Wen-AI Finance and Economics Li Yiman
Editor- Liang Ye
When it was another year of Victoria's Secret Show, the thin waist and long legs on the screen were full of light and vivid colors.
On November 8, local time, the annual Victoria's Secret fashion show was held in New York, with lavish decorations, "angels", a fiery cooking oil, and a grand scene of flowers. However, the ratings have been declining year after year, exposing the gold content of this big show is not as good as a year, and the sales behind it are also declining. Laura Champine, an analyst at The U.S. consultancy LoopCapital, wrote in her analysis that Victoria's Secret is becoming "the Sears department store of lingerie."
The chinese market, which has great potential, seems to be the last chance for the embattled lingerie giant to redeem itself.
High-end goods that cannot be sold at discounts
A sparkling "dream bra" set with over 2,100 Swarovski crystals and citrines, plus a large diamond in the middle, the underwear was made in over 71 carats and took 930 hours to create. This year, Victoria's Secret will launch a "affordable copy" for the $1 million Fantasy Bra for the first time, which can be pocketed for as little as $250.
A piece of underwear for $1 million may be an unimaginable astronomical amount for the average person, but in the past Fantasy Bra, this is already the most "grounded" price.
Last year's Fantasy Bra was made from more than 6,000 gemstones, including diamonds and blue Pato stone, weighing more than 600 carats and worth $2 million. The previous year's Colorful Starry Sky Dream Underwear was hand-set with nearly 9,000 gemstones worth $3 million over 700 hours. The most expensive Fantasy Bra in recent years was the 2013 Royal Dream Diamond underwear worn by supermodel Candice Swanepoel, which features more than 4,200 gemstones and a 52-carat pear-shaped ruby pendant in the middle, worth $10 million.
But on the stage of the Victoria's Secret Show, what attracts more attention than the "sky-high bra" are those "sky-high-priced angels" who are white-skinned and beautiful and have long legs against the sky.
Although Giselle Bundchen, a Brazilian national treasure supermodel who has been at the top of the Forbes model income list for 15 consecutive years, said goodbye to the catwalk three years ago, the amazing moments she left at the Victoria's Secret show are still talked about by the audience.
Kendall Jenner, who has 85 million followers on Instagram, is only 23 years old and has already appeared on the Victoria's Secret stage more than once, sucking up $22 million last year, snatching the crown from Bundchen, who is known as "Niangniang".
Sweet-looking California sisters Hua Jiji Hadid and Bella Hadid are also "veterans" of the Victoria's Secret stage for many years, ranking fifth and ninth on the list with annual revenues of $9.5 million and $6 million, respectively.
Chinese supermodel "big cousin" Liu Wen is also well known to the audience because she is the first East Asian model to appear on the victoria's secret show runway. Last year, she ranked eighth on the Forbes Model Revenue List with an annual revenue of $6.5 million.
The super-high beauty coupled with the multi-million dollar Fantasy Bra, sexy, high-end, luxury, is the American lingerie brand is trying to show the image in front of consumers.
In 1995, Victoria's Secret, with a budget of only $120,000, first brought the lingerie fashion show to the slightly rudimentary stage of the Plaza Hotel in New York, and this well-planned marketing method was a great success. In 1999, a Victoria's Secret show was put into a Super Bowl professional football league advertisement, attracting 1.5 million viewers, and the live broadcast platform was once crowded. In the heyday of the 15 years that followed, Victoria's Secret accounted for almost half of the U.S. lingerie market.
However, because of the audience's aesthetic fatigue and the lack of freshness of the product, the victoria's secret show has become less and less present in recent years. Since 2015, the ratings of the Victoria's Secret show have declined all the way. Last year's CBS Victoria's Secret show hit an all-time low in ratings, with a total audience of less than 5 million people.
Nowadays, in the face of fierce competition from sports brands and fashion brands, this underwear brand with a high-end image is gradually snubbed by consumers, and even discounts cannot be sold.
