Can Market Share Continue To Be Eaten Up By The Biggest Underwear Brand In The United States?

Sexy, if sold as a selling point, can be the most incisive in underwear sales. And the most incisive representative is "Vitoria's Secret" fashion show. The classic of this fashion show is the "angel" model, with its feathered wings on the T platform, and is promoting the biggest underwear retailer in the United States. Since 1995, the vogue fashion show has become one of the most anticipated annual TV shows in the fashion industry. In 2011, more than 10 million viewers watched the show, but it began to decline year after year, and this figure dropped to 3 million 270 thousand in 2018.

But what is caught off guard is that the news of the 2019 secret show's breaking down this year broke into everyone's ears. Moreover, according to the US consumer news and business channel (CNBC), the company headquarters in Columbo, Ohio, laid off about 50 people in October 9th and 10, including junior staff and senior leadership. The number of layoffs accounted for 15% of the headquarters staff. Analysts say the big layoffs of the biggest underwear brand in the US show that the brand's decline is proceeding step by step.

At one time, the performance of the silk underwear went up with the popularity of the secret show. In 2003, its sales amounted to 2 billion 800 million US dollars and had more than 1000 stores in the world. In 2009, it sold 600 underwear every minute. In 2015, the annual sales volume of Limited Brands of the virgin parent company reached 11 billion 200 million US dollars, and the proportion of the company was 63%. But since then, the performance of the company has been declining, and the sales of underwear shops have been declining, the highest decline has reached 14%. In 2016, sales of the company still amounted to $7 billion 780 million, but in 2017 alone, revenues dropped by 9% to $7 billion 300 million. In 2018, Limited Brands released a report showing that its net income was $6 billion 440 million, down 24% from a year ago, which was the lowest in years.

In the first quarter of 2019, Limited Brands sales amounted to US $2 billion 629 million and net profit fell by 15%. As of the two quarter of August 4th, Limited Brands same store sales fell 1%, much higher than market expectations of 0.3%, of which sales declined by 6%, while market expectations were 3.9%. The result is a big surprise. To add insult to injury, the largest underwear brand in the United States only closed 35 stores in the first quarter of this year.

In addition, the turmoil of personnel shows that the company has entered a troubled period: Holt, CEO of the Limited Brands underwear department, which has been working for more than 16 years, will soon leave the company. This is not the first high-level personnel turbulence in recent months. Limited Brands's chief marketing officer ed La sik officially left in August of this year. At the end of 2018, the former chief executive Jane Singer suddenly left and took over John John, the former president of the US luxury brand Tory Burch.

Randy knick, an analyst at Jimmy, an investment bank in the US, said that it was not surprising that the chief executive began to find another way out. Holt's departure is a signal that the strategy of "reversing strategy" is about to slip.

Stewart John, executive vice president and chief financial officer, told analysts at the performance conference that at present, Mehas Mehas is reviewing brand marketing, believing that product improvement and new series of listing can promote performance improvement.

But Randy knick said that the difficulties faced by the company were not solved by products alone, but its business was being devoured by new and old rivals. The brand is now in a structural downward channel.

Broadcasting British Corporation (BBC) said that the long-standing benchmarking brand in the American underwear market has been out of step with the fashion industry. The "secret of Vitoria" is already a "steady decline" name, New York Times reported. The Wall Street journal pointed out that the company, which is famous for its well-developed "angel" model in Ohio, has lost its appeal.

　 Who is eating the market?

BBC said analysts attributed most of the slowdown in growth to the competition brought by online startups, department stores and some fast fashion retailers to grab market share.

"Sexy" sold by Victoria is out of date. Over the past one or two years, the brand image that has been built for nearly 20 years has no longer resonated with the current consumers. Many people think that its "slim", "sexy" and "feminine" aesthetic is out of date, even causing pressure on female consumers.

According to the economist, when Roy Raymond founded the company in 1977, he wanted to build a shop where men could easily buy underwear for their wives or girlfriends. Velvet sofa and silk curtains make the store look more like a boudoir than a woman looking for a set of underwear. In 1982, Leslie Brands, the boss of Limited, bought the company. He added gentle light and flower patterns to the store to attract more women - this is his main customer group. Sexy was once the main asset of the brand, but now it seems more like a burden. Serena Rees, a deep inside industry, said: "the way people dress has changed."

