An In-Depth Study on Victoria’s Secret Supply Chain
Defined by my passion on lingerie, lingerie brands and Sex Work, I’ve decided to make my Supply Chain analysis on Victoria’s Secret. This brand, which I’ll be referring to as VS, defines itself as:
a Fortune 500 specialty retailer of modern, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear, athleisure and swim, as well as award-winning prestige fragrances and body care. VS&Co comprises two market- leading brands — Victoria’s Secret and PINK — that share a common purpose of inspiring and uplifting our customers in every stage of their lives.
They are not new to the game. They used to be under the umbrella of L Brands until 2021 and became it’s own entity, now trading under the VSCO stock symbol. VS is a fast fashion retailer with over 1300 stores in 70 countries. They lived the glory of the early 2000’s when they used to host their fashion shows and the Victoria’s Secret Angels were the standard of beauty, and survived the allegations and backlash they suffered after the questionable relationship between convicted sex offender Jeffrey Epstein with former VS CEO & Chairman, Les Wexner, was aired (2019), sexual harassment claims in the upper management team (Ed Razek, former Chief Marketing Officer) and Perfect Body Campaign (2014) occurred. I’m a VS Sales Associate currently, and I can honestly share, the customers don’t remember all the negative drama; they just see beautiful under garments and the fantasy VS so successfully sells, over 30k dollars daily.
Supply Chain Strategies
It should be no surprise that their main corporate website doesn’t share their supplier’s information; VS just shares how committed they are to certain policies, and that they’re working on mapping their Tier 3 and 4 suppliers, as they’ve already done with their Tier 1 and 2. Nonetheless, the information is out there: Airfreight, Sea freight, & Trucks. Simply put, they move their merchandise from factory to warehouse on trucks, from warehouse to distribution center mostly by airplanes, secondarily by boats, and then from port to store by trucks.
On December 1st, 2023 VS hosted their Q3 earnings call and shared they were moving their supply chain to ocean as freight rates stabilized. They lacked confidence in their supply chain amidst “chaos” that made it so they didn’t receive some of their merchandise on time, if they even received it at all. At that time, they were counting on 90% of their items to be shipped by air, leaving the rest to be shipped by water. When it comes to what to sell, Most of the Victoria’s Secret Stores’ new product introductions are offered in both fashion (items with less predictable demand) as well as basic (stable demand) styles. This mix of fashion and basic items helps Victoria’s Secret to distribute risk, to ensure profitability and to offer compelling value to customers. (Kumar, S. 2004)
This means they test out a style, see if it gets bought and make more of the popular purchased items, while also keeping a keen eye on trends, and offering the daily use and reliable items. Due to the different nature of these two categories, they require respectively different approaches in the supply chain. Fashion items need to come in fresh and hot out of the oven from reliable and innovative suppliers who require no minimum purchases, while the basic items can be manufactured in a vertically integrated factory with a slower approach: this one allows for more visibility in the supply chain.
Below we can observe how the company assesses their launches, depending on what category it falls under. The shaded area caries the most weight of importance.
The company’s main challenge, however, is still not being fast enough. In a world of ever growing Micro Trends, this is an issue, and even though technology is at an all- time high, if you account for the financial and calendar meetings, design time, manufacturer negotiations, sampling and shipping time, its almost, if not impossible, to shorten the time they have new items in their stores. To mitigate this, and the possible delays of merchandising receiving time, VS orders the same product from different suppliers, often in different countries, so it can guarantee their product will be in store by the due date. We should expect updates and more info on their Supply Chain shortly, as they will be hosting their 2023 Earnings Call on November 30th.
