July 21, 2024
A Victoria”s Secret store in the US, June 9, 2024. [Photo/Agencies]

Victoria’s Secret, a leading US-based lingerie retailer that has been facing business as well as branding challenges in recent years, is strengthening its marketing efforts in China, betting on the country’s promising market.

The company plans to close 38-42 existing stores in the United States and open 14 new outlets in the country, which is its largest market, this year. As of the beginning of 2024, the company operated 808 stores in the US, according to its latest quarterly report.

A former top player in the lingerie market with its own iconic fashion show, the company has been facing operational pressure and continued store closures in the international market, industry observers said.

In China, its second-largest market, a change in brand endorsers from renowned models to actresses reflects the company’s adjustment of its marketing strategy. Its Chinese endorsers include actresses Yang Mi and Tian Xiwei, as the company aims to attract more consumers with diversified endorsers.

“The diversification of consumer aesthetics and an emphasis on comfort-wear have been important factors in the decline of Victoria’s Secret’s business performance,” said An Miao, an analyst at market research provider LeadLeo Research Institute.

“Modern female consumers prefer products that meet their own demands and comfort, rather than pursuing brand effects. Besides, the shortcomings of Victoria’s Secret in product design and innovation, deviation in market positioning, and singularity in marketing strategies are also challenges it faces,” An said.

Victoria’s Secret opened its first store in China in Shanghai in 2015. Currently, it operates some 70 stores in the country. In the past few years, the company has strengthened marketing efforts and e-commerce sales, coupled with price cuts of about 20 percent, but sales have not improved significantly in the country.

China’s female underwear market has faced fierce competition as more brands have joined the fray.

With a low entry threshold and good growth momentum, the sector is fragmented and the industry may see a reshuffle of players in the near future with more emerging brands joining in, according to Lead-Leo.

By 2026, China’s underwear market is expected to hit 320 billion yuan ($44.1 billion), and the compound annual growth rate between 2010 and 2026 is pegged at 7 percent, according to market research firm Euromonitor International.

In the first quarter, Victoria’s Secret suffered a loss of $3.64 million, and its net income declined by 59 percent year-on-year. The company expects a single-digit decline in sales in the second quarter, Chief Executive Martin Waters said in an earnings call after the first-quarter results announcement.

In fiscal year 2024, sales are expected to reach $6 billion, a single-digit decline from fiscal year 2023.

The company’s share price has plummeted by more than 30 percent since mid-February this year.

The viewing rate of Victoria’s Secret fashion show reached a historic low in 2018, and in 2019, it was discontinued.

The company, however, said the show will be back this fall.

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