Branding without advertising
Ask most ad agencies how to build a successful brand, and they are likely to tell you that the most effective way is through advertising, and preferably on television. But this is not the only route. Some companies are doing quite well, thank you, with minimal ad spending.
"We don't do any advertising," said Lawrence Lewin, president of lingerie retailer La Senza Inc. "Our brand was built through effective merchandizing, in-store promotion, signage and staff training."
The results are encouraging. Starting from scratch, when he began La Senza as a division of Suzy Shier Inc. in the mid eighties, Lewin now heads a chain of 211 Canadian stores, and claims "about 20 per cent" of the Canadian lingerie market which he estimates at $1.1 billion in annual sales.
Getting specific statistics from Lewin is like pulling out his teeth. He would only say that same stores sales in the last quarter were up "about 10 per cent," from the same period the previous year, and that the outlets are some of the most productive -- on a sales per square-foot basis -- in Canadian retail.
"We add value, by providing the customer with a specialty product -- lingerie -- and unlike other companies, we offer very few ancillary items such as swimsuits," said Lewin.
"We invest heavily in training store personnel, to provide customers with knowledgeable clerks who can help them in their purchases," said Lewin. "We also have very low turnover. Many sales people who joined us as temporary workers in their late teens are still with us."
La Senza also cross-promotes its retail outlets through the Net. Lingerie Web-sites, like all sites featuring scantily-clad women, attract attention far out of proportion to their economic value. Thus by the time La Senza announced its E-commerce initiative last October, the company already had 40,000 members signed on at its existing site.
Like most Canadian retailers, La Senza was late in getting into E-Commerce, launching in October of last year, almost one full year after Victoria's Secret, -- itself a late arrival to the medium.
Like most Canadian E-tailers, La Senza's total E-commerce sales -- Lewin will only confirm that one per cent of total sales "is a good guess" -- are disappointing so far. But revenue growth is rapid, and the case is typical of our country's online vendors. Canadian consumers are behind their American counterparts in their openness to purchasing online, but are catching up quickly.
"The medium has good potential for us, because men visit our Web-site in greater percentages than our stores, which they are sometimes reluctant to enter," said Lewin. "We are also better positioned than our competition, because we have a network of stores to support the site. If you don't like a product bought on our Web-site, you can just return it to the store nearest you."
La Senza is also seeing a certain amount of success in its licensing division, which has 75 stores operating via various license and cooperation agreements in several countries, among them Great Britain, and of all places Saudi Arabia.
"I never imagined we would be doing business in the Middle East," said Lewin, who expanded, after being approached by some Arabs -- that would eventually become his associates -- who had visited one of his London stores.
Through the licensing arrangement La Senza provided licensees with store design, logistics and on-site training, the brand name as well as the merchandise to be sold. The partner provides the capital and the operational personnel.
In practice what this means is that once the franchise stores are up and running, La Senza has a customer for its products, without the headache of running the individual stores.
And since the merchandize is often shipped from a third party country -- usually in the Orient -- to the franchisee directly, without passing through Canada, La Senza is, in this respect, a model for the information economy.
"The Middle East has been a very successful region for us," said Lewin. "We originally planned nine stores in Saudi Arabia, and there are now 20 operating.
In fact, the operation has been so successful that La Senza last week announced an agreement with Lima Trading Co., that will see at least 15 new licensed stores open up during the next three years in the United Arab Emirates, Oman, Qatar, Bahrain and Kuwait. Not bad, for a company that is relatively unknown outside Canada.
The intimate apparel industry is one of the best exemplars of the power of effective marketing. Consumers are persuaded to spend big dollars, for what is essentially a rag, that almost no one gets to see.
In this environment -- where competitors such as Victoria's Secret routinely list items costing more than $100 -- La Senza has positioned itself as every-women's store. "We provide mass-market, moderately-priced merchandize," said Lewin.
And La Senza is not alone in pursuing a successful no advertising branding policy. Loblaws, whose stores are popping up all over the city, also has a small ad budget. As one official said: "Our store is the advertising."
Photo caption: Intimate apparel is the ultimate exemplar of good branding -- often the only person who sees a premium priced product is the wearer.
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|© 2000 Peter Diekmeyer Communications Inc.|