Victoria’s Secret to Success

Push-up Bras and Focused Operations


Victoria’s Secret is the world’s leading specialty retailer of intimate apparel. Its 1,100 stores generate $7.2 billion in annual sales, affording it a 35%+ share of the intimates market in the United States. Operating income margins are 18%+, higher than the apparel industry average.

Victoria’s Secret is a success story – it enjoyed tremendous growth and market share gain over its history, built a powerful name, penetrated popular culture, and commanded brand awareness. But there’s more at play here than just genius marketing. A unique value proposition, and execution of an aligned operating model, are behind the lingerie giant’s success.

Business Model

Victoria’s Secret creates value for its customers in two key ways:

Products: The company offers innovative, sophisticated products at an attainable price point. The products hold functional value (e.g. push-up design), as well as aspirational value (e.g. collections linked to the world-famous Victoria’s Secret fashion show). To drive store traffic, sales, and growth, Victoria’s Secret continuously launches new products (“fashion launches”) while also maintaining some staples (“non-launch” or “basics”).

Experience: Victoria’s Secret was also able to transform the intimates shopping experience from a “need to do” activity to a branded, quality-service experience.


Operating Model

Five elements of Victoria’s Secret’s operations neatly align with its value creation goals.

Product Design: The business model requires that the company remain agile and refresh its offerings. Victoria’s Secret is continuously working to introduce new and innovative products. The company places tremendous focus on its “concept-to-market” process. It prioritizes design and speed to market. A key philosophy of the company is to “Read. React. Chase.” The company’s internal design studios are constantly seeking inspiration for new product designs. New concepts are tested in small batches in select company stores. The product line Pink was innovated in this way to attract a younger, college-aged woman.

Supply Chain: Victoria’s Secret manages two supply chains – one for fashion launches, another for its basic products. It selects a handful of vendors that have proven innovative, technologically advanced manufacturing that can keep up with the rapid concept-to-market goals for fashion launch products. The remaining vendors are cost-effective, high volume suppliers for the basic lines. Overall, Victoria’s Secret partners with select contract manufacturers who are mostly small and agile. No supplier provides more than 10% of Victoria’s Secret’s purchases. The company also sources 90% of its product via “open buy” and not “committed buy” agreements – allowing greater flexibility in innovating.

Merchandising: Victoria’s Secret also treats fashion launch products differently from basic products in merchandising. Fashion launches are “pushed” from the distribution centers to the stores, in quantities aimed at certain sales targets. On the other hand, basic products are “pulled” from the stores in quantities dictated by replenishment needs and actual sales numbers. This allows Victoria’s Secret flexibility in managing fundamentally different groups of product.

Store Operations: While Victoria’s Secret has a strong direct channel in its website and catalog ($1.6 billion of annual sales), the majority of the business is in its brick-and-mortar channel. The company-owned stores generate the experiential value that helps to differentiate Victoria’s Secret. Interior design choices – lighting, fixtures, décor, and music – promote a feel of feminine luxury. The store layout, typically multiple adjacent room-like spaces, separate fashion launches from basic collections, but always displays “pair” bras and panties, to promote more browsing time and bundled sales.

Sales Associates: A big asset to Victoria’s Secret, and critical to its success, are the sales associates. The company is focused on building a sales force that can give the customer maximum comfort level (it is intimates they’re trying on!), and it hires and trains its associates accordingly.

bras and panties display fitting room layout


Limited Brands Annual Report, FY2004

Limited Brands Investor Handout, 8/26/2015

“Supply Chain Strategies in the Apparel Industry: A Case Study of Victoria’s Secret”, Sumit Kumar, MIT

Forbes article, “American Eagle’s Aerie Can Adopt Competitor Victoria’s Secret’s Ways” March 2014



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Student comments on Victoria’s Secret to Success

  1. Great post with some really nice detail on the operating model!

  2. Interesting post! 1) Where/how do you think they will find growth in the business? (physical retail expansion is slow and expensive) 2) What do you think their reaction will be to the emerging e-commerce competitors in the lingerie industry (such as Adore Me, HBS startup, pure e-commerce player, hired ex VS designer and half the price of VS merchandise)?

  3. Good questions! 1) It’s true – retail expansion is expensive, and there’s also some saturation risk. I think there will be two key avenues for growth: the online platform, and international expansion. The challenge with the former is the increasing competition (lower barriers to entry). The challenge with the latter is finding the right partners. Currently, VS has a small presence in 70 countries through franchise, licensing, and wholesale partnerships that help de-risk the international operations. 2) My best guess is they’ll react by improving the online channel, squeezing supply chain costs, focusing on the design process, and retaining their key designers. I think their “right to win” in the medium-term will remain in the brick-and-mortar retail experience. But I’m very interested to see how much share the pure e-commerce players will gain and how rapidly.

  4. I think it’s so impressive that VS has been able to remain a market leader and relevant all these years, and thanks to your post I have a better understanding of how! Interesting and logical strategy on their part that “no supplier provides more than 10% of Victoria’s Secret’s purchases” and also I really like your analysis of push and pull marketing in terms of their merchandising.

    On a personal note, I’m curious how you see their strategy in terms of target customer… is to obtain and retain loyal customers over the years (for instance keeping one shopper who makes her first purchase at age 16 keep coming back until she’s 26, 36, etc) or are they more focused on always targeting the largest proportion possible of their best performing customers (e.g.16-25 year olds, for instance)? I’m curious because I used to shop at VS until probably the age of 22 but I’ve turned to other sources such as department stores (Saks or Bloomingdales), Journelle, Natori, Hanky Panky, to make these apparel purchases. Maybe because my WTP increased, but also I think I have a perception of VS as a “younger” brand. That being said, I still tune into the VSFS every year, buy bathing suits from there occasionally, and will always feel a certain nostalgia for the brand!

    1. I was curious about the same thing on VS’s targeting strategy! Based on investor communications, I gather that VS is increasingly targeting a younger woman with the goal of retaining her over her lingerie-shopping years. The 10-k, for example, describes Victoria’s Secret’s approach as one that “markets products to the college-aged woman with PINK and then transitions her to glamorous and sexy product lines.” Their launch of PINK lines, and their deliberate choice of which sizes to carry, favors a younger woman too. I do think attrition naturally happens in that transition from college woman to professional woman, increasingly a pain point for VS as you pointed out.

      On VSFS – I’m always amazed how much attention it gets. It’s brilliant marketing.

  5. Great post! Really interesting to see the different ways that they have structured their product and channel operations to maintain maximum flexibility. I sometimes get my bathing suits there, and I think a big way that they distinguish themselves from competitors is their store design (as you mentioned in the post). Their comfortable dressing rooms get you to linger longer (aka try on more stuff) and the dim lighting in their dressing rooms makes you look better than you actually do in real life haha. Seems like a small thing, but I am always amazed when other stores of the same caliber do not pay attention to these details — I think it makes a big difference on sales. Thank you for the post!

  6. Great post! I’m curious to your thoughts around brand dilution as Victoria Secret expands into other markets? Do you also think competitors like True & Co are legitimate threats to Victoria Secret’s market position?

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