A course profile project for Strategic Management class - Case study of Victoria's Secret and suggestions for European expansion

1. STRATEGIC MANAGEMENT
COURSE PROFILE PROJECT
COMPANY: VICTORIA’S SECRET
Tereza Koudelková
Markéta Magyarová

2. Company Overview
• Division of Limited Brands Inc. (flagship)
• Around 60% of its revenues
• Present only in North America
• 1017 shops in US; 19 in Canada
• Operates mainly in the Lingerie, swimwear and
bridal stores industry
• Wide product range - bras, panties, sleepwear, swimwear,
cosmetics
• Strong financial position
• High profit margin, high inventory turnover (compared to
the industry average)

3. Vision, Mission
Ultimately Seductive.
Victoria‘s Secret is committed to being global
trendsetter in premium women lingerie providing
superior shopping experience to both men and
women. Tradition and employee expertise help us
attain loyal customers and therefore create
sustainable value for our shareholders.

4. SWOT Analysis
Strengths
Weaknesses
•Strong brand recognition
•In-store experience
•Customer care
•E-commerce
•Product range
•Premium prices
•US locations only
•High share price fluctuations
•High inventory
•Part of weaker group
Opportunities
Threats
•Economic recovery
•External competition
•Growth of the target population •Low profit margins due to price•International expansion
competition or purchasing costs
•PINK line strategy is successful
•Debacle of the to-be-opened
stores in Europe

5. Suggested long-term objectives
Objective #1
To establish Victoria’s Secret as a top retailer of premium
women lingerie in Europe.
Time horizon: 10 years
Objective #2
To discontinue all operations of Limited Brands except for the
Victoria’s Secret and Body&Bath divisions.

6. Strategic goals and initiatives
Establish the VS brand as a
top lingerie retailer
• Launch a marketing campaing in countries where stores will be opened.
• Hire VS Angels and organize annual VS Fashion show in Europe
• Establish brand awareness and sentiment among men buying lingerie as a gift
Open 200 stores in Europe
over the next 10 years.
• Hire and train staff using the U.S. know-how
• Try to select convenient occassions for store openings to increase the interest (such as Summer
Olympics in London)
• Choose countries to operate in (see organizational structure)
• Choose site to open stores at (sites rather in thecity centre, complementary in malls)
• Choose suitable products for the Europen customer and the store format
Establish successful
pricing and sales policy
Provide excellent
customer care.
Establishing cost-effective
logistics
Use e-commerce.
• Profile as a premium brand, but stay competitive in this segment
• Set the prices at levels comparable to U.S.
• Implement the U.S. sales model (2-for-1)
• Implement the U.S. know-how regarding in-store experience
• Create a reward card programme
• Train staff to become an experienced workforce able to advise both women and men with
product selection
• Minimize average delivery time
• Build an European distribution centre based in Germany
• Ship all products for Europe directly from the producer to the distribution centre
• Choose a cost-effective way of transportation to ship products to stores or end
customers
• Choose a suitable product range for the target market
• Set the prices lower than in stores or use specials
• launch an internet marketing campaign to raise awareness of the website and e-shop
• Ship the products to all countries of the European Union

7. Open 200 stores
in Europe over
the next 10 years.
• Hire and train staff using the U.S. know-how
• Try to select convenient occassions for store openings to
increase the interest (such as Summer Olympics in London)
• Choose countries to operate in (see organizational structure)
• Choose site to open stores at (sites rather in the city centre,
complementary in malls)
• Choose suitable products for the Europen customer and the
store format

9. Establish the VS
brand as a top
lingerie retailer
• Launch a marketing campaing in countries where
stores will be opened.
• Hire VS Angels and organize annual VS Fashion
show in Europe
• Establish brand awareness and sentiment among
men buying lingerie as a gift
Establish
successful pricing
and sales policy
• Profile as a premium brand, but stay competitive in
this segment
• Set the prices at levels comparable to U.S.
• Implement the U.S. sales model (2-for-1)
Establishing costeffective logistics
• Build an European distribution centre based in
Germany
• Ship all products for Europe directly from the
producer to the distribution centre
• Choose a cost-effective way of transportation to
ship products to stores or end customers

