Victoria’s Secret announced a cosmetics sales partnership with Amazon on Friday, following in the footsteps of other brick-and-mortar brands that are testing partnerships with third parties.
While some shoppers returned to malls in 2021, foot traffic at indoor malls in January decreased 12.2% compared to January 2020, according to Placer.Ai. In contrast, many mall-centric brands such as Victoria’s Secret, Gap or Sketchers are looking for increased sales through wholesale and retail partnerships.
Victoria’s Secret’s partnership with Amazon is the 45-year-old retailer’s first foray into third-party retail. In August, the lingerie and cosmetics store split into a separate Bath and Body Works company. In the fourth quarter, sales at Victoria’s Secret grew 4% year over year to $2.2 billion. On Amazon, customers can buy perfumes and lotions from Victoria’s Secret and its sub-brand, Pink.
“Through customer feedback and research, we’ve heard that consumers want to purchase VS Beauty from the Amazon store and are already searching for the product on the site,” Greg Younes, CEO of Beauty at VS & Co, said via a press release. “This is a natural channel extension for us to continue growing our beauty business and identifying customers wherever they are with the products they love.”
Gabriella Santaniello, founder of retail consultancy A-Line Partners, said the partnership will help Victoria’s Secret identify more shoppers in more channels. “By reaching such a broad audience,” Santiello added, the company would be able to “identify what works and what doesn’t work faster.”
Beauty is an easier category for a retailer to try for third-party distribution, Santaniello said, because it doesn’t have the right nuances of underwear.
Like Victoria’s Secret, clothing retailer Gap has also used third-party retailers to highlight one of its lesser-known product lines: Gap Home. In June, Gap launched a home décor, bedding, and bathroom collection sold exclusively at Walmart. In October, Gap and Walmart expanded the collection to include furniture and rugs.
When the partnership was first announced, Walmart home evp Anthony Soohoo told CNBC that the group wasn’t a capsule but instead, “a relationship we think we want to build, and it’s lasting for us.”
In fact, in an announcement about the group’s expansion, Gap’s head of strategic alliances, licensing and real estate, Adrienne Gernand, said there’s been an “amazing customer response to Gap Home.” Gernand added, “Through our partnership with Walmart, we are rapidly expanding the business by introducing new categories within the home space.”
For Gap, the partnership allowed the retailer primarily focused on apparel to try out a new category at a new low price with a larger audience. According to a similar site, Gap.com saw 55.2 million visits in February 2022, while Walmart saw more than seven times in 415.8 million visits.
This isn’t the first time Gap has tested using other retailers to promote a new brand. In 2018, for example, Gap launched the men’s sportswear brand Hill City with its own store as well as set up wholesale partnerships with companies like Need Supply, Neighborhood Goods, and A Runner’s Mind. Just two years later, Gap shut down the concept, citing Covid-19 budget cuts.
Other brands in malls focus on growing their wholesale channels as real competitors shift their focus to the direct consumer. Wholesale business, for example, has become a growing focus for Skechers, amid sneaker giant Nike dwindling wholesale inventory in preparation for its switch to direct-to-consumer sales.
After 30 years in business, Sketchers posted record profits in the first quarter of last week, with sales up 26.8% to $1.82 billion. For the first time, Skechers broke out wholesale and direct-to-consumer sales. Wholesale sales outpaced DTC sales by 33% versus 16%, respectively. Wholesale sales in the US, Europe, the Middle East and Africa in particular grew by 40%. On top of that, wholesale sales also saw the largest growth in all of 2021 and the fourth quarter, according to Skechers officials.
In the brand’s first-quarter earnings last week, Sketchers CFO John Vandemore explained that the retailer was selling more products at higher prices to its retailer partners. Meanwhile, David Weinberg, Sketchers COO, explained that this was made possible due to the specific investment in a wholesale “surge of staff”.
Sketchers is also expanding the wholesale business across more regions and products.
In late 2020, Skechers UK and Ireland managing director Peter Youell told fashion retailer Drapers that Sketchers was launching wholesale apparel in the region for the first time and investing in marketing to drive consumers to UK retail partners for footwear and apparel. In January, meanwhile, David Weinberg, Sketchers’ COO, announced the brand’s intent to increase wholesale sales in the Philippines.
However, the US wholesale market in particular led the gains for Sketchers in the first quarter, with wholesale sales in this region up 40% year over year. “U.S. wholesale performance increased significantly due to double-digit improvements across genders and most categories, reflecting strong consumer demand and retail operations, as well as improved product availability and our ability to receive and process additional inventory,” Weinberg said during the conference. . The retailer’s first-quarter earnings call last week.
Santaniello believes that other brick-and-mortar-focused brands — especially those with a large presence in malls — may also try new third-party distribution experiences or increase their overseas investment going forward.
“Traffic in malls has been declining for decades,” Santaniello said. “It’s showing… you have to go where the eyeballs are.”
