STRATEGIC MANAGEMENT COURSE PROFILE PROJECT

COMPANY: VICTORIA’S SECRET

Tereza Koudelková

Markéta Magyarová

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)

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.

SWOT Analysis

Strengths •Strong brand recognition

•In-store experience •Customer care •E-commerce •Product range

Weaknesses •Premium prices •US locations only

•High share price fluctuations •High inventory

•Part of weaker group

Opportunities •Economic recovery

•Growth of the target population •International expansion

•PINK line strategy is successful

Threats •External competition

•Low profit margins due to price-competition or purchasing costs •Debacle of the to-be-opened

stores in Europe

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.

Suggested long-term objectives

• 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 the VS brand as a top lingerie retailer

• 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

Open 200 stores in Europe over the next 10 years.

• 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)

Establish successful pricing and sales policy

• 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

Provide excellent customer care.

• 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

Establishing cost-effective logistics

• 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

Use e-commerce.

Strategic goals and initiatives

• 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

Open 200 stores in Europe over

the next 10 years.

• 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 the VS brand as a top lingerie retailer

• 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)

Establish successful pricing and sales policy

• 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

Establishing cost-effective logistics

• 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

Provide excellent customer care.

• 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

Use e-commerce.

Organizational Structure

Limited Brands

VS USA VS Europe

VS Direct

VS Stores

Sweden

UK

Spain

Italy

Germany

Romania Stores in

catchment areas

Logistics – distribution centers and catchment areas

Producer

Germany

Catchment areas

DHL / UPS / postal service

End customer

DHL

End customer

Catchment areas

Transportation company

Stores

E-shop purchases

Stores inventory demand

Inventory tracking system

Store manager

Web purchases – standard delivery Store inventory transport

Web purchases – express delivery

Key Process - Logistics

Key Processes

• Employee hiring

HR

• New IT system implementation

IT

• Customer Feedback Collection

Marketing

Key Processes cont.

Employees

Products

Customers

Shareholders Share Price Growth

Reward Programme

Range Price

Customer Mind-setting

Display

Training

Avg. Delivery Cost

Avg. Delivery Time

Expertise

Know-how

Satisfaction

E-commerce

Sales Net Profit

Margin

Cause-Effect Relationship Model (Customer Care)

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

Successful store opening 6 Total # of stores (COO)

Differs each year Annually low

7 Revenues (CFO) Proportionate to US Annually low

Effective logistics 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

Pricing policy 11 Net profit margin (CFO) 8% Annually medium

12 Avg. € amount per purchase (Sales) €45 Quarterly high

E-commerce 13 # of unique visitors (entries) (IT, MRG) 10.000/day Monthly low

14 Conversion Rate (# of purchases/unique entries) – (MRG, IT)

20% Monthly low

Required Precision: 95% for all the metrics Conversion Rate = percentage of purchases to entrants

Key Success Factors

Key Success Factor Importance

Score

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

Successful store opening 6 0,02

7 0,08

Effective logistics 8 0,02

9 0,02

10 0,03

Pricing policy 11 0,1

12 0,1

E-commerce 13 0,06

14 0,12

Total: 1

1 – not at all; 2 – partially achieved; 3 – achieved; 4 – exceeded expectations

Balanced Score Card

THANK YOU FOR YOUR

ATTENTION.