It's known for bras and panties, but over the past couple of years, Canada's largest lingerie chain decided to give its customers more choice - too much choice, it turned out.
Amid the racks of pink sweat pants and polka-dot bikinis, shoppers who'd gone to La Senza looking for a size 34C bra or a medium thong in basic beige often had to leave empty-handed, the product out of stock.
So it's back-to-basics time for La Senza, which is under more pressure than ever to reverse its sliding fortunes. It has new competition from within: One of its U.S. sister chains, global lingerie powerhouse Victoria's Secret, is preparing to open its first stores in Canada in 2010, and another of its sister chains, Victoria's Secret Pink, already is launching outlets here this fall. All three chains are owned by Limited Brands Inc., which paid about $710-million for La Senza in early 2007.
The company's new Canadian strategy presents operational challenges - and opportunities. It mimics the approach taken by retailers such as electronics specialist Best Buy Co. Inc. and clothier Reitmans (Canada) Ltd., which juggle different banners with the aim of getting more customers to shop at their stores.
Limited Brands is intent on taking a cue from those merchants by sharpening the positioning of its chains. Its aim is to double, to 30 per cent, its share of the estimated $1.3-billion Canadian lingerie market.
"Over the past two years, the performance of La Senza has not been stellar - far from it," said Martin Waters, an executive vice-president at Limited. "Our focus is on putting lingerie back in La Senza and focusing on the things that the chain became really famous for, which is essentially bras and panties."
Limited, based in Columbus, Ohio, is counting more than ever on getting its Canadian business right. It is determined to bolster its overall sales here by $1-billion over the next several years, from about $450-million today. Part of the increase will come from its fast-expanding Bath & Body Works stores, while most of the current business is at La Senza.
Limited executives think they can shore up its lingerie business by holding on to the La Senza banner, rather than ditching it for the high-profile Victoria's Secret name, Mr. Waters said. He thinks he can differentiate the chains enough to generate additional sales in this country, rather than giving them up to Sears Canada or privately owned, Montreal-based La Vie En Rose.
With 265 La Senza stores here, Limited is planning just 15 to 20 Victoria's Secret flagships in Canada's top malls over the next several years. At about 10,000 square feet each, the Victoria's Secret outlet will be more than three times the size of the average La Senza.
Victoria's Secret will cater to wealthier women (typically about 26 years old) with "uber-sexy" but sophisticated products, while La Senza attracts a slightly younger clientele (23 years old) with more "youthfully flirty" and affordable styles, he said. Victoria's Secret Pink, for its part, chases the 18-year-old school girl.
Limited executives are borrowing a leaf from the playbook of U.S.-based Best Buy, which bet several years ago on a dual-brand strategy in Canada. When Best Buy scooped up Future Shop in 2001, even top company insiders figured the Future Shop name would eventually disappear. Instead, it survived and thrived by serving a slightly different customer.
"It's proven to be very successful," said John Williams of retail consultancy J. C. Williams Group. "There are more than subtle differences between the two." Future Shop has commissioned salespeople, drawing many new Canadians who are used to haggling; Best Buy uses less pushy, non-commissioned sales people and interactive displays, which go over well with women.
The twin banners helped the company more than double its share of the $16-billion electronics market in Canada within five years, to 38 per cent, according to Solutions Research Group estimates.
Still, La Senza has its cup full, so to speak, in working to turn around its flagging sales. The revamping comes as Limited, which runs about 3,000 outlets, mostly in the United States, races to improve its own operations. Its financial results have been hit amid the recession and heated competition. It needs to become a more agile operator, chief executive officer Leslie Wexner told investors this week.
It wants to be able to restock popular items more quickly. And while Limited stores once took 18 months to produce a new bra and get it onto store shelves, the company has now shrunk that to nine months and has a goal to reduce it to as little as four months, Mr. Waters said.
It is looking at international growth generally, and the La Senza chain in particular, to help pull it out of its troubles. Limited executives are now taking a more hands-on approach to running the La Senza business and will take advantage of the parent company's supply chain and marketing savvy to operate La Senza more effectively.
La Senza had branched out into bathing suits, casual wear and other products, while offering too many choices of bras and panties, Mr. Waters said. Now, under a new president, industry veteran Joanne Nemeroff, La Senza is refocusing on bras, panties and sleepwear. Even in lingerie, it's concentrating more on stocking enough sizes of winning styles, dropping about 25 per cent of slow sellers. It's carrying more products at full price, rather than frequent markdowns.
It's put more emphasis on helping customers with bra fittings, always a touchy area in lingerie, and outfitted sales staff with a tape measure they drape around their neck.
As part of its emphasis on lingerie, it's gradually converting its La Senza Girl apparel stores to its other banners, or closing them. Already the changes over the past six months are starting to bear fruit, he said. La Senza's bra and panty sales have enjoyed "real growth." The company reports quarterly results next month.
"We want it to be fundamentally a sexy lingerie chain," Mr. Waters said. "The heart of everything we do is bras and panties."