When Frederick's of Hollywood CEO Linda LoRe joined the company in 1999, the Frederick's brand had no unique selling proposition, she says. "For a company that had so dramatically changed the face of lingerie over the past fifty-plus years, our brand was utterly destitute."
Addressing an audience at Harvard Business School earlier this month, LoRe discussed how she led the dramatic transformation of the misguided retailer over the past four years, from bankruptcy to profitability and positive brand perceptions.
The company has a storied history. "You have Frederick's to thank for black lingerie," LoRe said. "It was considered quite scandalous when it was first introduced in our flagship Hollywood store in 1946." In addition Frederick's was responsible for the first push-up bra, bikini, thong, and front-hook bra.
But after the women's liberation movement took hold in the 1970s, Frederick's stopped listening to what their female consumers wanted and continued introducing risqué lingerie products that appealed more to men's fantasies. This, coupled with multiple changes in ownership through the early 1990s, compromised the brand identity, resulting in multiple and contradictory brand positions.
"Lingerie is a purely emotional product," LoRe said. "Eighty-seven percent of sales are to women for themselves. In order to grow sales and maintain a loyal customer base, you need to have a clear brand identity. And if you don't tell the consumer what the brand means, they'll create their own perception of the brand."
Strong brand, wrong perception
This iconic brand surprisingly retained strong brand recognition when LoRe first took over, with an 88 percent recognition factor in the United States. LoRe's goal was to preserve the recognition while transforming the brand perception.
"Our initial research showed that our merchandise was considered less pretty, less quality, less classy, and less designed for women," LoRe stated. "But it also showed that we were considered more daring, more fun, and [had] better prices.
| If you don't tell the consumer what the brand means, they'll create their own perception of the brand. |
"We decided to play to these strengths. True to founder Fred Mellinger's notion that women should feel good in their relationship with intimate apparel, we set out to create a brand that was sexy, bold, fun, and confident, but which was also designed for comfort and fit. We would never go over the line, but we would push the envelope, true to our Hollywood heritage."
They chose a target audience of women aged eighteen to thirty-five to capture an ethnically diverse, trend-spotting, fashion-forward consumer group. There was another reason, too.
"There is less brand baggage to overcome with this age group," LoRe said.
The first challenge was to communicate a single relevant message that was powerful and consistent with the new brand position.
"We had to surround our customer with the transformed brand," LoRe said. "The problem was that our channels of distribution defined us more than the brand. The logo in the stores was different from the logo on the catalog was different from the logo on the Web site. We weren't talking to each other. Now our goal is that no matter where the customer encounters the brand, she finds the same logo."
Back to basics
Frederick's reworked the logo and reviewed every component of the brand that would touch the consumer.
"It was back to basics for us. Everything that the consumer sees or hears is a marketing message."
The stores are being transformed from worn and outdated retail outlets to enticing, intimate boutiques. The catalog became more romantic and enchanting. The clumsy, slow Web site became a fast, user-friendly, and entertaining shopping experience. The generic merchandise boxes were replaced with high quality packaging and unique product names.
"We took a simple massage oil and repackaged it as 'Boudoir Café.' Our signature marabou slippers were renamed 'Glamour Girl Slippers,'" LoRe said.
Advertising was also a key component to communicating the transformed brand. Starting with the campaign "The Original Sex Symbol," Frederick's plastered cities with billboards sporting sexy models. But this cash-strapped retailer also found creative ways to advertise for free.
"We had to take advantage of brand-positive PR opportunities," LoRe said. "During Valentine's and the winter holidays in particular, we snatched free spots on some of the most visible TV talk shows. Our Jay Leno appearance led to a $250,000 spike in sales alone. A good PR campaign can help when you don't have the budget for advertising."
The concentrated marketing efforts certainly paid off. Today, Frederick's ratings on quality and classiness have significantly increased. Three out of four women surveyed stated they are likely or somewhat likely to shop at Frederick's of Hollywood. And this past February and March provided the best comparative store sales on record, achieving profitability 60 percent over plan.
"We've had to upwards revise our plans going forward," LoRe said with a smile. "And this shows that having a strong marketing message is not enough. You have to have the operations in place to be able to deliver on the message or you have failed as a company. We still have a lot of upgrading that has to happen to be a state-of-the-art company, but we're well on our way." 