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FRILLY LITTLE THINGS ARE TAKING OVER THE WEB.
This story first appeared in the April 7, 2008 issue of WWD. Subscribe Today.
Lingerie business on dedicated sites as well as those operated by specialty stores is booming, with annual sales gains of 15 to 40 percent and higher, according to merchants.
In some cases, retailers’ online businesses are becoming so lucrative that they are beginning to account for a bigger slice of the $12.6 billion innerwear business at retail. While it still represents a small segment of overall lingerie sales, executives attribute the sales increases to four main factors:
– The credit crunch and rising gas prices, which are limiting visits to the local shopping mall.
– The convenience factor of purchasing intimate apparel in the privacy of one’s home.
– More product options whether it’s styles, colors or sizes that cannot be stocked in traditional stores that have limited space.
– A fast and hassle-free way of shopping when consumers have little time to shop at brick-and-mortar stores.
Internet Retailer’s 2007 Top 500 Guide of retail Web sites ranks four lingerie specialists within the top 100: Victoria’s Secret, which took the first spot in 2006 with Web sales of $1.1 billion; Frederick’s of Hollywood, which claimed 37th place with online sales of $55.6 million; Bare Necessities in the 54th slot with Web sales of $26.2 million, and Jockey International in the 67th spot with e-commerce sales of $17.3 million.
The top-selling categories are bras, shapewear, sleepwear, sports bras, dual-purpose loungewear and luxury brands, mainly in foundations, said executives.
Since it is a fashion item as well as an everyday mainstay, a key reason that lingerie is one of the most sought-after apparel categories online is that the Web allows consumers to see the product on a model, not a hanger. Therefore, a woman can see how she will look wearing the product, and men who buy gifts can visualize how a wife or girlfriend will appear in the item. And as consumers become more tech savvy, Internet retailers are reporting that an increasing number of shoppers are making online purchases of items shown in the print catalogue, instead of phoning in an order.
While establishing and maintaining an e-commerce business is generally less costly than operating traditional stores, online retailers said the costs of creating a state-of-the-art Web site — which includes marketing and advertising, keeping the content fresh, technology, constantly changing the imagery and operating a distribution facility — are becoming as expensive as brick-and-mortar stores. The annual costs range from $150,000 to $250,000, and in some cases, agencies are asking for $500,000 to develop e-commerce sites, according to Daniel Gestetner, chief executive officer of U.K.-based myla.com and 13 Myla stores. Gestetner cofounded shopsmart.com in 1998 with his brother Leo and sold the $500 million business to a division of Barclay Bank in 2001.
Linda LoRe, president and ceo of Frederick’s of Hollywood, which operates 137 stores and a catalogue and e-commerce business, said Frederick’s 10-year-old Internet business has increased “dramatically” since 2005.
“In aggregate over the past three years, our online marketing business has grown 43 percent, with double-digit growth each year,” said LoRe. “We are also seeing our catalogue customer using the Web as their preferred transaction channel. Seventy percent of our catalogue orders are placed on our site, a 10 percent increase over the last three years.”
Singling out the Frederick’s customer who shops online, LoRe said, “Our core customer, whom we call the ‘Sexy Spender,’ is very brand loyal and looks to Frederick’s of Hollywood for the hottest lingerie and apparel trends of the season. As an avid consumer of our product, she has the highest propensity to shop online where she can see our largest product assortment.”
Irene Steiner, vice president of marketing at Shelburne, Vt.-based pajamagram.com, a unit of Vermont Teddy Bear Co., said 80 percent of the $40 million division, which includes catalogues, is generated by online sales. Steiner said annual sales volume from 2002 to 2007 has grown steadily from $1.5 million to $6.1 million to $9.8 million to $20.6 million to $29.4 million to $35.5 million. She added that the marketing spend for 2007 was $12 million.
