Warm pinks, seductive lighting and a sprinkle of the risqué are all part of the mystique behind the flagship store of Victoria’s Secret in the heart of Shanghai’s swanky shopping district. But behind the glamor and glitz of its fashion shows, the upmarket lingerie label is struggling.
Part of L Brands, which is based in the United States, VS posted comparable falling sales every single month last year, according to the parent group’s earnings reports. China’s booming market could help reverse that trend.
“Now is a good time for VS to march into China,” Neil Wang, the president of Frost & Sullivan Greater China, a marketing firm and consultancy, told the Chinese media. “Compared with five years ago, [Chinese] consumers have demonstrated increasing brand awareness due to the rising income levels,” he added.
Indeed, the market numbers are as revealing as the VS catalog. Overall, demand for high-end lingerie in the world’s second largest-economy is surging. Sales volumes have literally doubled in the past five years to US$18 billion with analysts predicting strong growth in the next 12 months. For 2017, the figure will be nearer $25 billion, Euromonitor International, the market research company, has forecasted, which would be double the US sector. By 2020, it could increase to $33 billion.
“This trend has attracted overseas lingerie brands, most of which are more mature than domestic companies, to the Chinese market,” said Cai Sujian, the head of the China Luxury Institute, which is based in the coastal province of Jiangsu.
Apart from Victoria’s Secret, La Perla, which is Italy’s blue-chip luxury lingerie label, and Triumph, a German global brand, are increasing their presence in the country. Sensual designs and high-quality products have been their main selling points to China’s affluent 30-something shoppers.
“Luxury is … not about buying to show off, it’s about buying items that make you feel good,” Chiara Scaglia, who heads La Perla’s Asia operation, told Reuters. “The perception of the lingerie sector has changed,” she added. “At the beginning, many people we spoke to were confused as to why anybody should spend over $1,000 on panties for something nobody sees.”
Now, it is a question she is hardly asked. Instead, it is all about competition.
Chinese companies, such as Beijing Aimer, Maniform and Ordifen, have turned their attention to well-heeled shoppers with fashionable lines in women’s underwear. Naturally, this has fragmented the sector with the main players struggling to etch out around 3% of market share.
“That means foreign brands will have to out-compete local brands not just on quality, but also innovation,” said Matthew Crabbe, the director at Mintel Group, a privately owned market research firm based in London.
As for Victoria’s Secret, the company will be hoping that supermodel “angels”, such as Liu Wen, Sui He, Estelle Chen and Xin Xie, will be able to spread a bit of stardust to the bottom line.
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Article & Image: Asia Times