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CANADA’S SECRET

La Senza dominates C$1 billion lingerie market

By Susan Thorne

Lingerie retailer La Senza has established a competitive edge over the mass merchants by bringing glamour to underwear shopping.

Summer was in full swing, and at the La Senza lingerie store in Toronto’s Eaton Centre, the aisles were ablaze with undergarments in vibrant tangerines and fuchsias, animal prints and florals.

It was, and is, a great time to be selling lingerie in Canada. The C$1 billion market has been increasing by 8% to 10% per year, according to Laurence Lewin, La Senza’s president, and roughly C$1 of every C$5 spent on fashion today goes toward a lingerie or nightwear purchase.

A change in customer attitudes has contributed to this: Whereas underwear was a functional purchase 20 years ago — “like men buying a white shirt” as Lewin put it — the category has since become more glamorous, varied and fun.

Cleavage is trendy nowadays, and for those who need some help in that department, La Senza offers the Liquid Lift Bra, with an insert packet of mineral oil that has a natural look and feel. Merchandise offerings are up-to-date with clear plastic straps on some gowns and other garments, and La Senza’s new Aqua fragrance line extends the brand outside the apparel category.

“Women enjoy buying lingerie today: It’s a fun buy, a fashion buy and it feels great — more so than buying a skirt or blouse,” Lewin said. La Senza has made the most of this. During the past decade, a time when many Canadian specialty retailers have been devastated by the entry of big-format competitors and U.S.-based chains, Montréal-based La Senza has aggressively expanded its niche to become the country’s largest specialty lingerie/nightwear chain in sales and market share, with approximately C$200 million in annual sales. It holds a significant lead over other specialty players such as La Vie en Rose and Jacob Lingerie. Beginning with four stores in 1990, the company progressed to 85 in 1993, and today has 188 Canadian units under the La Senza and Silk & Satin banners, plus 25 locations of a new tween-age (8 to 14) concept called La Senza Girl.

The La Senza stores are usually among the top performers in the malls where they locate, with average sales per square foot close to C$600, according to Lewin; yet the chain invests virtually nothing in advertising, preferring to let word of mouth and good locations work to bring in customers. La Senza has been so successful that parent company Suzy Shier Ltd., (which also has a substantial minority interest in U.S. chain The Wet Seal) decided in June to change its name to La Senza Corp., acknowledging the earnings and high brand recognition of its offspring.

Canada’s nightwear and lingerie sales are dominated by department stores such as Sears, Zellers and The Bay, but La Senza has established a strong competitive position by providing a more attractive store ambience and better service than the mass merchants, while keeping the price point low.

“Our success is related to the intimate feel and personalized shopping which customers enjoy in our stores,’’ Lewin said. “We try to have a high standard of store fittings and design to give our stores an expensive feel, but we stay in a moderate price range.”

According to data from the Toronto office of NPD Group, a U.S.-based global market research company, the price spread as of last April between La Senza, Zellers and The Bay on popular lingerie items was quite small: Less than C$1 on bras and C$.40 on panties, for instance, which averaged C$20.43 and C$6.09, respectively, at La Senza’s points of purchase.

Close attention to pricing is vital in the current shopping environment, pointed out David Howell, vice president of NPD, because customers are trading down in price for many lingerie items, moving from traditional department stores to mass merchandise outlets. “There’s no disgrace in buying at mass merchants now, and there’s very little loyalty [to a particular retailer] anymore,” he said.

Lewin is La Senza’s founder as well as president, but he is modest about his contribution to the company’s success.

“We have a great team of people here. I basically just amble along and let them get on with it,” he joked. Yet corporate vision should be counted as a factor in La Senza’s rapid rise, noted Tom Leung, partner with Vancouver retail consultancy Thomas Consultants, who describes La Senza’s management as “very good operators.”

Leung said the company was perceptive in identifying a gap in merchandise offerings at Canadian malls several years ago and developing a concept to fill it. “At the time, Canadian retailers were very conservative in that area: Lingerie was not a mainstay of apparel operators in regional and super-regional malls,” he pointed out. La Senza took a bold step in developing a shopping center format and getting prime locations in the best regional and super-regional trophy malls, he said. With an established clientele and top locations in AAA shopping centers, the company now operates with a substantial competitive advantage. Even a powerful retailer like Victoria’s Secret (should the company decide to enter Canada) would have difficulty in playing catch-up with La Senza, Leung said.

So far no U.S. specialty chain has come north to pose such a challenge, however. While La Senza is sometimes compared with Victoria’s Secret, the Canadian company projects a softer-edged, less voluptuous image than its U.S. counterpart, and its stores avoid the low-lit, plush boudoir look characteristic of some Victoria’s Secret outlets.

La Senza’s sales record makes the company a prized mall tenant. “Around C$350 to C$400 per square foot is considered to be admirable in most shopping centers,” said Howell. “There are not a lot of people doing C$600.” By comparison, he observed, Old Navy, now opening its first Canadian stores, anticipates sales of between C$600 to C$700 per square foot for those outlets.

La Senza eschews the boudoir look favored by some Victoria’s Secret stores.

Lewin said he sees potential for another 30 to 40 La Senza stores in Canada; shops range between 2,700 square feet and 3,500 square feet of gross leasable area, with some newer units as large as 4,500 square feet. The company will also be expanding the La Senza Girl division (which sells casual wear and shoes as well as sleepwear) from 25 to 60 stores within the coming year. While there are no catalog sales, the company Web site, LaSenza.com, operates smoothly and has tripled the sales of one year ago, Lewin said.

La Senza also has extensive overseas sales via licensed operating agreements in each country, including the United Kingdom and Malaysia. Interestingly, the Middle East has responded strongly to the concept, despite deeply entrenched conservative traditions in some parts of the region. La Senza’s presence in Saudi Arabia sparked more requests from neighboring countries, leading to operations in Kuwait, Oman, Qatar and Lebanon. A first Moroccan store was opened in May, and the company recently signed an agreement with a licensee for Egypt.

Lewin explained that while Muslim dress codes require women to be covered up in public in black hooded robes in most of these countries, demand for fashion, including lingerie, is very strong and taste in undergarment fashions is similar to that of North America. “Internationally, women like the same merchandise by and large,” he explained, “and under those black outer gowns, the women in Saudi Arabia are every bit as fashionable as women in New York City or London. But there are cultural and religious differences — that’s why local involvement is vital.” In Saudi Arabia, for example, only men are allowed to work in stores, so all staff in La Senza outlets are male. There are no fitting rooms and no pictures of merchandise or models on storefronts.

As for the possibility of expansion into the United States, Lewin said that La Senza has been very busy establishing its Canadian market position, but he doesn’t rule out such a possibility entirely. Victoria’s Secret “is a fabulous retailer and clearly dominant in the U.S.,” he said, but points out that the retailer commands only around 15% of the U.S. market, and speculates that there could be unmet demand for lingerie products. “The U.S. is something we will always look at.”

 

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