In 2016, in order to cater to the new consumer trend of pursuing health and nature, Victoria's Secret cut off the $1 billion swimwear business and switched to the current popular sportswear, but did not significantly boost sales as desired. A consumer report released by Wells Fargo Securities that year showed that 48% of Victoria's Secret customers reduced their consumption, 60% of consumers thought the brand was a bit "fake", and 68% of people no longer liked Victoria's Secret so much.
According to the New York Post, in 2017, Victoria's Secret's local turnover shrank by more than 9%, and revenue losses amounted to billions of dollars. In June this year, Victoria's Secret took a series of measures such as extending sales time and discounting promotions, and sales still fell by 1.1% year-on-year, 3.5% less than in May and 7.3% less than in April, and the sub-brand PINK grew negative for two consecutive quarters. Randal Konik, an equity analyst at Jefferies, an investment bank in the United States, said the price of Victoria's Secret lingerie had reached a 10-year low. Affected by this, the stock price of Limited Brands, the parent company contributed by Victoria's Secret, has fallen continuously, and its financial situation is not optimistic.
Limited Brands' second-quarter earnings report showed that as of August 4, the company's net profit was $99 million, down 29% year-on-year. Shortly thereafter, Victoria's Secret announced that PINK CEO Denise Landman would leave the company by the end of the year.
After successive setbacks in the United States, Victoria's Secret has set its keen eyes on the Chinese market with great potential.
Think of China as a second homeland
Although this year's show returned to its hometown of New York, Victoria's Secret still enthusiastically extended an olive branch to China's top supermodels.
Liu Wen, the most senior Chinese "Victoria's Secret Angel", accepted a special invitation to try on clothes without interviews. Xi Mengyao, who "became famous in one fell", also got a "green card" for the interview and served as a brand ambassador for Victoria's Secret China. In addition, there is he Sui, the first Chinese supermodel to get wings on the Victoria's Secret stage, and Chen Yu, who stood out in the selection last year. Victoria's Secret, which used to be extremely harsh on "angels", seems to be particularly tolerant of Chinese girls.
Last year, Xi Mengyao fell on the Victoria's Secret stage, not only did not ruin his career, but quickly rose to 350,000 fans, his value doubled, and he was even ridiculed for falling a "golden heel". Victoria's Secret chief marketing officer Ed Razek posted on Instagram that the moment Xi Mengyao fell and Gizele lifted her up was the most wonderful moment in his mind.
All kinds of indications show that Victoria's Secret, which has always been on the shelf for developing overseas markets in the past, has been criticized for being too conservative in China, and has long coveted the fertile land of the Chinese market.
The Guardian reported that with the increase in income and the change of women's concepts, the demand for high-end women's underwear in China has soared, and sales have doubled in 5 years to 18 billion US dollars, equivalent to 124.5 billion yuan, twice that of the United States and far higher than the 2 billion US dollars in the United Kingdom, known as the "last gold market in the apparel industry".
In the "2016-2022 China Domestic Garment Industry In-depth Survey and Future Prospect Forecast Report", Zhiyan Consulting pointed out that China's underwear market is growing at a rate of nearly 20% per year. Euromonitor estimates that China's lingerie market will reach $33 billion by 2020.
Two high-end lingerie brands, Agent Provocateur and La Perla, which entered the Chinese market earlier than Victoria's Secret, saw their sales surge by 42% and 30% year-on-year, respectively, after entering China in 2016. British consulting firm Mintel predicts that the size of the Chinese market can make Victoria's Secret a lot of money, and even double Victoria's Secret revenue in the next 5 years.
"Chinese have done millions of dollars worth of business with Victoria's Secret, and we treat China as a second home because there are opportunities that are comparable to those of the United States." Victoria's Secret CEO Leslie H. Wexne declared. Earlier, Limited Brands saw China as "an incomparably important market for the future".