Information Technology
Data is key, and with the advances of technology, data is becoming easier and more accessible than ever. Many brands have incorporated the use of Radio Frequency Identification (RFID) for inventory tracking purposes as well as incorporating a Rewards program sold to the consumer as a reward for their loyalty to the brand. Victoria’s Secret capitalizes on the two. By the consumer consenting to giving the brand their phone number or email, they allow the brand to contact them directly, to let the brand know exactly what they have purchased, as well as their shopping habits. The cherry on top is if you have the brand’s app on your phone, or open their website on your device. This lets them know what triggers your purchases as well as when, so their algorithm can get better and better. Another example of how VS employs their IT is with the option to buy an online item through their cashiers. This allows for a more satisfied consumer, and more accurate data acquired from them. The company also offers two different credit cards: the Store Credit Card and a MasterCard. Now the company knows where you live, how much you make, and your social security number, and if approved for the card, they’ve gained your loyalty and devotion even more as you’ll likely up your spending. You can apply for it in 2 minutes through the cashier or a sales associate with an iPad on their hand. An iPad? Yes. This iPad is a key tool in their brick and mortar stores as it is used for anything ranging from virtual meetings from upper management to store management, to reporting found defeated sensors, to training employees, to ordering maintenance, to processing Buy Online Pick Up In Store or BOPIS orders and more. Another element in their tool box has to be the walkie talkies all employees have on hand while on shift. Everybody is always on top of anything that is going on in the store via these devices. All these gadgets and information funnels all the way to the Supply Chain as it let’s the company know what sells and what doesn’t, and this influences the speed needed for the items in question.
In-Depth Analysis
Victoria’s Secret owes transparency and conscious ethics to the public, specially after the issues they’ve faced through the years. They say on their website that they have strong policies with an ethical sourcing approach.
•VS&Co is committed to respecting human rights. Our guiding philosophy on human rights is based on the following international frameworks: • Universal Declaration of Human Rights (UDHR) International Labour Organization (ILO) Declaration on Fundamental Human Rights and Principles at Work • UN Guiding Principles on Business and Human Rights
On top of this, they share what these policies are, so the public has access to the document they say they use to keep their sourcing, manufacturing, suppliers and themselves accountable. It is unfortunate they don’t share a list of their extensive suppliers, but with a little digging through import database sites, you can get to know some of the entities behind their garments. The majority of their merchandise is obtained from Sri Lanka, Indonesia, China, Vietnam and United States. Three of the suppliers of this brand are Mantra Exports Pvt. Ltd. in India, Ecose Konfeksiyon Ith Ve Ihr San in Turkey, and Shanghai Haya Retail Display Furniture Manufacturing in China; this last one focuses on fixture manufacturing and retail ambiance in luxury stores.To my surprise, Haya is the only company that talks about ethics in their values or about section. They are not extensive about it, but they do address it. Other than that, the companies primarily focus on quality and timely delivery. These companies export their products to VS via Sea Freight, the majority arriving to Newark, NJ. Nonetheless, VS, as a vertically integrated business is highly on top of their production and doesn’t just delegate it to third parties.
Some of Victoria’s Secret competitors include Honey Birdette and Intimissimi, also vertically integrated businesses. Honey Birdette (HB) is a luxury lingerie brand with a more erotic approach, and a little slower than VS. They operate at a luxurious boutique level with only 12 stores in the USA. They are more open with their sustainability as they share their suppliers and manufacturers are OEKO-Tex certified. Some individuals accuse HB of infringement of designs from small designers. On the Other hand, Intimissimi is an Italian lingerie brand with a smaller and more romantic approach. They also operate as a boutique with 59 stores in the US. This brand addresses their products production chain with a Traceability section in each product sheet. On this document they say they strive to provide the most accurate data possible on the factory where each product was created. (Visit their Production Chain page here). VS could learn a thing or two from Intimissimi on this one.
Even though these companies at their core sell lingerie, they cater to different consumers and have different business models and practices. On Black Friday last week, Victoria’s Secret in the Cherry Hill Mall, NJ sold a total of $250k worth of merchandise at a 40% off discount. It should be no surprise this is a retail giant, even in a world were black Friday is not as big of a deal as it used to be, and online shopping is more accessible. For the year ending in January 2023, VS had a total revenue of $6,344.00 in millions of US dollars. See attached below a portion of the official income statement of VS for the year ends 2020-2023, all in millions of US dollars:
So far, 2023 hasn’t been as good as 2020, but we shall see what the numbers are once the earnings call happens, just a few days away from the time this document is being crafted. Nonetheless, VS, like mentioned before, shares on their website that they uphold ethical standards and believe that the quality of the products they make is directly related to the way their artisans, manufacturers and suppliers are taken care of. They are aware that it also involves taking care of the communities they operate in. In this spirit, they have a Sourcing Risk Council. This council has professionals from all different fields including, but not limited to Legal, Company Affairs, Ethics and Compliance, Global Trade Compliance, Government Affairs, and Independent Production Services (IPS). On their site, they share:
The Council assesses current risks, including geopolitical, social compliance and associated supply risks and sets policies related to responsible sourcing. It also sets policies related to responsible sourcing, including locations from which we will source materials or produce goods as reflected in our Sourcing Country Policy.
