Victoria's Secret, in China "salted fish turned over"
This original article is from the WeChat public account: DT Finance (ID: DTcaijing), text: Lin Meishan, data: Lin Meishan, editor: Tang Yeqin, design: Zheng Shuya, operation: Su Hongrui, executive producer: Tang Yeqin.
Many people know Victoria's Secret, and they all started with the supermodel show. During the big show, which models appeared on stage, what clothes they wore, and whether they had wings on their backs can always be the focus of discussion on the Internet.
In 2017, the Victoria's Secret show came to Shanghai, 7 Chinese supermodels took the stage, and Xi Mengyao wrestled to push Victoria's Secret to the top of the topic of the Chinese Internet. But after the peak is all the way down, due to the sharp decline in ratings, the 2019 Victoria's Secret show is suspended, Victoria's Secret in the Chinese Internet volume is getting lower and lower, and there is no new breaking point.
For a long time afterward, Victoria's Secret disappeared from the headlines.
Until June this year, Victoria's Secret released the first quarter of 2023 financial report, in the overall sales decline, the Chinese market turned a profit, was evaluated by Victoria's Secret CEO Martin Waters as "a special highlight", Victoria's Secret once again attracted the attention of DT Business Watch.
Is the former Internet celebrity Victoria's Secret going to rejuvenate in the Chinese market? How is it done? DT Business Insights examines the various stages of Victoria's Secret's development in China, explores how Victoria's Secret has transformed and become popular as an old brand in the face of fierce competition among new consumer brands, and what challenges it will face in the future.
The beginning of the story, the less valued Chinese market
Back in the early 90s, Victoria's Secret was the largest women's underwear retailer in the United States. By 2003, Victoria's Secret had net sales of $2.8 billion and had more than 1,000 stores in the United States.
But Victoria's Secret, which flourished in the United States, never really entered the Chinese market in its early years.
In 2007, a clothing company called Shanghai AllBright purchased a batch of overstock from Victoria's Secret authorized companies in the United States for $5.1 million and entrusted Shanghai Max Investment Management Company to sell it. In order to sell goods, Shanghai Max claimed to be the headquarters of Victoria's Secret China, and opened stores in Beijing Wangfujing Pedestrian Street, Shanghai Metro City and other places.
After selling this for four years, it was not until around 2011 that Victoria's Secret discovered that an unauthorized number of Victoria's Secret stores had appeared in the Chinese market, so it collected information and launched an investigation.
In 2013-2014, Victoria's Secret took Allbright and Max to court respectively, and although they sold genuine Victoria's Secret goods, they constituted unfair competition and trademark infringement, and the two companies lost one lawsuit after another.
(Shop operated by the defendant)
After cleaning up the "cottage store", Victoria's Secret began to prepare to enter the Chinese market.
In 2014, Victoria's Secret handed over the Chinese market agency to Valiram Group, a Malaysian luxury retail group, and established Victoria's Secret (Shanghai) Trading Co., Ltd., which imported products to be sold by agents. Victoria's Secret officially enters China.
At this stage, even if Victoria's Secret officially entered the Chinese market, it did not move its core products in.
In January 2015, Raffles City Shanghai welcomed Victoria's Secret's first full-brand store, which does not sell underwear, but only sells body milk, perfume and other products. Since then, Victoria's Secret has opened more than 20 beauty accessories stores in China.
In this regard, Khalid Rouissi, CEO of Valiram Group's Hong Kong and Macau region, said in an interview with China Business Weekly: "Chinese women and American women have different figures, and it may not be appropriate to directly sell underwear products in Asia for the US market." ”
But within two years, Victoria's Secret had taken action to disprove this narrative.
The second stage of starting to pay attention to the Chinese market was vigorous but did not create miracles
Fast forward to 2016, just two years after handing over agency rights to Valiram Group, Victoria's Secret took back the operating rights of 26 Chinese stores and changed them to direct brand operations.
On February 23, 2017, Victoria's Secret's first directly operated flagship store in China was launched in Shanghai. On the same day, Victoria's Secret's parent company L Brands issued a statement saying that it was bearish on the group's performance growth in 2017 and lowered its full-year earnings per share forecast.
Recoding the Chinese market at such a coincidental time is clearly in search of an antidote to growth.
