Runway show the key to Victoria's Secret success

Bloomberg NewsNovember 12, 2012 

— Victoria’s Secret is thriving using a marketing strategy that seems more from the era of “Mad Men” than Twitter.

While other big brand retailers try to hone their social-media skills, the intimate-apparel chain is creating excitement with a network TV holiday fashion show featuring young women strutting down a runway in Swarovski crystal-decorated lingerie and six-inch heels.

The show, in its second decade, is the cornerstone of an efficient marketing machine. Last year, the special received its highest rating since at least 2002, with 11.5 million viewers, mostly women. Sales have risen 7 percent in the past three quarters to $4.33 billion after posting a record $6.1 billion in revenue for the year through Jan. 28. It’s the biggest of Columbus, Ohio-based Limited’s brands, followed by Bath & Body Works.

The TV show is “essentially an hour-long commercial, and really, that is unheard of,” Erika Maschmeyer, an analyst at Robert W. Baird & Co., said in an interview. “There are a lot of places to buy intimate apparel, but there’s no other place that has such a strong brand connotation to it, and I think the fashion show is definitely a part of that.”

The marketing approach is in sharp contrast to industry trends. Retailers, which may see online sales grow to 16 percent of $586 billion in revenue this holiday season, have increased digital efforts at the expense of more traditional advertising. Gap Inc., the biggest U.S. specialty apparel retailer, has added to social media and moved away from television and print ads. Department-store company J.C. Penney exited its catalog business last year.

Viewers can’t buy much of what the models wear in the Victoria’s Secret’s show aside from bras and panties. Elaborate costumes range across themes such as “Circus,” “Calendar Girls” and “Silver Screen Angels.” Jeweled silk corsets, feather bustiers and wings of all types were styled around the underwear to create the lingerie-clad version of a tiger in one walk to a Native American chief in another.

“As soon as this one finishes they start working on the next,” said supermodel Miranda Kerr. “There’s so much attention to detail in the underwear; everything is hand-stitched.”

The chain does use Facebook, Twitter and e-mail to draw Web traffic and build excitement around new collections and events such as the fashion show. Web and catalog sales rose 4 percent to $1.56 billion in the latest year, a quarter of the business, while revenue at Victoria’s Secret’s 1,000-plus stores rose 14 percent to $4.56 billion.

Still, the Internet doesn’t drive a lot of “emotional content,” Chief Financial Officer Stuart Burgdoerfer, said in a presentation to investors on Oct. 17. Victoria’s Secret and Bath and Body Works emphasize the product and in-store experience above all and aren’t aiming to be leaders in technology, he said.

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