This council is supervised by the Board of Directors’ Audit Committee. Retrieved on Nov 27, 2023 from their official web page, some of the policies that this council and committee abide by are:
Sourcing Country Policy VS&Co will not source product from any country prohibited or restricted by law as sanctioned by the Office of Foreign Assets Control of the U.S. Department of the Treasury.
Foreign Migrant Worker Policy VS&Co's Supplier Code of Conduct clearly states that prison, indentured, bonded, involuntary or slave labor or labor obtained through human trafficking shall not be used. In order to use a factory that employs foreign migrant workers, the sourcing team must obtain executive approval which can only be given if the factory receives positive results on a specialized audit developed in accordance with the International Labour Organization’s handbook on Combating Forced Labour.
Cotton Policy VS&Co Is committed to ensuring the traceability of cotton in our supply chain, and we align ourselves with suppliers who share this commitment. We updated our Cotton Policy (Policy) in January 2022, to require all cotton fiber, cotton yarn, cotton fabric and cotton products be spun in or originate from one or more of the approved countries listed on the Policy.
Conflict Minerals Policy VS&Co prohibits its suppliers from using conflict minerals which may directly or indirectly finance or benefit armed groups in the Democratic Republic of the Congo and its nine adjoining countries in accordance with the Dodd-Frank Act’s Conflict Minerals Provisions.
Independent Production Services (IPS) involved in the production and purchasing process and outlines the requirements each must meet to work with VS&Co.
Expanding a little more on VS’ social responsibility, they have done a good job with their rebranding after the flop of the “Perfect Body” campaign. They have become more inclusive with their models. When you walk in a store, the models on their posters aren’t necessarily the prettiest or fittest based off of the European beauty standard, even though they haven’t totally discarded that standard of beauty. Additionally, they have created the VS Collective which is a group of people with whom they collaborate with the intention to drive positive change in causes that are vital to women. Among the members of this group we have Priyanka Chopra Jonas, Hailey Bieber and Adut Akech.
Conclusion
It’s not easy to map out a Supply Chain of a company who guards very deeply who their suppliers are and how they receive their merchandise, however, it’s been a great exercise. Victoria’s Secret is not going anywhere and they have crafted their business model in ways that are admirable. Gotta give Les Wexner credit here, as he revolutionized and dominated the retail world for decades. Among the things that I appreciate from my findings of this VS study is the concept of their two main product lines: basic and fashion; the tried and true, and the risky yet possible high reward. Their fashion line invites me to reflect on how much money , time and resources they are losing with every trend or style prediction they bet on and ends up being rejected by their consumer...
Another concept I liked is their Sourcing Risk Council. I think it’s very wise to have a dedicated and varied group of people who make sure there are no practices that go against VS’ ethics of conduct as that would represent a huge liability for the company. Personally, I wish they were more open with who their suppliers are, because, as we say in my country, if you don’t owe nothing, you don’t fear anything. As much as it’s understandable that a company wants to hide their secret sauce, the secrecy allows for a smoke and mirrors show, which is unacceptable.
My recommendations are:
• To share their suppliers information, and, if they haven’t done so already, to patent their designs so they wont get replicated by their suppliers if they get approached by their competitors. • To share more information about their Sourcing Risk Council. Who are they? Are these individuals legit? What have been their evaluations? What measures have they taken once they noticed a supplier wasn’t operating under the agreed policies? • To share what happens when a fashion launch flops. Where do those garments go?