Victoria's Secret did show its emphasis on the Chinese market with actions, and in 2017, it intensively moved out a complete set of market plans: introducing the underwear business to China, opening five full-category flagship stores in Shanghai, Chengdu, Chongqing, Beijing and Suzhou, entering the Tmall flagship store, and opening the Victoria's Secret show directly to Shanghai.
Unfortunately, as we mentioned at the beginning of the article, the brilliance of the Shanghai big show flashed, and the highlight brought by the sexy lingerie blessing national model did not last long.
At this time, the Chinese underwear market is no longer a sexy world, and a group of new brands of domestic underwear that focus on comfort took the lead in removing the steel ring in underwear.
In 2016, the zero-sensitivity entry series of 169 yuan was launched inside and outside, becoming the brand's first explosive product; The first "Tagless unlabelled underwear" in Banana was launched; Also in this year, Ubras was founded in Beijing, and 4 years later became the Tmall Double 11 underwear sales champion.
DT Business Watch counted the underwear products of Victoria's Secret Tmall International Store in early 2017, and among the 50 hot-selling styles, 60% were underwired models, 72% were V-shaped models, and 38% emphasized the convergence effect. In the product introduction, "gather", "sports", "ultra-thin", "lace cutout", and "sexy" are the words that appear the most.
Victoria's Secret China should also notice some changing trends and try to break the stereotypical image of sexiness through brand actions.
In 2020, Victoria's Secret officially announced Zhou Dongyu and Yang Mi as brand spokespersons in Asia, saying that they would "break the stereotypes and inherent labels about sexiness", and in 2021, Yang Tianzhen was officially announced as the brand's best friend, and tried "plus-size models" for the first time in China.
Unfortunately, only the action of the brand side, while advocating breaking sexiness, but still selling traditional sexy lingerie, can not really change much.
In FY2020 (as of 2/1/2020) to FY2021 (as of Jan 30, 2021), Victoria's Secret's China business lost HK$669 million and HK$1.09 respectively. Even Victoria's Secret CEO Martin Waters lamented: "When the world changes, we are too slow to respond. We need to stop focusing on what men want and focus on what women want. ”
The third stage, which has achieved initial results, is a more thorough localization transformation
In early 2022, Chinese underwear manufacturing giant Virginie acquired a 49% stake in Victoria's Secret China for US$45 million to jointly operate Victoria's Secret's China business with Victoria's Secret.
Victoria's Secret's short history of China's development has officially entered the third stage. It is also this cooperation that has turned Victoria's Secret around in the Chinese market.
Virginie, which many consumers have not heard of, is actually the world's largest underwear manufacturing giant, which has long been OEM for Nike, Uniqlo, Lululemon, Ubras and other brands, and has many years of experience in underwear production and sales in the Chinese market.
After cooperating with Virginie, Victoria's Secret China began to operate more thoroughly and locally.
Liu Zhenqiang, R&D director of Virginie, and Wu Di, assistant to the chairman, said in an interview with Bright Company: "Previously, the overall operation of Victoria's Secret China was more in collaboration with the US headquarters, and its brand and marketing were more or less constrained by product/supply chain problems. ”
The first step in Victoria's Secret and Virginie's partnership was to develop new products for Chinese consumers.
In March 2022, Victoria's Secret and Virginie launched their first local product, the "Double Size Jelly Strip Vest"; In September, Victoria's Secret China partnered with Tmall Underwear and New Product Innovation Center (TMIC) to launch the "Anti-Gravity Bra".
"DT Business Watch" looked at the highest-selling products of Victoria's Secret Tmall Futures Ship Store in the past year, and rarely saw steel rim styles, and keywords such as traceless, jelly strips, vest type, and soft support appeared in the product description.
Such a localized product strategy quickly gained feedback on sales:
In 2022, Tmall 618, Victoria's Secret first appeared on the top 10 list of underwear sales; On Double 11 in the same year, Victoria's Secret's sales exceeded 120 million yuan, a year-on-year increase of 121%; In 2023, 618, Victoria's Secret sales are second only to Ubras, Bananai and Youkeshu, rushing to the 4th place on the Tmall underwear sales list.
DT Business Watch also noted that in addition to launching new products for Chinese women, Victoria's Secret China's sales channel layout in the past two years has also followed the Chinese market - to sink market nuggets.
In 2021, when it did not cooperate with Venis, Victoria's Secret established all online sales channels, including Tmall, mini programs, Douyin, etc. In 2022, which is determined to localize, it coincides with the Chinese market live streaming e-commerce in full swing, and Victoria's Secret China's efforts in Douyin are particularly obvious.
