Victoria's Secret, It's Time To Change!
In a letter written to Mr. Leslie H. Wexner -- Chairman and CEO of L Brands (parent to: Victoria’s Secret, PINK and Bath & Body Works) -- investor James A. Mitarotonda speaks on behalf of Barington Capital Group by writing a few recommendations that the American fashion retailer should consider, as they “strongly believe in the value potential of L Brands and are confident that changes can be made to create meaningful long-term value for shareholders.” The main focus of this statement and his letter? The Victoria's Secret (VS) brand.
Mr. Mitarotonda refers to unfortunate events when referring to the VS brand that among them, includes: the high executive and employee turnover rate since 2016, the financial loss due to its merchandise missteps, and its dated brand image and lack of alignment with women’s evolving attitude towards what beauty, diversity and inclusion truly looks like. There was also that late 2018 Vogue interview with Ed Razek -- Victoria's Secret CMO -- where he had some negative comments towards trans and plus size women that didn't bode well with the public at large. He apologized then, but was it enough?
I don't know about you, but Ed reminded me of someone...
Do you remember a little known brand named, Abercrombie and Fitch?
If you do remember this highly sexualized, very popular "all American, cool" teen brand, you can see why I bring them up during a VS focused conversation.
In case you aren't as familiar with the Former CEO, Mike Jeffries and his twisted way in positioning his brand, or need a reminder, read the following quote...
“In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong [in our clothes], and they can’t belong. Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don’t alienate anybody, but you don’t excite anybody, either. " -- Mike Jeffries (Salon interview)
Talk about being completely out-of-touch with reality.
It was this messaging and this CEO's crude comments that ultimately helped lead the once brand giant to its demise.
(Not that you need any more examples but in case you do, there's a link at the bottom of the article with a list of quotes from Jeffries, courtesy of Elite Daily.)
Now, let's get back to the Victoria's Secret brand:
Yes, Victoria's Secret ads are known for showcasing beautiful, provocative, symmetrical, thin women to represent their brand. Yes, they have a yearly, highly televised fashion show event that has been around for over two decades (although ratings have been plummeting -- from 6.7m in 2016 to 5m in 2017 to 3.3m viewers in 2018). And yes, they can be considered a leader in their category. Bottom line is that Victoria's Secret has used sex, unilaterally, to sell and it worked for them.
Until...it stopped working because things are no longer what they used to be.
To discuss this, I called on Modeling Industry expert, Iggy Goncalves to get his thoughts on the modeling business and VS. As someone who has been inside the industry since a child model himself -- over 20 years altogether -- Iggy has traveled over 34 countries as an International Model Scout where he scouted, managed, and worked at several agencies such as Wilhelmina, Mc2, and Elite. Now running his own mother agency, Iggy Models, Iggy had this to say:
"As a Talent Scout scouting top female fashion models, it's really difficult for me to find that one particular girl that modeling agencies are looking for because they are usually one out of hundreds of girls that actually make it with a modeling contract. With that being said, if you were to look at it on a broader perspective, Victoria's Secret is hiring these girls that scouts find that are one in hundreds of women. And there's the problem. They are choosing a specific look that does not represent society. Has it sold? Yes, because over the years the media has embedded in women's minds that that is the way they need to look. But that's not realistic. It's just not real."
Talk about a statement, Iggy! But he didn't stop there. I asked Iggy about the casting process and the following apology issued by Ed:
It all comes down to the decision makers' biased opinion on who they feel "fit the brand." They can say they will cast a plus size model or they will cast a transgender model, but that means nothing. Casting someone means nothing! Casting is basically just an interview. And then, through their biased decision, these decision makers choose who they want representing their brand.
His last words brought it all home:
"We are a society that's changing and becoming more diverse; more global. Victoria's Secret is stuck in this old school mentality and that's one of the reasons they are suffering -- because of the lack of inclusion," Iggy continued.
And with that, a perfect way to transition into the second part of this article where we take a better look into Mr. Mitarotonda's letter to L Brands regarding Victoria's Secret operations, where he and his team list, in detail, three recommendations for them to do better. I read his very detailed and very informative letter and decided to make some suggestions based on his three main points:
Take swift action to improve the performance of Victoria’s Secret by correcting past merchandising mistakes and ensuring that it communicates a compelling, up-to-date brand image that resonates with today’s consumers
Retain a financial advisor to help explore opportunities to unlock the tremendous value of Bath & Body Works, such as through a spinoff of Victoria’s Secret or an initial public offering (IPO) of Bath & Body Works
Improve the composition of its Board of Directors, as it believes that its current directors lack the independence and diversity needed to effectively oversee and advise management
The topic, or question, at hand is:
How can a veteran brand survive in an ever changing, saturated market?
Well, Mr. Mitarotonda stands on the premise that the key to survival in the fashion industry is for a brand to reinvent itself as its shoppers evolve.
You, sir, are right! You can say that about all industries, really. I'm a firm believer that if a brand isn't evolving, it will soon be dissolving.
But let's look at each recommendation, closer...
Recommendation #1 where Mr. Mitarotonda refers to merchandising missteps.
He mentions how these missteps lead the company to a decline in sales of well over $400 million between 2016 and 2018. From not shifting in time when there was a demand for certain products and inventory turnover, to not keeping up with other brands within the same industry, and loss of revenue due to a lack of new merchandise.
My thoughts here are that Victoria's Secret should understand what lead to these mistakes and take responsibility by owning up to them. And with that, take the necessary actions to steer away from making those same mistakes again. Changed behavior moving forward is the goal here, VS team. (The full letter dives into this in detail; link at the end of article).
