STORES Magazine - August 2008 - (Page 34)

EXECUTIVE SUITE / INDUSTRY ECONOMICS SEXY STILL SELLS t’s the granddaddy of intimate apparel in this country, having lifted the spirits of post-World War II America by inventing the pushup bra, pioneering black lingerie and introducing the thong to U.S. consumers. Linda LoRe An icon of sensuality for generations of shoppers, Frederick’s of Hollywood is poised for significant growth following its merger with Movie Star, a manufacturer of branded and private label intimate apparel for mass merchandisers, department, specialty and discount stores. The merger will enable the company to open a minimum of 50 new locations over the next 36 months as well as a Frederick’s office in Asia to increase assortment and facilitate speed to market. Also on the agenda is the development of multiple store concepts that tailor merchandise to individual markets. STORES recently spoke with Frederick’s president and CEO Linda LoRe about current market conditions and the chain’s strategies for growth. I Lingerie can be a delicate matter – does your customer want sexy or safe? Foundations or fashion? We have spent a long time getting to know our customer and what she wants to put in her top drawer. From that knowledge, we’re able to offer the Frederick’s experience – sexy, quality lingerie at an alluring price point. Has the economy had an impact? LoRe: The lingerie segment certainly feels the impact of the current economic climate, but consumers still consider lingerie an affordable luxury. They might not be buying as many highticket items, but they’re able to treat themselves to indulgences at a lower price point. Frederick’s is responding by offering discounts on multiple items – two-for-$24 bras, four-for-$24 panties – promotions that give the customer the same Frederick’s experience at a price that allows her to get more for her money. We’re also giving her the ability to combine functionality with fashion. If she wants to get into a trend without making a significant purchase on a shirt or dress, she can indulge in trend-oriented lingerie, such as a bra or boyshorts. We’re doing extremely well with our fashion items. What’s the outlook for the segment generally? LoRe: The industry as a whole is at an important juncture. Many retailers continue to extend their brands with basic lingerie offerings. But the real winners will succeed by tapping into the needs of the customer through innovation and experiential shopping. It’s not enough anymore to build a bra with your label in it: You have to sell a better bra at an even better price, in a setting that makes customers feel special. What do you see as the major challenges facing the lingerie business these days? LoRe: Many apparel retailers have jumped onto the lingerie bandwagon as a way to offer their customers a more complete lifestyle extension of the brand. The challenge in this is that these retailers don’t often delve deep enough into their customers’ lingerie drawer, so to speak. producer of intimate apparel, it is no longer the least expensive one, so companies are going to Vietnam, Cambodia and back to the Philippines. Additionally, Sandler says, “freight has gone up dramatically and manufacturers are really being squeezed.” The escalating cost of gasoline could contribute to even higher online sales. However, the pace remains difficult to judge, according to Sandler. “Many in the industry feel that lingerie is a category that consumers look at online but go to the stores to buy.” What is too sexy? The question is, which stores do they visit? Victoria’s Secret has a firm grasp on about 30 percent of the market, but even this venerable purveyor of intimate apparel is not immune to market swings: After a relatively weak first quarter, company officials have been asking themselves whether they have veered off course by becoming “too sexy.” Bemoaning an overabundance of sensuality seems oddly puritanical for a company whose marketing theme was “What is 34 STORES / AUGUST 2008 Sexy?” However, as CEO Sharen Jester Turney recently told analysts, “We use the word sexy a lot and really have forgotten the ultra-feminine. … We will return to an ultra-feminine lingerie brand to meet [customer] needs and expectations.” She emphasized the success of the chain’s Pink brand, a $900 million annual business that targets a younger demographic. With the lingerie business becoming more fragmented, there is no shortage of competitors for the younger set. One of these is Gilly Hicks, intimate apparel stores with an Australian twist, launched by Abercrombie & Fitch. They specialize in moderately priced items that are described as more casual and fun and a less-provocative alternative to Victoria’s Secret for younger consumers, according to industry observers. The company now has five stores in operation and plans call for another seven or eight this year. StORES Len Lewis is a veteran retail industry journalist and commentator and the editorial director of Lewis Communications. WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - August 2008

STORES Magazine - August 2008 Contents Executive Editor's Page President's Page The Lure of Free Shipping Walmart’s New Look What Shoppers Think Will Widgets Work for Wheat Bread and Wasabi? 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Store Design Industry Economics Hot 100 Retailers Concept2Watch Mobile Technology Small Store Technology Website Optimization Site Selection Mobile Payments Recycling Merchandising: Cool Sells Merchandising: Merchandising in Mexico Store Construction & Development Human Resources Loyalty Programs Mobile Marketing Loeb Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - August 2008

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