The economist pointed out that today, competitors with comfort and inclusiveness as selling points have clearly remembered Selena Rees's words. According to research firm Ou Rui, the sales of Aerie, a brand of the eagle's pride brand, which is quite different from Wei's location, has achieved 12 consecutive quarters of growth in the same store. The latest quarter has achieved sales of over $1 billion. And recently just got $55 million in new financing.

The latter changed the traditional way of success.

Michel, a former senior director of Commerce, was founded by Grant, a Lively. She believes that making women sexy is self confidence, which means paying attention to comfort.

Thirdlove's underwear ads use more than 60 year old or breast feeding models; Aerie no longer does post-processing of advertising photos; the famous singer Rihanna's underwear brand Savage x Fenty is also popular among young consumers because of its friendliness with all kinds of bodies.

More than half of consumers in the UK, France, Germany, Italy and Spain believe that fashion retailers should use more realistic models, according to a survey by research firm Ying mint.

"In terms of market share, weir is still leading and leading," said Diana Smith, deputy director of the retail and garment industry of market research and consulting company. "But other companies are beginning to provide women with more choices that they did not have in the past." Companies like Lively, ThirdLove, Savage X Fenty and other companies have accurate market positioning. They either provide more diversified size requirements or specialize in specific product categories.

By contrast, Wei is behind the times. Edward La ZEK, the former chief marketing officer, had rejected the suggestion that the show should have transgender and large code models, insisting that the show should be a "dream show". Randy knick, who has been criticizing Wei Ming, thinks that the show has helped the brand.

In addition, lower prices may also affect the profitability of the business in the future. Market research firm IBISWorld expects that in the next five years, the number of underwear business in the United States will increase by 4% every year, which is almost 3 times the growth rate of the general women's clothing industry. "Small market operators will only continue to increase and continue to seize the industry," said Claire, chief analyst of IBISWorld. "They really have the strength to compete with O Conner."

According to Technavio data from the consultancy, the global underwear market will grow at an annual rate of 17% and will exceed US $58 billion by 2020. Booming consumer demand and substantial profits have made many start-ups leap into this red sea.

Is it time to change?

In the early October of this year, the first large-scale model was launched by Wei Ming, and the British model Ali Tate, whose size was 14 yards, had taken the advertising blockbuster. In August, Valentina hired Sampaio, a Brazil denatured model.

On social media in Instagram, users say that it is so hypocritical that they do this just to save the company, rather than really think that it is necessary for them to express themselves.

Wei has reached the crossroads of reform. For this lingerie brand, which starts with "sexy marketing", how to peel off the old-fashioned sexy show labels and inject deep cultural connotation into the brand is the key to breaking the board.

The economist points out that maybe it will not go bankrupt immediately. The scale of the company is very large. If the brand is rebuilt properly, it is possible to make a comeback.

Barclay analyst Mara also expressed confidence in the management of US companies, because the resumption of the company's secret is the only task of the US company. Therefore, Barclays Bank raised the Limited Brands rating from "holding the sidelines" to "increasing Holdings".

But some analysts do not think so. Randy knick felt that the brand did not have the sustainability of growth, which would ultimately make the investors who hoped for the brand even more disappointed. After Jie Furui's performance, he gave his industry the lowest target price of US $16, which means that Limited Brands shares still have a downside risk of about 40%.

Nomura Securities analyst Simon Seagal pointed out that despite the negative media coverage, people hate the marketing promotion of the company, but it is still one of the most expensive underwear brands in the world. However, data from market research firm NPD Group show that the millennial generation has occupied more than 1/3 of the consumption in the underwear market, and the group has contributed 1/3 of the purchasing power to sports underwear.

According to the analysis of company Coresight Research, in 2018, Victoria still had a market share of 24%, but it had a big gap compared with the market share of 31.7% in 2013. At the same time, the market share of emerging competitors represented by underwear brands such as Thirdlove and Savage x Fenty has increased from 28.1% in 2013 to 36.2% today.

Analysis company Edited thinks that the size of the secret means that it will react slowly to some trends, but it is too early to judge the death penalty. Many big companies will experience this, and it will rebound.