Victoria’s Secret parent integrating brands and channels

For the past two years, Intimate Brands Inc.’s chairman/CEO Leslie H. Wexner has held monthly “branding” meetings. Bringing in key department managers – from creative, merchandising, circulation, and new media – Wexner aims to ensure that merchandise sold in IBI’s Victoria’s Secret and Bath & Body Works (BBW) catalogs, in the 2,100-plus stores, and on the company Websites is consistent throughout. It’s all part of Wexner’s plan to solidify IBI’s brands so that they can really strut their stuff on the global stage.

The $4.5 billion Columbus, OH-based Intimate Brands Inc. is committed to building both Victoria’s Secret and BBW into what its executives call a “360-degree brand.” This involves a comprehensive marketing strategy connecting all three selling channels of each brand to reach customers anyhow, anywhere, and anytime – and offering them the same high-quality merchandise. As Wexner told an audience of investors last September (speaking of the company’s flagship), “We’ve been working diligently on a coordinated basis to make sure that Victoria’s Secret stands as an integrated world-class brand. Across all channels – catalog, stores, Internet that the same products are launched at the same time, in exactly the same way, same quality, and same price.”

Prior to 1998, “there was no real effort to interact or connect the catalog with the retail business,” Wexner admitted in his September presentation. “Cindy Fields, the president of Victoria’s Secret catalog, and Grace Nichols, the president of Victoria’s Secret retail stores, ran independent businesses – there was no coordination of styles or marketing efforts.”

And it showed. “Victoria’s Secret has had a perennial problem with its clothing and lingerie line,” says Dorothy Lakner, an analyst with New York-based investment bank CIBC Oppenheimer. “Because marketing between the retail stores and the catalog wasn’t done together, sizing of lingerie and apparel was inconsistent from the stores and the catalog.”

This inconsistency, plus the company’s tendency to overmail its catalogs, resulted in sluggish mail order response in 1997 and 1998. Thus, Wexner’s decision to move to an integrated 360-degree brand strategy.

The same bra, in any venue

So far, the new integration strategy seems to be working. Total sales from the Victoria’s Secret women’s apparel division doubled from $1.5 billion in ’95 to $3 billion last year, with the catalog accounting for about $750 million. (See sidebar, page 19, for what IBI is doing with its Bath & Body Works brand.)

But these results were hard-won. The shift began in August 1998, when in an effort to boost sluggish response the Victoria’s Secret catalog cut circulation for the first time, mailing 30% fewer catalogs for the second half of 1998. (Though the company would not comment on circulation, Victoria’s Secret reportedly mailed more than 400 million catalogs as late as 1997.)

More pages per book in 1999 also helped increase response by 20%, says Victoria’s Secret’s Fields, who has worked for Wexner for 16 years – the longest tenure of any executive at IBI.

And of course, the company concentrated on trying to standardize offerings in the retail, catalog, and Web channels. “We wanted to more closely align the catalog with the retail [and Web] stores,” Fields says. “It was a massive undertaking. But we’ve made great strides. More than half of the merchandise in our stores, the catalog, and our Website are now exact duplicates. We began with bras and panties, which are highly fit-sensitive.”

According to Fields, the company expects nearly all the bras and panties sold in the catalog and the retail and Web stores to be identical by the fall.

Still, trying to sell the exact same merchandise throughout your selling channels presents some hurdles. “Lingerie that might look fabulous on a store mannequin might not translate as well in the catalog,” says Glenda Shasho Jones, a New York-based catalog consultant. On the other hand, certain apparel and lingerie might sell better in the catalog than in a retail environment. “In a catalog, where you can show merchandise on models, you can really romance merchandise” that would otherwise look flat on hangers in a store, Jones says. “It may be one of the reasons the Victoria’s Secret stores carry only lingerie.”

Beyond borders via the Web

As for the global aspect of IBI’s new brand strategy, like many other multichannel marketers, the company has high hopes for its Website, which it thinks will blaze a trail for its brands overseas. “The Internet raises the ease with which you can sell your brand to overseas markets,” says Ken Weil, the vice president of new media at IBI.

For instance, within the first few hours of going live in December 1998,, which now accounts for about 7% of the company’s sales, had received orders from 37 countries. (All told, Victoria’s Secret online now has a database of more than 1 million registrants.) Its first live Webcast of a lingerie fashion show, during the 1999 Super Bowl, was so successful that the system became overloaded by the rush of people (30% of buyers are men) trying to access it.

“Going global is a natural for Intimate Brands,” says catalog consultant Marty Brill, former president of women’s apparel book Tweeds. “It’s probably the next step for them. In my travels to the Far East, consumers in China and Japan are fascinated with all things American. And I can’t think of anything more American than Victoria’s Secret. My strong reaction says it will be successful in the Pacific Rim and to a lesser extent Europe.”

John Pitzen, chief financial officer of women’s apparel cataloger California Style and formerly the senior manager of financial reporting at IBI, says Intimate Brands has grown so big that it’s very difficult to get new names, “so it’s a natural progression to go overseas.” (The cataloger already mails in Canada, the U.K., and Japan.)

In the long run, international success will de-pend heavily on the success of IBI’s new global brand strategy. “It seems like common sense, but most companies struggle with their branding,” consultant Jones says. “With brand building, everyone has to have the same vision, from the CEO right on down.”

And then there’s channel integration. Regardless of what channel they buy from, Jones says, consumers everywhere want what they want, when they want it, and they still expect a certain level of service. “But Victoria’s Secret has done a good job of taking away those barriers by providing consistent products and services across all channels,” she says.

There’s more to Intimate Brands and its integrated, global strategy than the sexy Victoria’s Secret brand. The $1.5 billion cosmetics and toiletries marketer Bath & Body Works (BBW) is shouldering a great deal of the load involved in realizing IBI’s global dream of worldwide recognition. For instance, a BBW magalog (currently being tested) will be mailed internationally, and further bricks-and-mortar expansion into the U.K. is planned. “Everything we do is centered around expanding the brand,” says Beth Pritchard, president of Bath & Body Works.

Since its inception in 1993, BBW has grown at a 63% clip annually. It has been testing the magalog for a year, Pritchard says, and although she wouldn’t comment on circulation, she does say that the magalog is “a major initiative. It’s sort of a `news you can use’ concept,” she claims. In 1999, BBW recorded a year-over-year sales increase of 22%, and a 24% rise in profits.

IBI is banking that the Bath & Body Works brand will play overseas the way it has domestically. BBW, which has 1,200-plus stores domestically, has expanded to the U.K., where it has nine stores – the only physical presence it currently has in Europe. The success of these stores, Pritchard says, is proof “that the Bath& Body Works brand plays internationally.” And more stores are planned. “Clearly, we will be pushing the bricks-and-mortar button in the U.K.,” IBI chairman/CEO Leslie Wexner told a group of investors last September.

As if the company didn’t have enough on its plate, IBI also launched The White Barn Candle Co. last November. Intimate Brands apparently believes it can do for scented candles and room sprays what it did for body lotions and creams. The White Barn Candle Co. now operates about 85 stores (it has no print catalog) and has sales of $185 million. IBI is projecting sales of $300 million by the end of 2000.

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