no more ‘free panty’ deals: big changes afoot at victoria’s secret
In recent months, there have been several changes made by strong people at the mall: in April, it cut 200 corporate jobs and announced a restructuring of the business.
The company closed its clothing catalog business and stopped selling swimwear.
Among these changes, Wall Street has given up L Brands, the retailer\'s parent company, and its shares have fallen by about 32 so far this year.
This week, Brand Executive L spoke to investors, depicting what kind of problems it was struggling with and how it planned to do better.
Basically, their trouble comes down to the fact that promotions like ubiquitous \"free underwear\" are no longer working and that chain stores have not recently identified their lineup of goods.
Let\'s start with the coupon and it seems that the coupon appears in the female mailbox with the same reliability as the electricity bill.
Over the years, Victoria\'s Secret offers a coupon where you can get free panties in the store for a limited time.
The logic is that you will come in and get a free giveaway, but once you get there you will be tempted to buy a bra, perfume or pajamas.
Executives have previously said the free underwear parade is coming to an end.
When the company\'s Columbus, Ohio headquarters did a presentation for investors, they gave the exact reason.
Stuart Burgdoerfer, chief financial officer of brand L, said the promotion was no longer a magical traffic --and-
It used to be a sales magnet.
Nowadays, 40 of the customers who exchange free underwear will not buy anything else in the end.
Moreover, Burgdoerfer added that the continuous trading drums are lowering the price of the brand.
\"Will they drive the volume?
Yes . \"
But, he added, \"You can also sell Mercedes at a discount, so you have to be careful how you drive sales and what impact it will have on the brand over time.
\"The Rise and Fall of free underwear promotions is another warning for this industry that has been hooked on promotions since the worst of the recession.
Consumers are numb to them, and then these deals no longer provide the sales stimulus they have ever done.
For example, retailer Tween touted offers such as \"discounts, plus discounts\" for 400 consecutive days on 2014 and 2015.
And eventually became two.
The problem is: the promotion affects the profitability of the brand, and the customer is not even interested in the promotion.
So Victoria\'s Secret now joins many chain stores trying to rethink over the yearslong merry-go-
A round of promotion.
Some chain stores are trying to reduce discounts;
Others are trying to re-examine the type of transaction they offer, and may cancel store activity that benefits the classificationspecific sales.
Victoria\'s Secret is turning to offers for newer products such as sports bras and their beauty range, which the company is working to improve.
Executive president Les Wexner said at the event, \"We have not been particularly proud of our beauty products for the past 12 to 18 months.
\"Victoria\'s Secret is rethinking and beauty is not the only part of the lineup.
The retailer has given up its swimwear business and apparel business, where it does not offer products that are particularly different from its competitors.
Can someone sell Uggs, right?
No disrespect for Uggs, good product, right?
\"But why are we selling Uggs?
Is this really related to Victoria\'s Secret brand?
\"There is also the fact that women nowadays don\'t necessarily want to add more underwear and molded cups to the dresser drawer. Bralettes —a soft, often-pullover-style bra —
Sports bras have been particularly popular recently, and this may be a product of the popular \"sports\" look.
This is a challenge because this style is not Victoria\'s Secret.
In this area, clothing retailers are better equipped to give Victoria\'s Secret the opportunity to make money and produce a good-fitting, looking item, said Wexner.
\"Clothing like bralette is essentially made like clothing, and it\'s easy for people in the apparel industry to sell them,\" said Wexner . \".
To be sure, there are a lot of Victoria\'s secrets.
According to market research firm Euromonitor, one of the products took a close share of the bra and underwear market last year.
The next closest competitor?
The fruit of the Loom is much smaller.
While comparable sales have declined over the past two months, an indicator of store sales that have opened for more than a year, before that, it was a rare specialist clothing retailer, strong growth on this benchmark.
In other words, this is not a long-term brand.
Long term downturn, this is a brand trying to get out of the current short termterm rut.
But Wexner said the company was at an \"inflection point\" and said afterwards he wanted Victoria\'s Secret to make those changes two or three years ago.
Time will tell us if it\'s too late to act.