Victoria's Secret (NYSE:LTD) faces competition from a slew of e-commerce competitors that offer lingerie for as little as half the big chain's prices. But that's exactly the way Victoria's Secret originally failed to be successful, according to Business Insider's Ashley Lutz.
While online brands like AdoreMe, Intimint and True & Co. offer lower prices, lingerie-of-the-month shipments and keep-it-or-don't returns, they're mimicking Victoria's Secret's original business model from the 1990s, which was a failure because nothing set the chain apart from larger brands like Hanes and Maidenform. The result: The retailer floundered.
The turning point came once the chain stopped focusing on price and instead concentrated on customer experience. Stores were redesigned with soft, pink wallpaper and staffed with associates trained to greet customers and measure their bra sizes (which is still the most problematic part of lingerie sales for all stores that sell it). That shifted Victoria's Secret up a notch on the luxury-experience ladder, supported higher prices and brought customers back.
That's not what those online competitors believe. "People are so tired of high prices and slow-fashion from Victoria's Secret," AdoreMe CEO Morgan Hermand-Waiche told Business Insider. That may be so for some customers, but Victoria's Secret's sales are up 6 percent year-over-year, on top of a 10 percent increase in 2012. That suggests the customer experience and brand trust are working after all.
It also suggests that Victoria's Secret's online competitors may need to look a little harder at how they can differentiate themselves, not just from the brand leader but also from their e-commerce competitors. After all, that was the first thing an unsuccessful Victoria's Secret had to do, too.
- See this Business Insider story
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