10. Provide excellent
customer care.
Use e-commerce.
• Implement the U.S. know-how regarding in-store
experience
• Create a reward card programme
• Train staff to become an experienced workforce able to
advise both women and men with product selection
• Minimize average delivery time
• Choose a suitable product range for the target market
• Set the prices lower than in stores or use specials
• Launch an internet marketing campaign to raise
awareness of the website and e-shop
• Ship the products to all countries of the European Union

11. Organizational Structure
Limited Brands
VS USA
VS Europe
VS Stores
VS Direct
Sweden
Germany
Spain
UK
Italy
Stores in
catchment areas
Romania

12. Logistics –
distribution
centers and
catchment
areas

13. Key Process Logistics
Producer
Store manager
Germany
E-shop
purchases
Web purchases – standard delivery
Catchment areas
Inventory
tracking system
Stores inventory
demand
Store inventory transport
Web purchases –
express delivery
Catchment areas
DHL
DHL / UPS /
postal service
End customer
End customer
Transportation
company
Stores

14. KeyKey Processes
Processes cont.
• Employee hiring
HR
• New IT system implementation
IT
• Customer Feedback Collection
Marketing

15. Cause-Effect Relationship Model
(Customer Care)
Shareholders
Customers
Products
Employees
Net Profit
Margin
Share Price
Growth
Sales
Reward
Programme
Range
Avg. Delivery
Cost
Avg. Delivery
Time
Satisfaction
Price
Display
Expertise
E-commerce
Customer
Mind-setting
Training
Know-how

16. Key Success Factors
Key Success Factors
#
Metrics
Target Value
Frequency
Susceptibility to
influence
Rising the VS brand awareness as
a top lingerie retailer
1
Survey/Questionnaire
(MRG)
90%
Every two years
high
First choice for men buying
underwear for their partners
2
Annual increase in # of purchases
(MRG, Sales)
10%
Per purchase/annually
high
Customer satisfaction
3
Scale 1-10 (at the desk)
(Sales, STMNG)
95%
Per purchase/annually
low
4
# of reward cards (MRG)
30% of customers
Quarterly
low
5
Conversion Rate (Sales, STMNG)
40%
Quarterly
high
6
Total # of stores
(COO)
Differs each year
Annually
low
7
Revenues (CFO)
Proportionate to US
Annually
low
8
Avg. delivery time
(COO)
Stores 24h
Web standard 5days
Web express 36h
Quarterly
medium
9
Avg. delivery costs (COO)
?
Quarterly
medium
10
Inventory turnover (CFO, COO)
6
Annually
medium
11
Net profit margin (CFO)
8%
Annually
medium
12
Avg. € amount per purchase (Sales)
€45
Quarterly
high
13
# of unique visitors (entries) (IT, MRG)
10.000/day
Monthly
low
14
Conversion Rate (# of
purchases/unique entries) – (MRG, IT)
20%
Monthly
low
Successful store opening
Effective logistics
Pricing policy
E-commerce
Required Precision: 95% for all the metrics
Conversion Rate = percentage of purchases to entrants

17. Balanced Score Card
Key Success Factor
Importa
nce
Rising the VS brand awareness as a top lingerie retailer
1
0,15
First choice for men buying underwear for their partners
2
0,06
Customer satisfaction
3
0,06
4
0,08
5
0,1
6
0,02
7
0,08
8
0,02
9
0,02
10
0,03
11
0,1
12
0,1
13
0,06
14
0,12
Successful store opening
Effective logistics
Pricing policy
E-commerce
Total:
1 – not at all; 2 – partially achieved; 3 – achieved; 4 – exceeded expectations
1
Score

18. THANK YOU FOR YOUR
ATTENTION.