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Victoria’s Secret’s unique opportunity to recover lost market share

Stream | January 14, 2022

The pandemic has been a time of opportunity for intimates and sleepwear apparel as they basically shifted to lifestyle categories while people lived and worked entirely from home. It also served as a turning point for one market leader in this space — Victoria’s Secret — whose traditional marketing and value proposition (to summarize: appearance over comfort) was on its way out with Gen Zers focused more on body positivity than trying for a model’s physique.

This expert interview with former Kohl’s VP of Category Merchandising for sleepwear and intimate apparel explores some recent industry-wide challenges and trends but mostly discusses the unique position Victoria’s Secret held as the pandemic emptied malls and gave them a much-needed opportunity to rethink their strategy.

Quick Takeaways

  • Supply chain issues have made an impact on intimate apparel and sleepwear, but these categories have fared much better than many others.
  • The competitive landscape in intimates and sleepwear has evolved to include Amazon as well as mass brands who experienced new growth in this category during the pandemic.
  • Victoria’s Secret has lost significant market share in recent years as their messaging fell out of touch with young consumers.
  • The pandemic shutdowns may have given Victoria’s Secret a needed opportunity to focus on revamping their brand and messaging.
  • The future of intimate apparel marketing lies in body positivity and inclusivity, a priority for younger customer segments.

Supply chain is a top disruptor for intimates and sleepwear

Like just about every industry, supply chain challenges throughout the pandemic have affected sleepwear and intimates. Production shutdowns, port log jams, and other transportation issues are affecting retailers’ ability to get product on the floor. Companies who are navigating this issue most successfully are those who are diversifying where production is happening to reduce potential risk:

“Based on what I am seeing in stores, [supply chain issues] appear to be fairly widespread . . . certain brands that have production in a broad range of companies. Komar, for example, does some manufacturing in Sri Lanka, China. They could be out of Vietnam or Korea at times, I believe . . . [companies] who spread that risk across a lot of different locations will ultimately fare better than the competition.”

Supply chain challenges also depend on product categories. This expert reports that sleepwear has held up quite well compared to other apparel categories, but some products — specifically bras — have more issues because of their production complexity.

“. . . in intimate apparel and basics and sleepwear, that business has rebounded better than almost any category out there in softlines. Historically, anytime you have economic disruption, things get tough from a financial standpoint, basics always outperforms the rest of the market. The rebound on basics has been extraordinary.

Sleepwear held up incredibly well through the pandemic and the shutdown. It was a category that became a lifestyle category as people worked from home . . . [but] things like bras, which require incredible numbers of components to come in from multiple countries and locations to create a bra, [that] particular category has extraordinarily long lead times. They’re going to experience in-stocks and out-of-stocks that fluctuate depending on what they’re in short supply of. I know people are working very hard to mitigate that and make sure that they can ship as much of it as possible . . . Even if you have the goods, getting them through the ports and into the stores is still a challenge.”

Fortunately, modern technology has allowed many retailers to navigate this challenge more adeptly than they would have been capable of in the past. They can quickly shift their marketing to target the products they have in-stock and ease off of those that are delayed, ramping targeted marketing efforts up or down as needed.

“[Companies] can shift [their] marketing, which most people can because of digital abilities to pull triggers on the fly, and actually showcase categories that they have better stock positions in, I think retailers that have broad assortments will have the best opportunity to do that rather than some specialty stores that are very dependent on one, two, three, four categories.”

Victoria’s Secret loses market share with outdated messaging

Victoria’s Secret — once the market leader in intimate apparel, owning more than a quarter of the market — has struggled in recent years to stay relevant with younger audiences as their traditional market strategies fell out of alignment with consumer sentiment.

“I think if you look back historically, Victoria’s Secret was the clear market leader in intimate apparel and sleepwear. There were years where they owned 24%-26% of the categories, which is also almost unheard of in an industry that is fragmented from a market share perspective as intimate apparel is. They’re a hugely dominant player. Then they really became tone-deaf in terms of that sexy persona. You had these younger consumers who really felt body positivity was more important.

I think they’re trying to correct that. If you go to the website or in the store, certainly they’ve changed their imagery. They are toning down the overall store environment, the website environment . . . [but] they lost share. It’s I’d say somewhere in the 4% range across categories from their peak, which is significant volume. I think they are trying to quickly right that ship.”

