The Operation

 

Victoria’s Secret will be entering the Portuguese market in the capital of Portugal, Lisbon, where the population is currently 2.9 million. With a regular flow of tourists and Lisbon being one of the most visited cities in Portugal, entering the market at this location would be most beneficial and successful for Victoria’s Secret to open there first store in Portugal.

 

Victoria’s Secret will be opening their first Flagship store in Lisbon’s largest shopping centre, Colombo centre located in the parish of Carnide. With over 340 stores, Centro Colombo is a shopping centre with unique features and with an incredible variety of offer. It has over 60 restaurants, 9 cinema screens, an outdoor garden, a Health & Fitness Club, over 10 customer service points, and the largest anchor stores in the country. The Store will be opening in September 2017 just before the Christmas season to maximize sales and use as an opportunity to have discounts to attract the consumers to try VS. The Flagship store will only include the ranges of lingerie, swimwear, gym wear, nightwear and clothing to match the ranges that are out there for the target consumer but with the VS in store experience being a strong differentiation to the others.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advantages and Disadvantages

By entering the market as a flagship store it opposes advantages for Victoria’s Secret such as developing a strong brand image within the new market and puts the it on a strong market platform. Also with opening a flagship store means that Victoria’s Secret owns the store, meaning flexibility of how they want it. Flagship stores play a critical role in relationship development. The principal function of the flagship is to establish awareness and interest in the brand within the foreign market. A flagship store opening initially attracts the attention of the fashion press, generates customer excitement and interest in the brand (Zhang, 2011). A flagship store is the retailer’s most prominent store, which is targeting high-income shoppers. These status symbol establishments are the preferred shopping destinations because they carry the widest selection of merchandise, provide high quality of service, and offer the most luxurious atmosphere.

 

However the scale of entry is a high-risk strategy. Entering a market with a Flagship store can create disadvantages for the business such as it is a large risk to take, due to the cost being so high to open a Flagship store it is then critical that the location has been well researched and looked into. With the costing of the Flagship being high this also means that the business is limited to the amount of stores they can open, unless sales are doing well.

 

Distribution

Victoria’s secret will be importing their products into Lisbon for the UK warehouse to minimize cost of shipping in the EU. However after one year of success, they will then future look into the future potential to open a warehouse in Portugal to cater for the European countries to help minimise costs and also shipping costs will be lower.

 

International Suppliers for Victoria’s secret

• Policy (L Brands): no supplier should provide over 10% of manufacturing

• Designers – the Limited Design Studio

• Manufacturers: Jordan, China, Thailand, India, Jordan, Sri Lanka

• Differentiation: Launch and non-launch

• Materials: Burkina Faso and Eastern Europe

• Logistics and administration: merchandise allocation, planning, shipping, other services

• Divisions: Independent Production Services, Inc. (IPS), Limited Logistics Services (LLS), Columbus Direction Centre

 

Employment and management

For employees for the Flagship store they will be recruiting a manager from the U.S to make sure brand values and high standards are enforced. Extensive Training for the American Manager will be given in the native Language. Also recruiting an experienced co-manager from Portugal with the experience and benefit of knowing the consumers and can work together to achieve the best experience catered to the Portuguese consumers. Also developing local relationship and using local workers to work at the Flagship store to make the consumers feel comfortable when in-store.

 

Three stages of internationalization

Caution: through research and selection in order to make sure that the selected market would be beneficial to the growth and success of Victoria’s secret.

 

Exit strategy

If Victoria’s Secret does not perform as well as they had aimed to, and the sales are not reaching the set targets and loosing the business money then they will need to have a plan B as an exit strategy. Victoria’s Secret will need to have a constant monitoring of the market, competitors and consumers to be able to identify that the opportunity is in decline and make a decision on what is best for the business before the market is in a steep decline and a big loss could potentially be made. If the business is declining then they will need to consider how to exit.

There are two exit strategies that would be suitable for Victoria’s secret exit strategy:

• Organizational restructure- changes the method of operations e.g. franchising.

• Dissolve the operations e.g. bankruptcy or insolvency.

 

By using either of the two methods means that Victoria’s secret can still have the option of staying in the market with a smaller store or withdraw completely.