In April 2016, Limited Brands bought back its China operations from its agents and changed all stores to direct operations. Among the six series of the Victoria's Secret Show that year, The Road Ahead series specially displayed Chinese elements such as dragon dance, sugar gourd, and Peking Opera, and the official Instagram also posted a group photo of Chinese models, and enthusiastically greeted Chinese audiences with the pinyin "Ni Hao".
In November 2016, it entered Tmall International, opened China's first all-category flagship store in Shanghai in 2017, and launched the Tmall flagship store exclusively in July of that year. In order to maintain a tall "human identity" in front of Chinese consumers, the first flagship store is located on the famous luxury shopping street Huaihai Road, next door to Cartier and Max Mara, and opposite the Hermès House.
AI Finance and Economics found that as of now, Victoria's Secret has opened 42 stores in China, most of which are concentrated in first- and second-tier cities such as Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Suzhou, Nanjing, Chongqing, Chengdu, Hong Kong, and Macao, of which 15 are all-category stores, and the rest only sell beauty and accessories with higher profit margins.
Also last year, Victoria's Secret moved the annual big show to Shanghai, and joined hands with iQiyi to create a reality show "Angel Road" that selected "Angels", and finally 7 Chinese supermodels appeared on the Victoria's Secret stage.
Still a familiar recipe, still a familiar taste. However, the "sexy economy" abandoned by American consumers, will Chinese girls still pay for it?
The road to China is not smooth
"We have the strongest brand building capabilities, even people who don't speak English know Victoria's Secret." Wexner said confidently. In Victoria's Secret's view, China's 200 million young adult women have become accustomed to buying $90 underwear, and whoever wins the brand hegemony will get huge profits.
However, the first Victoria's Secret show held in Shanghai last year was full of twists and turns, which seemed to indicate that the brand's road to China was not smooth.
The high-profile supermodels Gigi Hadid and the "fruit sister" Katie Perry, who announced that they were coming to China, were unfortunately stopped from the country because they were refused visas.
On the night of the show, vips in evening dresses braved the bitter cold wind to queue for nearly an hour, accepting the triple entry identity check of ID cards, invitations and computer records, and finally told that the system collapsed, the seats were random, and the first-come, first-served. Hong Huang, a "famous and ruthless woman" who has always been ruthless under her mouth, complained on Weibo, saying that the scene was chaotic and "like an escape."
When it came to the social media dissemination of the highlight link, the crowd was embarrassed to find that the catwalk guests and Victoria's Secret "angels" who had been two meters and eight meters long in the past were photographed by the official photographer. Even the retirement farewell show of Victoria's Secret's most valued angel, Alessandra Ambrosio, was adjusted by the editor to the wrong chapter, losing the glory of the closing model.
Coupled with Xi Mengyao's heavy fall, the self-proclaimed high-end Victoria's Secret has not occupied a place in the Chinese market as smoothly as imagined.
In the eyes of Chinese consumers, women's underwear brands have long been occupied by familiar names such as Diane fen, Hua Geer, Aimer, An Li Fang, and Mani fen. In order to cater to the preferences of young people, these brands have opened a side line of the girl series.
What caught Victoria's Secret even more off guard was that the "sexy economy" in China has gradually been abandoned, and the popular wind direction has begun to shift to comfortable underwear without underwire, and the Japanese brand Ubras, which focuses on comfort and freedom, is very popular.
Victoria's Secret underwear that used to cost $200 a piece is now priced at three or four hundred yuan in the Tmall flagship store, and the price of double 11 activities is only one or two hundred yuan. Even so, some consumers still complain that the size of the underwear is too large and does not match the figure of the Chinese. Many people also find that these "high-end goods" from the other side of the ocean, the style and quality are not as perfect as shown on the runway.
In September last year, staff of the Shanghai Municipal Entry-Exit Inspection and Quarantine Bureau detected products with excessive formaldehyde in a batch of underwear sent to China, including Victoria's Secret.
The tens of millions of dollars Victoria's Secret show is here again. This time, will Chinese consumers still indulge in this dream of money-filled sound and color, and use their wallets to save Victoria's Secret's precarious lingerie empire?
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