Fortunately for them, according to this expert, the Victoria’s Secret brand has plenty of best practices to lean on as they recover.

“Their product has always been good. I think they are master marketers. Intimate apparel, particularly bras, is a solution-based business. They are masters of bringing new technology to the industry, but they’re also really good at taking their major share bra platforms and bringing them back new and improved and marketing against that. If you’re a Body by Victoria consumer, they’re going to let you know that they have a new and improved, lighter weight, breathable, whatever it might be version of your favorite bra that keeps the consumer coming back again and again.”

How the landscape has changed in the meantime

One thing the Victoria’s Secret brand will need to consider is that the competitive landscape has drastically changed over the past few years. Amazon, for instance, wasn’t a major player at all during Victoria’s Secret’s peak years, and mass brands gained increased market share during the pandemic when they were the only retailers open.

“There are a couple complications in the industry, one being COVID and the shutdown where there were just a few players that you could really walk into a store and buy intimate apparel from for several months . . . The mass players have taken a big piece of the pie because they were open and because they were able to get the supply in. People like Walmart and Target have really seen nice increases in the category.”

Another challenge to address? Shifting product preferences — specifically, comfort over appearance — a trend that was already happening before the pandemic but was accelerated by so much time spent at home.

“. . . prior to the pandemic, there was already a shift happening from underwires to non-wire bras, seamless bras. Now you see these super lightweight laser-cut comfort bras that are more useful, number one in appearance, but just throw them on and you don’t think about wearing them. VS, in order to continue to move forward and be relevant, not only did they have to address different body types, but they’re going to have to have more comfort solutions because that’s what the consumer is demanding.”

How the pandemic gave VS a much-needed opportunity

Interestingly, the pandemic and its resulting total shutdowns of malls and other retail locations may have served as an advantage for Victoria’s Secret as they revamped their approach.

“If anything, the pandemic may have helped them as malls didn’t have the traffic. It gave them the opportunity to go in, rethink their customer experience at the store level. You’re seeing a lot of their stores being remodeled. Clearly, their online photography has changed dramatically, much more, I’d say, empowering versus sexy, much more diverse, more body types.

I think the change in strategy was out of necessity. You don’t own 26%, 27% of the market and actually feel good about giving up 4% of that. It’s a huge market. Every woman is a potential customer. If anything, they were slow to do it. Just standing back and seeing the change in the trends and the demographics, we all as competitors saw it happening. I think they were a bit stubborn in terms of their prior management. I think that there’s been plenty of public commentary out there that people could glean that opinion from. They did not want to change who they were and that hurt them in the short-term.”

If the pandemic has forced even retail giants such as Walmart and Amazon to rethink their strategies, Victoria’s Secret can certainly attempt to become leaner and avoid becoming a victim of the retail apocalypse!

The future lies in inclusivity

It’s clear that a more inclusive, body-positive approach will be a key to success for Victoria’s Secret and all intimate apparel retailers. And despite assumptions (including by the analyst conducting this interview) that the inclusion of diverse body types and unedited photography could be a turn-off for consumers, this expert sees it as a positive contributor to growth.

“In my experience, when marketing was changed to be more inclusive, actually there was a positive impact to conversion . . . You have to be realistic about America and your target audience. The vast majority are in that curvier bucket. That’s just fact . . . If you alienate 60% of your consumer base by always showing people who are stick-thin, which is the kind of feedback I used to get before we were able to actually broaden our model selection, you get a lot of people that are annoyed . . . I think diversifying not only in size, but in age and in body type and ethnicity is just the reality of who the American consumer is today. That is being embraced by more and more consumers and getting less backlash and less of a conversion rate pushback than perhaps one might think.”

As for Victoria’s Secret? This expert thinks they’ll navigate this changing landscape and make a strong comeback.

“They’re such a dominant player, I have to believe that finally embracing a broader customer base and opening their eyes to the fact that sexy versus confident, sexy is not where the consumer was at. I think they want confidence. They want to feel good about themselves. If they can deliver that, they definitely have the opportunity to gain back [the] share that they lost.”

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