Transcript Victoria`s Secret Expansion
Victoria’s Secret
Possible Expansion into Bulgaria
Draganova Maria Kasabova Steliyana Levendova Elitsa Stoitsova Desislava
Overview of the Corporation
Strategy Overview
• • Mission: “We are committed to building a family of the world’s best retail brands that offer captivating experiences that drive long-term loyalty and deliver sustained growth for our shareholders.”
Values:
The customer rules!
Passion leads to success Inclusion makes us stronger It matters how we play the game
Strategy Overview
• Vision and long-term objectives: Be the best retailer of women lingerie in the world by always getting better and living the company’s values Keep the domestic US business healthy and also pursue profitable growth internationally by maintaining the brand’s image while expanding
Business Overview
Financial data
Net sales (in millions) Operating income (in millions) Operating income rate Total assets (in millions) Capital expenditures Depreciation and amortization 2012 $ 6,574 $ 1,188 18.1% $ 2,428 $ 268 $ 148 2011 $ 6,121 $ 1,081 17.7% $ 2,346 $ 161 $ 142 2010 $ 5,520 $ 889 16.1% $ 2,357 $ 82 $ 135
Market share
% Change 2012 7% 2011 11% 10% 2% 3.5% 66.5% 4% 22% 10% 96% 5% 24,51% Victoria's Secret Competition 75,49%
Business Overview
• • • • • • Value proposition: products which are fashionable and attractive, create experience and deliver emotions Competitive advantage: brand name and loyal customer base Resources and core competences: trade name and inventory management Markets: present mostly in North America but beginning to expand worldwide Products: underwear, swimwear, cosmetics, accessories, clothes, shoes Competition: retailers, specialty, and department stores
• • •
Recent Developments
Partnership with M.H. Alshaya Launch of PINK – college line for women aged 15-22 International expansion outside North America since 2012
Conclusion
Victoria’s Secret is a profitable and stable company with growth potential.
Geographical Expansion
• • • • • Increase profitability and secure long-term growth, access new markets Choose partners carefully and keep the brand’s image Enter the market with lingerie Careful expanding strategy in order to keep the image of exclusivity Enter in September in order to be established for the Christmas shopping season
Country-specific Analysis
PESTEL Framework
P S E T E L
Target Market
• • • • • • • • •
Women profile:
Age 18-49 Income – 1000BGN and above per month Live in larger cities Marital status – single or in a relationship Sophisticated, financially independent Profession: managers, full-time, or housewives Like to be sexy, attractive, and fashionable Active on social media platforms Buying habits
Target Market
• • • • •
Men profile:
Age 25-45 Income 2000BGN and above Marital status - in a relationship Open-minded, contemporary, care about appearance, appreciate the woman in their life, willing to spend a lot of money on her Buying habits
Product Differentiation
• • • • • • Exclusivity Best super models displaying the products Feeling of being special Visual appeals At a reasonable price – more than a product Older women feel younger
Market Analysis
• •
Reaching to customers
Brick and mortar store Catalogs for advertising Online shopping website
Market trends
Aging population – negative growth Improving economic situation Emigration of young people •
Probability of a successful expansion
– country’s attractive image for investment
Competitors Assessment
Overall Competition
•
Types of businesses:
Producers - Hristy, KIA Intim, Kiki Distributors - BulBel, Seven Seconds, Triumph, Za-za, Ivon.bg
Sellers - Delfina, Sia, New Silhouette • •
Product range
Competitive advantages: Popularity, variety of products, discounts
Supplier Assessment
• • • • Policy (L Brands): no supplier should provide over 10% of manufacturing Location: developing countries
Types of suppliers:
international: designers, manufacturers, companies providing materials, logistics and administration local: store managers, shop assistants, suppliers of legal, accounting and other services
Vertical integration
International Suppliers
• • • • • • Designers – the Limited Design Studio Manufacturers: Jordan, China, Thailand, India, Jordan, Sri Lanka Differentiation: Launch and non-launch Materials: Burkina Faso and Eastern Europe Logistics and administration: merchandise allocation, planning, shipping, other services Divisions: Independent Production Services, Inc. (IPS), Limited Logistics Services (LLS), Columbus Direction Center
Supply Chain
Product design and launch Merchan dise Planning, Allocatio n and Forecasti ng Product ion & Sourcing Logistics Store Opera tions
Bulgaria
• • • • • Shop assistants – unemployment rate13%, secondary Education 12% Store manager – 6.4% of unemployed Legal and accounting services – the big four Suppliers of store assets and area – lower prices, new malls Additional services – freight, store arrangement, marketing, etc.
Switching Costs and Bargaining Power
• • Moderate switching costs due to: • Short-term contracts (established partnership)
Wages
Technology and quality (expertise) • • • •
Trade arrangements and regulations Culture
•
Time and organizational changes
(location)
Globalization High volume of production
Internal suppliers
Market Entry Assessment
• • • Barriers to entry - moderate Way to enter – franchising Alshaya Co.
Managing personnel
Results Assessment
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Pricing and profitability analysis based on:
Competitor's financial results Triumph – similar target market and pricing strategy.
Earned 199,000BGN in 2012 from 5 stores.
Size and purchasing power of target market 41,225*100 = 4,122,500BGN = 2,906,239USD sales revenues 2,906,239USD*7.2% = 209,249USD profit
Results Assessment
• •
Short-term success
Strong recognition
Long-term success
Establish the brand on the market Build a loyal customer base Increase in sales Online shopping website New store opening Increase in store size Introducing of cosmetics and accessories
Final Decision
Unwillingly , we say ‘NO’ but just for now.