• To be more eco-friendly... To recycle their damaged goods or maybe donate their salvageable goods to women shelters. Store managers destroy damaged merch so they wont get stolen from the trash. • To become more technological and use softwares such as CAD for their designing processes if they aren’t doing so already. An in depth look at the designer job description will tell you nothing about any softwares needed besides Adobe. A software like CAD will make the communication between brand and supplier clearer and seamless.
References
Bahadur, N. (11/06/2014) Victoria's Secret 'Perfect Body' Campaign Changes Slogan After Backlash. HuffPost. Retrieved on 11/27/23 from here.
Calzedonia Group Brands. (n/a) Intimissimi. Calzedonia Group Brands. Retrieved on 11/27/23 from here.
Cosgrove, E. (12/02/2022) Fashion brands can't keep up with the latest trends because of supply-chain chaos — and it's one more reason everything's on sale. Business Insider. Retrieved on 11/27/23 from here.
Eder, S., Goldstein, M., Maheshwari, S., & Steel, E. (07/25/19) How Jeffrey Epstein Used the Billionaire Behind Victoria’s Secret for Wealth and Women. NY Times. Retrieved on 11/27/23 from here.
Haya Retail (n/a) Social Responsibility. Haya Retail. Retrieved on 11/27/23 from here.
Honey Birdette (n/a) Sustainability. Honey Birdette. Retrieved on 11/27/2023 from here.
Import Yeti (n/a) Ecose Konfeksiyon Ith Ve Ihr San. Import Yeti. Retrieved on 11/27/23 from here.
Import Yeti (n/a) Victoria’s Secret. Import Yeti. Retrieved on 11/27/23 from here.
Import Yeti (n/a) Victoria’s Secret Beauty. Import Yeti. Retrieved on 11/27/23 from here.
Import Yeti (n/a) Victoria’s Secret Canada. Import Yeti. Retrieved on 11/27/23 from here.
Intimissimi (n/a) Production Chain. Intimissimi. Retrieved on 11/27/23 from here.
Kumar, S. (06/04) Supply Chain Strategies in the Apparel Industry: The Case of Victoria’s Secret. Submitted to the Engineering Systems Division in Partial Fulfillment of the Requirements for the Degree of Master of Engineering in Logistics at the Massachusetts Institute of Technology. Retrieved on 11/27/23 from here.
Maheshwari, S., Rosman, K., Silver-Greenberg, & Stewart, J.B. (02/01/20) ’Angels’ in Hell: The Culture of Misogyny Inside Victoria’s Secret. NY Times. Retrieved on 11/27/23 from here.
Mantra (n/a) About Us. Mantra Exports. Retrieved on 11/28/23 from here.
Reuters. (01/20/17) Lingerie maker Victoria's Secret looks to uncover supply chain issues. Fashion Network. Retrieved on 11/27/2023 from here.
Stroh, K. (12/08/22) Victoria’s Secret moves freight from air to ocean in bid to save costs. Supply Chain Dive. Retrieved on 11/28/23 from here.
Victoria’s Secret (n/a) The VS Collective. Retrieved on 11/27/23 from here.
Victoria’s Secret & Co (n/a) About Us. Victoria’s Secret & Co. Retrieved on 11/27/23 from here.
Victoria’s Secret & Co (n/a) Affiliations. Victoria’s Secret & Co. Retrieved on 11/27/23 from here.
Victoria’s Secret & Co (n/a) Commitment & Governance. Victoria’s Secret & Co. Retrieved on 11/27/23 from here.
Victoria’s Secret & Co (n/a) Events & Presentations. Victoria’s Secret & Co. Retrieved on 11/27/23 from here.
Victoria’s Secret & Co (n/a) Featured Partnerships. Victoria’s Secret & Co. Retrieved on 11/27/23 from here.
Victoria’s Secret & Co (n/a) Income Statements. Victoria’s Secret & Co. Retrieved on 11/27/23 from here.
Zarroli, J. (03/11/23) In Trendy World Of Fast Fashion, Styles Aren't Made To Last. NPR. Retrieved on 11/27/23 from here.
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