At present, Victoria's Secret has opened four accounts on Douyin: one for brand value communication, publishing some female interviews, fitness classes and advertising videos; an underwear flagship store account specializing in selling Victoria's Secret underwear products; As well as the brand number of the same name and the sub-brand PINK flagship store account, live broadcast of goods for a long time every day.
Feigua data shows that 78.5% of consumers in Victoria's Secret Douyin's official flagship stores are in cities other than the first tier, and the age distribution is mainly mature women aged 31-40.
From the perspective of the opening of offline stores, Victoria's Secret China's operating logic at this stage is to go out of first-tier core cities and go to a broader market.
In January 2022, Victoria's Secret's first store in Northeast China landed in Shenyang; In June, Victoria's Secret Wenzhou store was launched; In December, the second full-category store in Xiamen was opened; In March 2023, the first store of Victoria's Secret Shanxi landed in Taiyuan.
At present, Victoria's Secret has 72 stores in 27 cities in Chinese mainland (including full-category stores and beauty and accessories stores), of which nearly a quarter are second- and third-tier cities.
Looking back at 2017, when Victoria's Secret first entered China, it was still taking the high-end luxury route, with a three-story retail area in the global flagship store in Beijing and a global flagship store in Shanghai with a business area of 2,400 square meters, and both flagship stores have Victoria's Secret Angel Suites.
Fast forward to 2023, Victoria's Secret closed its Beijing flagship store in the Central Shopping Center of Wang Fu and turned to a number of lightweight stores in lower-tier cities.
Victoria's Secret's public relations team once revealed to Interface Fashion that the brand is accelerating the layout of second- and third-tier cities and airport channels, and will focus on opening 300-400 square meters of lightweight stores in the future, aiming to open 100 new stores by 2025.
At present, Victoria's Secret China has a total of 18 airport stores, in addition to first-tier and new first-tier cities, but also distributed in Guiyang, Xiamen, Wuxi, Shenyang, Xianyang, Haikou and other places.
The vast Chinese market is full of rivals
Looking back at the development process of Victoria's Secret's real entry into China, at the beginning, it was a dispenser and entrusted to agents to operate; Later, the US market was weak, and I wanted to seek growth in China, so I personally started the operation, and intensively transferred the American experience, but after a few years, there was not much improvement; Now, with the help of the power of the manufacturing giant, it has finally begun to truly localize the operation, and the results have been achieved in just one year.
The Chinese market, which Victoria's Secret has cultivated seriously, is indeed full of opportunities.
From the perspective of brand concentration, China's underwear market is still very fragmented. In 2022, the total market share of the top ten brands in the Chinese mainland underwear industry was only 9.6%, while in the lingerie market of Japan, the United States, Hong Kong and South Korea during the same period, the market share of the top ten brands in the industry reached 72.7%, 61.6%, 59.4% and 36.2% respectively.
This means that the head brand still has a lot of room for growth.
But Victoria's Secret faces many opponents. Among the top 10 brands in China's underwear market share in 2022, there are not only traditional brands Aimer, Cosmopolitan Beauty, Maniform, but also new consumer brands Ubras, Bananai, and clothing brand Uniqlo, while Victoria's Secret did not make the list.
This also means that Victoria's Secret will not only have to compete with new consumer brands that are popular among young people, but also face old brands such as Aimer and Urban Beauty, which have been deeply cultivated in the sinking market for many years.
Moreover, whether Victoria's Secret's phased victory in China can be sustained also faces great challenges.
In today's fierce competition, brands must not only fight for products, but also for ideas - especially to truly impress female consumers. A number of new consumer brands have explored and strengthened their own labels: under the big proposition of "my basic model", banana emphasizes "soft and powerful" in underwear products, ubras mainly promotes sizeless "let the body be free first", excavates female power inside and outside, and milk candy pie focuses on large cup bras... Victoria's Secret, on the other hand, is difficult to imagine when many brands have already explained women's propositions well, and it is difficult to propose a unique brand gripper that can cover the sexy labels of the past.
On July 27, the Victoria's Secret show, which had been suspended for four years, announced that it would restart in September this year, and this official announcement did not make any splashes on the Chinese Internet, and Victoria's Secret's official Weibo only received more than 100 interactions.
What this show means to Victoria's Secret is still unknown, as is the future of Victoria's Secret.