Models (from left) Izabel Goulart, Lindsay Ellingson, Miranda Kerr, Adriana Lima, Doutzen Kroes and Candice Swanepoel walk the runway during the finale of the 2012 Victoria's Secret Fashion Show on Nov. 7 in New York. The show will be broadcast at 10 p.m. Pacific on Dec. 4 on CBS.
A model walks the runway during the 2012 Victoria's Secret Fashion Show on Nov. 7 in New York.
Lily Aldridge models a patriotic creation during a rehearsal for the 2012 Victoria's Secret Fashion Show in New York on Nov. 7
Brazilian Alessandra Ambrosio walks the runway during the 2012 Victoria's Secret Fashion Show on Nov. 7 in New York.
Model Doutzen Kroes walks the runway during the 2012 Victoria's Secret Fashion Show in New York.
While other big brand retailers try to hone their social- media skills, the intimate-apparel chain is creating excitement with a network TV holiday fashion show featuring young women strutting down a runway in Swarovski crystal-decorated lingerie and six-inch heels.
The show, in its second decade, is the cornerstone of an efficient marketing machine. Last year, the special received its highest rating since at least 2002, with 11.5 million viewers, mostly women. Sales have risen 7 percent in the past three quarters to $4.33 billion after posting a record $6.1 billion in revenue for the year through Jan. 28. It's the biggest of Columbus, Ohio-based Limited's brands, followed by Bath & Body Works.
The TV show is "essentially an hour-long commercial, and really, that is unheard of," Erika Maschmeyer, an analyst at Robert W. Baird & Co., said in an interview. "There are a lot of places to buy intimate apparel, but there's no other place that has such a strong brand connotation to it, and I think the fashion show is definitely a part of that."
The marketing approach is in sharp contrast to industry trends. Retailers, which may see online sales grow to 16 percent of $586 billion in revenue this holiday season, have increased digital efforts at the expense of more traditional advertising. Gap Inc., the biggest U.S. specialty apparel retailer, has added to social media and moved away from television and print ads. Department-store company J.C. Penney exited its catalog business last year.
Viewers can't buy much of what the models wear in the Victoria's Secret's show aside from bras and panties. Elaborate costumes range across themes such as "Circus," "Calendar Girls" and "Silver Screen Angels." Jeweled silk corsets, feather bustiers and wings of all types were styled around the underwear to create the lingerie-clad version of a tiger in one walk to a Native American chief in another.
"As soon as this one finishes they start working on the next," said supermodel Miranda Kerr. "There's so much attention to detail in the underwear; everything is hand- stitched."
The chain does use Facebook, Twitter and e-mail to draw Web traffic and build excitement around new collections and events such as the fashion show. Web and catalog sales rose 4 percent to $1.56 billion in the latest year, a quarter of the business, while revenue at Victoria's Secret's 1,000-plus stores rose 14 percent to $4.56 billion.
Still, the Internet doesn't drive a lot of "emotional content," Chief Financial Officer Stuart Burgdoerfer, said in a presentation to investors on Oct. 17. Victoria's Secret and Bath and Body Works emphasize the product and in-store experience above all and aren't aiming to be leaders in technology, he said.
Victoria's Secret spends about $220 million annually on the catalogs sent to customers' homes each year, including postage, creative, printing, paper and circulation, the biggest expense of its direct business, according to a job posting on its website.
The company's 15 percent stock gain this year trails the rallies at specialty retailers Urban Outfitters, which has added 28 percent and Gap, with an 81 percent rise. It has beaten both in the past five years, as well as the Standard & Poor's 500 Retailing Index by more than doubling to $46.48 as of Nov. 9.
Limited Chief Executive Officer Les Wexner, the longest- tenured CEO in the S&P 500, according to data compiled by Bloomberg, has spun off apparel brands including the Limited stores, Abercrombie & Fitch Co., Express, while keeping Victoria's Secret and Bath & Body Works.
"He truly views intimate apparel and personal care as more attractive categories," Maschmeyer said. Victoria's Secret, the biggest specialty retailer for intimate apparel, has created demand for items like push-up bras and colorful underwear in the way Lululemon Athletica has helped create a market for trendy yoga wear, she said.
Victoria's Secret's models, known as "Angels," are a major part of the brand's image, appearing in the fashion show, catalogs, stores and advertisements. Under Wexner's direction, the brand sought to create celebrities rather than use them as spokespeople, said Marcie Merriman, director of brand strategy and planning for Victoria's Secret from 2001 to 2003.
"They would never pick known models or ones that are already out there, because the brand is stronger than that," she said in a telephone interview. "The models chosen are very specifically ones that women can relate to or feel comfortable around and have personalities," such as Heidi Klum and Tyra Banks.
One model wears a multi-million dollar bra gift set in the show each year, an illustration of the event's opulence and the brand's aspirational nature. This year's set, valued at $2.5 million, was made with more than 5,200 precious gems, including sapphires, rubies and diamonds, in 18-karat rose and yellow gold. But Merriman said prices generally are "reachable for the average upper-middle class woman." Merchandise online includes $62 lace push-up bras and $70 satin pajama sets.