Victoria's Secret

Victoria's Secret is a retail brand of lingerie and beauty products, owned and run by the

Limited Brands company. Victoria’s Secret generates more than $4 billion in sales a year. It is

the fastest growing subsidiary of Limited Brands and contributes 42% of corporate profits. More

than 1000 Victoria's Secret retail stores are open in the United States. Products are also available

through the catalogue and online business, Victoria's Secret Direct, with sales of approximately

$870 million.

Victoria’s Secret was established by Roy Raymond in the San Francisco area

during the 1970s. Raymond saw an opportunity in taking “underwear” of the time and turning it

into fashion. Products stood apart from the traditional white cotton pieces, which department

stores offered, with colors, patterns and style that gave them more allure and sexiness. They

combined European elegance and luxury. Even the name Victoria’s Secret was meant to conjure

up images of 19th-century England. The store went so far as to list a fake London address for the

company headquarters. Like Starbucks, Victoria’s Secret markets self-indulgence at an

affordable price. By 1982, Raymond had opened six stores and launched a modest catalog

operation. He then sold Victoria’s Secret to Limited Brands, which took Victoria’s and sprinted

away. Today, Victoria’s Secret enjoys nearly a monopoly position on the retail of intimate

apparel in the US. The typical bra that once sold for $15 at Victoria’s Secret, when the company

first opened and was worried about competition, now sells for just under $30.

Bath and Body, another subsidiary of Limited Brands has seen the entrance of The Body

Shop, which has essentially the same products but with an environmental slant that attracts

consumers concerned about the environment, representing a significant fraction of Bath and

Body’s customers. Will Victoria’s Secret face a similar challenge? In Europe, the lingerie

industry is certainly fragmented with more than half a dozen brand names that are as prolific as

the brand names of fashion attire. Thus, the lingerie industry should be able to support multiple

firms. There is still room for entrants in Victoria's Secret's market. How has Victoria's Secret

been able to protect its market position? How can an entrant enter the lucrative lingerie market

and steal profits away from Victoria?

Victoria’s Secret’s Success

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