Sales at lingerie chain Victoria’s Secret at up 8 per cent this month, and the brand has posted record sales every quarter for three years.So how did Victoria’s Secret do it? By figuring out how to always lure people into its stores.
Analyst Brian Sozzi at NBG Productions explains:
“I think the secret sauce on VS is super simple: ton of marketing (online, print, and through in store deals) and consistent new product introductions (bras) that make the stores seem fresh every time the customer walks into, or by, the store,” Sozzi told us.Victoria’s Secret CEO Sharen Jester Turney revealed part of the company’s strategy for turning profit during the company’s quarterly conference call.
The retailer found the perfect formula for controlling inventory and selling absolutely everything before releasing new product, she said.
“Our second quarter merchandise margin dollars were up, and the merchandise margin rate was down versus last year in both channels. This is the direct result of decisions we made to ensure we ended the season clean in inventory and better positioned to chase into early fall winners.
In the store channel, the merchandise margin rate decline was primarily driven by 3 things: first, an increase in clearance merchandise sell-through; second, a timing shift in our marketing strategy to support our early August bra launch; and third, continued strong response rate to our gift with purchase and direct mail offers, a trend we will expect will continue this fall. In our direct channel, the merchandise margin rate decline was driven by incremental promotion offers and lower pricing during the semiannual sale.
In other words, Victoria’s Secret always has a reason to draw people into its store–either through big clearance sales or new products. This keeps inventories clean and balance sheets flush.
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