In just twelve months, Victoria’s Secret has canceled its annual show, dismissed its chief marketing officer and replaced its chief executive officer.
There was a time when only the Superbowl competed with the Victoria’s Secret show in the annual audience rankings. Its annual show, with live music and the best supermodels in the world, achieved what Chanel, Dior or Balenciaga have not achieved: that public from all over the world stayed hooked to a television show. It was its great marketing asset, later copied by other intimate groups such as Etam, and its angels, thin and dressed in exaggerated sets, where the main attractive. Until they ceased to be, and their clients, their angels, their shows and their push-up bras stopped being the center of people’s screens.
The first symptom was precisely the decline in the audience of its annual show. In 2017, the number of spectators of the event reached historical lows since it began to be organized in 1995, with only five million spectators, and in 2018 it reduced again to just 3.3 million. In parallel, the results of the group began to suffer as well. After skyrocket results in 2016, the turnover of L Brands, the parent company of Victoria’s Secret, declined by 5% in 2017and stagnated in 2018. Like-for-like sales fell 8% in 2017 and 2% in 2018. Profit, meanwhile, fell 7% in 2016, 15% in 2017 and sank 35% in 2018.
And in 2019, everything exploded. Jan Singer, who had joined as chief executive officer in 2016 from Spanx, left the company. The executive had led strategic decisions such as the eliminating the bathing collection, but without success. His departure happened at the same times as L Brands chief marketing officer Edward Razeksaid there is no room in Victoria’s Secret for large size models or for transsexuals.
Just a few months later, the company announced the departure of Razek, signed a transsexual and a plus size model in a desperate attempt to bet on diversity and canceled its annual show, which had been held since 1995. “It is important that we evolve the Victoria's Secret marketing,” stated Stuart B. Burgdoerfer, chief financial officer of L Brands, at a conference with analysts.
“We are considering how to advance the positioning of the brand and communicate it to consumers,” said the executive. The company also sealed alliances with brands such as the pure player Livy or the British Bluebella with the aim of bringing them closer to a new generation of consumers. Singer was replaced by John Mehas, former Tory Burch and the first man to lead Victoria’s Secret in almost two decades. Before Singer, the company was run for sixteen years by Sharen Turney, who took the reins in the period of the company’s greatest growth, between 2000 and 2016.
What went wrong? Brand, product and stores
The fall of Victoria’s Secret happened due to a mix of factors. First, Victoria’s Secret’s hypersexualized, white and thin image conceived by Roy Raymond in 1977 is no longer aspirational for 2019 women, who reward brands with more inclusive messages. On the other hand, the product has lost meaning in the reign of athleisure and comfortable and casual fashion.
The fall of Victoria’s Secret happened due to a mix of factors
The group also arrived late to retail transformation: until just a few years ago, it only sold online in the United States and the United Kingdom, and its more than 1,500 stores worldwide have become unprofitable. The company has been reorganizing its retail network for two years: in 2019 alone, the group closed fifty stores. Victoria's Secret crisis has even catched the attention of some of the group’s investors, such as Barington, who asked L Brands to consider splitting Bath&Body Works, which is still rising, and stressed the need to improve branding and the merchandising.
The group sell another of its chains, La Senza, which had losses of forty million dollars and was acquired by Regent investment fund. Even so, Victoria’s Secret continues to dominate the intimate market in the United States, which amounts to 12.4 billion dollars: almost one in four dollars spent on underwear in the country end up in the company. Abroad, its share is 4%.
And then Rihanna arrived
While Victoria’s Secret languished, other entrepreneurial projects have taken positions on the ground that the American giant did not cover. If the angels are sexy supermodels and their clothes are lace garments designed by and for men, brands such as Aerie, Third Love or True&Co claimed to address real women, with comfortable and basic outfits, size range and communicationin the antipodes of angels.
Victoria’s Secret closed half a hundred stores in 2019
American Eagle Outfitters launched Aerie in 2006, but it was not until a decade later that it decided to ban the use of Photoshop in its models. The measure was widely accepted and other brands soon followed. The chain has a market share of only 3% in the United States, according to Euromonitor, but growing by leaps and bounds. Aerie chains eighteen consecutive quarters of double-digit evolution, and ended 2018 with like-for-like sales increase of 29%. While Victoria’s Secret shrinks its retail network, American Eagle Outfitters chain still has room to grow. Only in 2019, the company planned to open between 60 stores and 75 stores, and the goal is to reach a turnover of one billion dollars before 2021.
ThirdLove, on the other hand, jumped to retail in 2019 with an opening in New York after having exceeded one hundredmillion dollars of revenue only with its online store and under the motto Bras and underwear for everybody. The company, which offers more than seventy sizes of bras, raised 55 million in its last financing round, in which L Catterton acquired a minority stake in the company, as well as other investors.
Other digital natives such as Harper Wilde or True&Co (owned by PVH), which allow its customers to try several bras at home before paying, have also made comfort and inclusiveness its main value proposition.
Along with the diversity of sizes, racial inclusiveness is another of the drivers of this new generation of lingerie brands
Along with the diversity of sizes, racial inclusiveness is another of the drivers of this new generation of lingerie brands. This is the case of Trunude, specialized in basic flesh color for nine different skin tones. Many of these brands use their Victoria’s Secret differentiation as one of the keys to their speech, such as Lane Bryant, who has launched campaigns under the motto I’m No Angel.
In the midst of this polarization between diverse and inclusive, there was a gap in the market that remained empty and the singer Rihanna filled, ready to intimately replicate the phenomenon achieved with its cosmetic brand, Fenty.
The singer launched the Savage x Fenty brand in 2018, with models of all sizes and races but sexy sets. Her show in 2019, very similar to those of Victoria’s Secret, was the most applauded of New York Fashion Week. The firm is managed by a joint venture between the singer and the investment fund Techstyle Fashion Group, and in 2019 it reached fifty million dollars from investors such as Jay Z or Avenir Growth Capital. In total, the company has raised seventy million of its foundation and it is estimated that its turnover is around 150 million dollars a year.