“It’s been a rocket ship up here,” said Steiner. “We are a sister company of Vermont Teddy Bear, which markets to adult men who buy our bears as gifts for wives and girlfriends as an alternative to flowers and chocolates. But women were not buying the bears. So we started talking to women, and they loved the idea of pajamas. The pajamas are packaged beautifully in an organza hat box, a sachet and a little sign that says ‘Do Not Disturb.'”
Steiner said the online demand for pj’s has gained such momentum that the company has expanded into an entire realm of pj’s with logos including Super Mom, Super Dad, Super Baby and Super Dog, which has a drop-seat that can be monogrammed with the family’s name or the dog’s name.
Dan Sackrowitz, vice president of marketing and business development at Bare Necessities, which has headquarters in Avenel, N.J., said the company has three stores and operates 10-year-old barenecessities.com. “For the past three or four years, our online business has grown consistently by 40 percent or above each year. So far this year, it’s up 40 percent against the first quarter in 2007.” He noted that Web sales account for 90 percent of the company’s total business, which is approximately $35 million, compared with 70 percent in 2004. Best-selling brands are Wacoal, Spanx, Chantelle, Hanro and Hue legwear, he said.
Maureen Stabnau, vice president of marketing at Bare Necessities, noted, “A lot of things now go into the [online] mix. We realize our ability is to plan and execute, and it’s a combination of in-house merchandising, marketing, technology and a customer service team. We’ve become very good at giving the right merchandise and presentation to the consumer in a simple, meaningful way. At the end of the day, if you don’t have the right technology behind it, you’ll sell the products, but you won’t be able to maximize the business you want.”
Regarding the aesthetics of a Web site, Gestetner of myla.com observed, “You can do it on a shoestring budget, but you won’t get the results. You have to represent the theater you offer in the store. Today with broadband, consumers don’t expect a boring, bland, one-dimensional Web site. To do what they want to see, you have to spend the money. You have to treat it as its own revenue stream.”
Gestetner further noted, “I’ve been in this game for 10 years. The Internet has come of age and now everyone, from our parents to our children, is shopping online. That’s a massive move. We’re time-poor, and have less time to spend on ourselves. So the Internet is the route for indulgence. About three-quarters of our online customers are repeat purchasers.” Online sales are up 15 percent against a year ago, and the company is planning a redo this year of the five-year-old Web site, he said.
Cecelia Pagkalinawan, director of Web and e-commerce business at Frette Inc., said online sales, primarily of Frette lingerie, have jumped 77 percent over the past year. Frette’s e-commerce business was launched in November 2006.
“We find that to be amazing, considering the current economic situation. Sales have consistently grown from month to month. The Web site has been a great customer acquisition vehicle with 72 percent of our customers being new to Frette,” she said. “We attribute the gains partially from luxury customers being more accustomed to buying online, being able to reach locations where we do not have physical stores, and a broader Frette brand awareness from our public relations and marketing efforts. We have nine stores, with our 10th store opening in late summer in Boston’s Mandarin Oriental Hotel. The online store consistently ranks among our five top stores, which we find interesting, especially since the other stores have been open for many years.”
Tomima Edmark, president of Dallas-based Andra Group, created herroom.com in 2000 as a resource for bras, panties and shapers. Since then, she has expanded into sleepwear, men’s underwear and activewear for women and men with labels like Under Armour. She would not give an annual sales figure, but said renvenues have increased 34 percent against the same year-ago period.
“We have extensive consumer feedback. We [women] assume when it comes to sports bras, there’s high-impact and low-impact, but how do you know if your breasts are not bouncing when working out? So, we introduced The Bounce Test, where every sports bra classified as high-impact on our site is featured in a video. The model is a 34D. We have approximately 40 of these videos on our site. We do the same with videos of The 20 Step Test for control bike shorts and every firm control shapewear garment that has legs. Each video begins with the placement of a black tape at the edge of the garment’s leg. The model performs 20 steps — as if going up a staircase — on video and then the camera zooms in to see if the garment crept up the leg. We have 33 of these videos on our site.”