MACRO-ECONOMIC ANALYSIS

As for January 2019, the UK currently has a stable economy, with an employment rate estimated at 75.8%, 0.5% higher than the year before, and the highest since 1971, while the unemployment rate is estimated at 4.0% (Office for national statistics). Moreover, the inflation rate was around 2.51% in 2018 and is estimated to decrease in 2019 to 2.17% (Statista, 2019). Based on this statistics the average spending per UK inhabitant is presently steady and should not affect Victoria’s Secret as a business.

PESTEL

P- -The UK leaving the EU (Brexit) can cause changes in trading and transportation laws(export/import subsidies, custom duties,  as the cotton used is grown overseas mainly in West Africa, transformed into cloth in India and final products are manufactured in Sri Lanka, Jordan, U.S.) Therefore, as Victoria’s Secret is a company that produces and sells physical goods it can be affected by changes in tax and manufacturing laws.

E  -The economic crisis that started in 2008 caused a shift in spending habits and people are being more careful about where their money goes. Many students don’t have part-time jobs and have to manage their budgets carefully so they might not have that much disposable money for shopping and have to choose between essentials and products they buy solely for pleasure. Low employment rates could also affect spending habits. Moreover, economical differences affect overseas wages for female workers.

S  -Celebrities like their angels endorse the brand on their personal social media accounts and recently they even used hyper-followed celebrities (the Kardashians) to create buzz before the 2018 show. People accuse the brand of body shaming and say they are refusing to embrace diversity. Using the same kind of models repeatedly can affect the society, namely younger girls that might base their self-worth on appearance. Society’s perception on healthy bodies is changing so the “supermodel” image VS is currently promoting will go out of trend. In addition, advertising and marketing campaigns are highly influenced by social factors: for example certain countries in the Middle East where VS sell their products have different religious beliefs and customs so VS has to keep in line with these traditions. Also, prospects about population growth in the future can expand the current customer demographic that VS wants to capture.

T-  -Social Media usage is an important technological factor because the way people consume fashion is changing. Other technological innovations might affect consumer buying behaviour: virtual changing rooms, 3d body-scanning for custom sizes, VR and AR shopping and trying clothes. Additionally, new production methods to replace human labour and improve production efficiency might affect the current way of producing their goods.

E-  -Even though Victoria’s Secret has a Fairtrade certification (lb.com), relatively recent investigations revealed that forced child labour is a reality and one that is very hard to uncover as cotton picked by children is the same as the one picked by adult labourers. Furthermore, recycling concerns about the current consumption model (cradle-to-grave) instead of cradle-to-cradle creates incredible amounts of waste: “PR reports, from the Environmental Protection Agency, that 15.1 million tons of textile waste was generated in 2013, of which 12.8 million tons were discarded.”(Hill, 2019). Incredible amounts of waste also link into the global plastic crisis and how synthetic fabrics are contributing to its worsening. Moreover, harmful cotton production “It takes more than 5,000 gallons of water to manufacture just a T-shirt and a pair of jeans” (Hill, 2019) is another environmental factor worth taking into consideration.

L-One important legal factor that came into the spotlight recently is that VS started to sell on the Chinese market so their beauty products have to be tested on animal before they reach the shelves. This can potentially affect sales as it might come into conflict with people’s beliefs and values. Also, immigration laws affected their models or staff that didn’t get a visa for the 2017 show that took place in Shanghai. In the UK, trademark laws to protect the logo and branding from 1:1 replicas or other brands that would want to imitate their marketing strategies are important. Other legal requirements that might affect VS are labelling laws. The brand needs to state where the garment was produced, the fabric it is made of and whether it is highly flammable.

-maybe packaging laws??

References:

Hill P. R. (2019?). Fashion Industry Waste Statistics. Retrieved from: https://edgexpo.com/fashion-industry-waste-statistics/

Office for national statistics

Statista