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Shopping Centers Today -> May 2004
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CANADA’S SECRET
La Senza lingerie chain moves south
BY SUSAN THORNE
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La Senza, a steadily expanding, Montréal-based lingerie maker and retailer, is opening its first stores north of the border. During the second half of last year, La Senza, whose No. 1 merchandise item is bras, opened stores at five East Coast centers managed and owned by Simon Property Group. The company describes the openings — three in Massachusetts (Burlington Mall, Burlington; Northshore Mall, Peabody; and South Shore Plaza, Braintree), one in New Jersey (RockawayTownsquare, Rockaway) and one in New York (Roosevelt Field Mall, Garden City) — as a test venture.
The objective, says La Senza President Laurence Lewin, is to woo U.S. shoppers away from the department stores where they currently make 75 to 80 percent of their lingerie purchases.
“It is our belief that our specialty stores offer more [than department stores] in terms of ambience, staff assistance and packaging,” he said. “That’s why we think there’s room for our concept in the U.S.”
The larger U.S. shopping centers may typically have 25 women’s fashion stores and 25 shoe stores, but only one specialty lingerie shop, he says; specialty chains also tend to be more upscale and expensive than La Senza. “So we think the market will be accepting of an alternative,” Lewin said.
La Senza has been upwardly mobile for all of its 14 years in business. It was founded in 1990 as a branch of Montréal-based apparel company Suzy Shier and has rapidly grown into Canada’s leading specialty lingerie chain. Sales from its 230 La Senza and Silk & Satin banners and its 80 La Senza Girl shops (for preteens) account for 12 to 15 percent of Canada’s $1.8 billion lingerie market, Lewin says.
La Senza’s assets, which trade under the La Senza name on the Toronto Stock Exchange, include U.S. apparel chain Wet Seal. International franchise operations now extend to 180 stores in 12 countries, including China, Indonesia, Poland, Saudi Arabia and the United Kingdom. The most recent addition is Iceland, where a La Senza store opened in Reykjav’k last October.
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“You get the feeling that many retailers are run by accountants,” he said. “Our image is to convey a warm, luxurious shopping experience with a lot of fun and beautiful packaging. The customer goes out feeling she has been served in internationally luxurious style but has paid affordable middle-American prices.”
La Senza’s combination of store environment, product quality and customer service appeals to the value-minded shopper, says David J. Howell, vice president of the NPD Group Canada, Toronto, a research and strategic planning consulting firm for retailers and manufacturers. (La Senza is not an NPD client). Howell points out that La Senza is not competing on price — in Canada the company’s overall price point is 20 percent higher than that of Zellers and 30 percent above Wal-Mart’s — but discounters and department stores have failed to create the kind of intimate ambience required for lingerie retailing; specialty stores such as La Senza are meeting that need.
“Customers are willing to step up to the plate in terms of price if there is a perception of quality and a quality atmosphere,” Howell said. NPD data show that La Senza continues to gain Canadian market share while rivals (including Wal-Mart) have lost share. In bra sales, for example, La Senza now accounts for 7.2 percent of the market, compared with 4.1 percent in 2000, while Wal-Mart and Zellers have suffered negative growth (0.2 percent and 2.3 percent, respectively) over the same time period.
“Everything La Senza does is working, and the concept could be as well received in the U.S. as here,” said Howell.
Canadian retailers have historically had mixed results in the States, as evidenced over the past 15 years by the less than stellar performances of Canadian Tire (automotive goods), Coles (books), Colour Your World (paint), Mark’s Work Wearhouse (casual apparel) and Second Cup (coffee houses).
In any case, Lewin maintains that his company’s operational expertise supplies a competitive edge.
“We’re highly experienced in the [lingerie] market, and we’re structured to deal with a very large organization, from store construction and leasing to movements of large quantities of goods internationally,” he asserts. “We also have a very powerful international vendor base, and all our merchandise is unique to ourselves — our own brand, made by factories that contracted to us. That infrastructure gives us a running start when entering into a new market.”
La Senza will face stiffer competition in the United States than it does in its home market, from players that aren’t present in Canada, such as Victoria’s Secret (which operates about 1,000 U.S. stores), notes Wendy Evans, president of Toronto-based retail consulting firm Evans & Co. (which has no business relationship with La Senza) and a specialist in U.S.-Canada cross-border retailing.
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| La Senza’s undergarments are sold in 14 countries — including Saudi Arabia. |
Furthermore, it is mid-size companies like La Senza, with their inherent adaptability, that have done well in the United States, she adds. “I think these players are sometimes more flexible and can adapt and adjust more quickly.”
La Senza’s experience with Wet Seal is yet another advantage in its expansion southward, Evans says. “Because of this, they understand the vagaries and challenges of the U.S market.”
Overall, she rates La Senza’s chances for success as “pretty good,” but predicts that sales productivity will be lower than in Canada, the United Kingdom or the Middle East. “It depends how quickly their competitors target them,” Evans said. “They will have their work cut out for them, there’s no doubt about that.”
Discussions of U.S. specialty competitors inevitably draw comparisons with Victoria’s Secret. Lewin seems sanguine, though, as he contemplates La Senza’s position relative to that lingerie giant.
“They are a super-successful, powerful, exciting retail operator that’s a household name,” he said. “We’re a five-store newcomer that very few people have heard of.”
But La Senza’s price point, he notes, tends to be lower than that of Victoria’s Secret, “and we are different in our styling — some people would say we have slightly younger merchandise.” But again, he says, the company’s primary strategy is to take market share from department stores.
Allen L. Kaplan, Simon’s senior vice president of leasing, says he is impressed with La Senza’s track record as an international retailer with proven global success.
“They have pretty much saturated the Canadian market and were ready to take the company to a whole different level by entering the U.S.,” he said. Lingerie is a merchandise category with plenty of room for new specialty entrants, Kaplan says. “It’s an important category today, and the specialty retailers see that department stores don’t do the best job. That opens the door to others.”
Among these is Chico’s, which is coming out with a lingerie concept: Soma by Chico’s.
“There is no question that there is an opportunity for La Senza in the U.S.,” he added. “The question is more one of what pace of expansion they feel is warranted.” Does Simon anticipate having La Senza as a tenant in more of its malls? “Oh yes, without question,” Kaplan said.
Lewin declines to disclose sales figures for the U.S. pilot venture, but he says that further expansion will turn on the evaluation of results from those five stores. The company will reach a decision by year-end. He says further that the company anticipates a shopping center occupancy picture similar to what it has in Canada, where 90 percent of La Senza’s stores are in malls and 10 percent in big-box plazas. For now, however, Lewin says he is learning the ropes in the U.S. “I think we still have a lot to learn,” he conceded. “But we learn fast.”
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