Supermodels return in new live Webcast

The Victoria's Secret supermodels are the objects of fantasy for millions. In May, for the lingerie company's next blowout fashion show and live Webcast, the scantily clad models will be strutting the runway in the midst of the ultimate fantasyland of glitz, the Cannes Film Festival. More importantly, the Cannes Webcast will mark the kickoff of the world-famous lingerie line's use of the Internet to move into the global marketplace.

After the May 18 Webcast, Victoria's Secret will launch a major marketing campaign to promote its first concerted effort to sell its lacy bras and silky underthings to European consumers.

Details are still being worked out, but the company expects to use Web sales to help determine where and how Victoria's Secret should roll out physical stores in European markets, says a company executive. Currently there are 850 Victoria's Secret lingerie and beauty stores in the U.S.

More than 24 million people are online in Europe, with the Internet audience expected to reach over 53 million in 2001, according to Forrester Research.

Going global
It's not as if the Victoria's Secret retail unit of Intimate Brands needs global support. According to the company's earnings report in September, total sales for the Victoria's Secret and Bath and Body Works brands for the 35 weeks ended Oct. 2 rose 15 percent to $2.46 billion, from $2.14 billion in the same period a year ago. Same store sales are expected to increase 10 percent to 12 percent in fiscal 2000 and 6 percent to 8 percent in fiscal 2001.

But Leslie Wexner, chairman and chief executive of Intimate Brands, has told the investment community that his five-year vision is for Columbus-based Intimate Brands to become a $10 billion (sales) global company.

What faster or more relatively low-cost way to reach European consumers than via Web sales?

"It's probably the best-known lingerie brand in the world," says Dorothy Lakner, an analyst who follows Intimate Brands for CIBC Oppenheimer. "It's not farfetched to say they are already a known entity [in Europe]."

"It's seed planting to begin to broaden the name," says Dave Ricci, analyst with William Blair & Co. "By testing the waters [via Web sales], it's a way of reducing the risk of global expansion."

Even with very little marketing to overseas shoppers, already 10 percent of Victoria Secret's Web sales are international, and 5 percent of its catalogs are delivered to customers in other countries, says Kenneth Weil, the lingerie company's vice president of new media. Intimate Brands doesn’t break out online sales, and Weil concedes that the conversion number of Web browsers to shoppers is "slightly lower" at VictoriasSecret.com than the average for online retail. That means a lot of (presumably male) Web browsers come into the site, but don't buy anything.

Nevertheless Weil says the company's Internet business is "growing 60 percent to 100 percent a year and it will continue to experience explosive growth."

The Europe-ready site won't be entirely translated into foreign languages, says Weil. It will offer currency and sizing conversions, and certain introductions will be tailored to readers from different countries.

Hard-to-cross borders
Europe has always been a challenging environment for U.S. retailers, investment analysts say. While The Gap has been successful, other chains like Toys 'R Us have run into problems with their cross-border efforts.

Intimate Brands has met mixed success with its Bath and Body Works stores in the U.K., eventually tweaking the product line to focus more on aromatherapy than in the U.S.

"The Internet has changed the game," says analyst Ricci. "You can enter the market without having to build stores and see what the customer wants," and then open a physical store with tested merchandise.

Intimate Brands executives can only hope the Cannes Webcast matches the hype and popularity of the first Victoria Secret fashion show beamed live online last February from New York. About 1.5 million people jammed the Web site's server trying to get a jerky glimpse of supermodels Tyra Banks and Stephanie Seymore parading the new line on a New York catwalk.

It cost Victoria's Secret about $6 million to $7 million to put on the New York Webcast, with the Cannes extravaganza expected to fall in the same range, followed by the major marketing push, says Weil.

To make sure that the Cannes fashion show doesn’t become so crowded that anxious online viewers are blocked, as they were during the New York Webcast, Victoria's Secret has quadrupled its bandwidth. The site can handle "8 to 10 times the audience as last year," says Weil.

For Forrester Research analyst David Cooperstein, using the Internet to test an international audience isn't so much about saving money, "it's a matter of revenue generation."

That is, the average retail store can only reach shoppers within a 10-mile radius, while the Web crosses all borders.

"Because the Web site can reach all of Europe and appeal to people in different countries, it's a matter of appealing to as wide an audience as possible," says Cooperstein.