> Reduces cost of doing business.

> Accounts for fluctuations in various regions.
The Challenges of Expansion
Decline in Quality
> High demand for stock can lead to the use of cheap manufacturing.

> Persistent quality problems reported in the 1990's.

> Value of the business lied with its high quality of product.
Overproduction
> The production of too much stock.

> Lack of market research and beta testing.

> Overstocked with sexy sports bras in 2013.
Cultural Differences
> PINK was seen as a means of "sexualising" young girls.

> The company eventually withdrew their "call me" campaign.
Ethical Initiatives
> Wexner and L.Brands have contributed $163.4 million to the Columbus Foundation
The Columbus Foundation
> A hub for hundreds of not-for profit groups.
Timeline
1977
1980's
2000's
Inflation
Expansion
An Established Business
Revenue/Profitability
Revenue/Profitability
> A general increase in prices causing money to lose its value.

> Contributes to the gradual increase in revenue.

> Doesn't increase profits as business costs also increase.
> L Brand's subsidiaries using their own methods.

> Greater amount of company owned real estate.

> Increases both revenue and profits with more sales made.
> No major fluctuations/losses in revenue.

> The result of an established business.

> Their success over a long period of time has contributed to the consistency of their massive annual revenue.
Full transcript