China Consumer

Shanghai surprise

Why Victoria’s Secret is unhappy with China sales

USA/

Victoria’s got a China secret

Victoria’s Secret was started in San Francisco in 1977 by Roy Raymond, who felt embarrassed buying lingerie for his wife and wanted to provide a more comfortable place for men to shop.

He later sold the business for $4 million to Leslie Wexner who grew the brand quickly into a much more substantial undertaking. Raymond looked on aghast, eventually jumping off the Golden Gate Bridge.

Rather more happily, the lingerie label has introduced millions of women (and a few men) to the Fantasy Bra over the years, as well as the annual extravaganzas that showcases glamazon models on the catwalk (see photo for the most recent event).

The show, which airs in 180 other countries, is one of the most watched programmes on earth.

So it shouldn’t come as a surprise that the label hosted a show to celebrate the opening of its flagship store in Shanghai last December. It wasn’t a huge success (Xinhua reported audiences were disappointed that it was “nothing like the US one”). Bu that’s probably because Victoria’s Secret didn’t host it. Instead it was put on by Yimin Group and Uni-Mice Investment, the owners of the Shanghai store. In February, the two companies also announced that they have secured sole distribution rights to Victoria’s Secret in China until 2022, which quickly sent shares of Yimin Group up 7.4% on the Shanghai Stock Exchange, says 21CN Business Herald.

But their statement elicited a strong response from L Brands, the parent company of the lingerie label. The Ohio-based headquarters issued a statement on Victoria’s Secret website insisting that the lingerie brand doesn’t have any stores in China at the moment (except for the four it operates in Hong Kong and one in Macau).

“There are currently no authorised Victoria’s Secret stores operating in mainland China,” it reiterated. “We want consumers in China to know that any store claiming to represent the brand is not authorised and cannot guarantee Victoria’s Secret high-quality services or authentic products.”

So what’s going on? Through its public relations firm, L Brands told the Securities Times that a subsidiary of Uni-Mice had purchased off-season clothing from Victoria’s Secret back in 2007. What L Brands didn’t foresee was that Uni-Mice would use the outdated range to set up stores selling the brand in China.

Worse as far as L Brands is concerned, Uni-Mice claims that it is planning to sell franchising rights to open stores selling its Victoria’s  Secret lingerie inventory in five other cities including Chengdu, Changsha and Xiamen, reports CBN. If the Shanghai store is anything to go by, the outlets will get a glossy black lacquer makeover with neon-pink accents, not unlike the American stores.

L Brands has now filed a lawsuit against Uni-Mice’s subsidiary at the Shanghai No. 1 Intermediate People’s Court over trademark infringement. The hearing starts on April 8. L Brands also announced in February that it is planning to open Victoria’s Secret Beauty and Accessories stores in China later this year. But don’t expect blinged-out bras and racy undergarments. Like its Hong Kong outlets, these Victoria’s Secret stores are smaller shops that sell mostly beauty products and fragrances.

Despite the cautious beginnings, industry insiders believe that selling lingerie to China’s growing middle class is Victoria’s Secret longer term objective. In a conference call with analysts, L Brands executive Nicholas Coe called the country “an incredibly significant market for us in the future”.

China’s contribution to global lingerie is growing. In 2010, total revenue from lingerie sales was about $3.9 billion, according to statistics from cloth.hc360.com, a Chinese clothing retailer, compared to global sales of over $30 billion.

Nevertheless, CBN reckons that the US firm’s more immediate priority is the Uni-Mice shop. “The company definitely needs to take action before the situation spins out of control so it can still repair its image and reputation in China,” the newspaper warns.


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