It's already challenging enough that the world of retail has been transformed thanks to major players like Amazon and eBay; brands have been forced to keep up and adapt in order to survive. What Victoria's Secret needs is a dedicated research team that can read and translate where the market is and where it's headed. And of course, understanding their consumers and what drives them in order to "move with them" is of dire need. This way, they can start new conversations, be in the know of new topics and trends while understanding what matters most to their consumers [non panties and bras related], and so much more! And definitely, bring in a dedicated team to ensure quality control of its merchandise, as well. Here’s a little experiment, VS: Hide the logo from your products, take it to the streets, and approach women that fit your buyer persona. Now tell them to guess what the price of that item is based on the feel of the material alone. As a woman, as a woman with female friends, and as a woman who has talked to women (research), I can tell you that although your products are 'pretty,' the pricing/quality feedback won't be. So adjust your prices or make better quality stuff. And remember, your prices should also match the price point your consumers are willing to spend. You don't have to go far to see the disconnect with your consumer base here.
This brings me to part two of Recommendation #1, where Mr. Mitarotonda speaks on ensuring that the brand communicates a compelling, up-to-date brand image that resonates with today’s consumers
VS needs to know who. they. are. selling. to. This is an obvious one. But is it? Victoria's Secret continues to sell to one type of beauty so they really don't know who they are selling to or, they are too set in their ways believing that the formula that worked in the past will work now. It's almost as though they want to make the people change their way of thinking. Hmm... All in all, they need to get to know their audience and adapt. They need to study them, listen to them, and connect and interact with them on a personal level.
Now, to the part on the recommendation that refers to "resonating" with consumers. Let's go even deeper...
Beauty, in this day and age, doesn’t have a face, nor does it have a body. Beauty has and is and will from now on be an attitude that feels and looks different to every single woman. When Victoria's Secret lives on: “Confidence is Sexy” with one representation of beauty stamped on every piece on content that represents their brand, it’s attaching one look to 'confidence' which in turn attaches one look to 'sexy.' And I believe that we should all be pretty 'confident' at this point that sexy is in fact, a mindset and not a body type.
Let us; however, keep in mind that evolving towards showcasing confidence and sexy more globally -- meaning, bringing in different body types -- that the skinnier, non curvier girls don't get alienated in the process. We can't highlight one type of beauty (curvier, for example) and bash the "non-curvy." And I’m afraid that if Victoria's Secret simply begins working with "curvier" women "here and there" in an effort to shut critics up, without any sense of direction, we won't see a real change happening with their branding efforts and with how their consumers perceive them. And on top of that, we will see comments like this one: "Finally VS valuing models with a real body! She is gorgeous!" A comment [that received over 1k likes] on the announcement of Barbara Palvin recently being named an angel (VS's Instagram).
Side note: It's fair to say that we can't assume how skinnier girls became skinny. So the shaming and the bashing (such as the comment above) really needs to stop. If we are evolving as a collective, towards acceptance of people...let's do it all the way. Let's realize that these girls, are humans, first and foremost. That is their body and they deserve respect.
At the end of the day, if Victoria's Secret doesn’t take a stand and audit their own idea of what beauty is, they will be known for not having an idea at all and for digging themselves a deeper hole with every attempt at doing what they feel they "should" to not be scrutinized by the media and public. Here's a simple, yet powerful and intimate way to educate your team, VS: How about bringing in strong women to tell their stories to assist with opening your teams' mind about attitude and strength being the new sexy?
Let’s now move on to Recommendation #2: Retain a financial advisor to help explore opportunities to unlock the tremendous value of Bath & Body Works, such as through a spinoff of Victoria’s Secret or an initial public offering (IPO) of Bath & Body Works.
I’ll only speak on the suggestion of a Victoria's Secret “spinoff.” And to that I’d say: Call it a rebrand, a spinoff – just do it and call it something! A brand overhaul is necessary. And Victoria's Secret can start by reevaluating the 'VS team' from the intern to the executives and board members. They need to bring in diverse individuals (in age, ethnicity and different lifestyles that embody strength) like researchers, merchandise consultants, copywriters, and cinematographer and photographers with experience working with women. And that's just to start!
Lastly, let's look into Mr. Mitarotonda’s 3rd Recommendation:
Improve the composition of its Board of Directors, as it believes that its current directors lack the independence and diversity needed to effectively oversee and advise management.
A brand’s success rises and falls on leadership, right? Well when 9 of 12 board members are male with a median age of 71, with no experience catering branded products to women, no proven experience working nationally let alone internationally, and believed to all be in these roles due to personal ties? (Mr. Mitarotonda said it, not me!) When this is what represents your leadership? It’s very clear that changes need to be made at the top before anything else.
I believe Victoria's Secret can succeed the changing tides of culture. However, it can’t and won’t unless they decide they want to change in their rooted thinking and rooted behavior. It's really true that you can't fix 'the problem' if you don't first recognize it to be a problem. Here's a last thought: Maybe outsource a Branding Consultant who will bring an outsider-looking-in perspective to the team? A person that can work alongside your team to restructure the business [before it’s too late to glue the shattered pieces together] will bring tremendous value.
This article was written by Anna Paula Goncalves -- Founder at business consultancy, Águiarise.
For Barington Capital Group's full letter, click here.
(L Brands issued their statement in response to Mr. Mitarotonda’s letter.)
Sources: Barington Capital Group Website, Elite Daily