Victoria\'s Secret: History and SWOT

Victoria's Secret: History and SWOT Analysis

Company Introduction

In the 1970s, Roy Raymond of San Francisco established a lingerie store that he attempted to give a close, welcoming, and yet private atmosphere that echoed the feelings of a Victorian-era bedroom or dressing closet (White 2010). By 1982, Raymond had developed the company into a three-store enterprise with a successful and growing catalogue business (White 2010). This attracted the attention of Limited Brands, a British conglomerate, which acquired the company in whole from Raymond in 1982 and has been operating Victoria's Secret ever since, perpetuating the belief that the company is of British origins and capitalizing on the boost this seems to give the profile of its products (White 2010). Today, Victoria's Secret operates over one thousand stores and still has a very strong catalogue and now website ordering system, with a combined total of over two billion dollars in sales annually (White 2010).

Internal Analysis

Two primary strengths of Victoria's Secret are its existing market share and brand power as well as its diversity and spread of sales options. Though only in operation for a few decades, the company has an immense market share and is the most recognized brand women's wear worldwide, giving it ample cash flow to attempt innovative growth (Hoover 2010). The company offers sales through its retail store division as well as its web presence and 400 million catalogs distributed annually, which allows it a large degree of security in its continued success (Yahoo 2010).

This does not mean that the company is without weaknesses, however; there are several points of internal strategy that could potentially limit the company's profitability. Victoria's Secret is branded as a somewhat luxury company which reduces the potential market for the company and demonstrates a weakness in their overall marketing strategy (Yahoo 2010; White 2010). In addition, the fact that the vast majority of the company's product sales take place quite purposefully thorough its own retail outlets limits the potential sales and distribution of Victoria's Secret's products (Hoover 2010). Though these have obviously not hurt the company's standing to a large degree during its short span of operation, they are certainly internal factors that limit the company's growth potential.

On balance, the internal position of Victoria's Secret is very strong. The company has products that are well-liked and well-endorsed, which speaks highly of their deign department as well as certain of their marketing strategies, and company leadership has a clear vision combined with substantial business acumen that will doubtless continue to guide the company well (VIP 2010; Victoria's Secret 2008). The weaknesses in the company's sales and marketing strategies, while not unduly depressing the company's growth, revenue, or profitability, do serve as limiting factors for this growth and profitability, and will eventually need adjustment for the company to remain the industry powerhouse that it has become (Hoover 2010; Yahoo 2010). Addressing these weaknesses will serve to make Victoria's Secret's internal position even stronger than it currently appears to be.

External Analysis

The company's external situation is also fairly strong, and there are two key opportunities facing the company in the current era that it could exploit to its even greater success. First, given the company's strong market share, its profitability, and its ownership by the larger Limited Brands, Victoria's Secret will emerge from the current global economic downturn with far less risk and damage than many of its smaller competitors (Victoria's Secret 2008; Hoover 2010). Another opportunity facing the company is the increase in current fashion trends of "sexy" outerwear and underwear as modeled by pop stars and the increasingly media-potent socialites of the day (VIP 2010). Victoria's Secret has already begun to capitalize on these opportunities and continuing to do so will improve its external position.

The economic downturn also creates something of a threat for the company, however. As a luxury brand, Victoria's Secret runs the risk of losing clientele based on perceptions and realities of affordability and simple price competition in the market, and there is already evidence that this has occurred to some degree (Victoria's Secret 2008; Hoover 2010; White 2010). Though the company has a strong internet presence, increasing reliance on web-based shopping and especially the use of multi-product ad discount sites such as Amazon.com form a new class of competition for Victoria's Secret's retail operations that the company has not necessarily met with the degree of efficacy necessary (Yahoo 2010; White 2010). These threats will need to be addressed for continuing company success.

Just as Victoria's Secret's internal position is relatively strong on balance, it faces more external opportunities than it does threats. Continuing to capitalize on its already large market share and the relatively weakened positions of its competitors will enable more effective growth and profitability for the company in the coming years (White 2010). This must be balanced, however, by an awareness of the increased competition and potential reduction of market share presented by internet-based companies and their generally lower operating costs as well as keeping a close watch on the luxury brand identity that Victoria's Secret has cultivated in order to ensure that it does not price itself out of key consumer demographics in the lingerie market (Hoover 2010; White 2010; Yahoo 2010).