April 20, 2015
Will Frederick’s of Hollywood’s succeed as an e-tailer?
Frederick’s of Hollywood reportedly plans to file for bankruptcy protection and sell the company to the highest bidder. For now, Frederick’s will operate as an online-only retailer, according to its website, with the chain closing all its remaining physical stores. In February, Great American Group was hired to liquidate a third of Frederick’s 93 locations.
The shift from a struggling brick & mortar to online-only follows the path of Montgomery Ward, Linens-N-Things, Service Merchandise and, most recently, Delia*s.
Ron Friedman, an accountant and consultant at Marcum LLP, believes Frederick’s could be profitable online if they’re able to use social media to drive the web traffic the stores used to provide.
"An online business is nothing more than another retail store without fixed rent," Mr. Friedman told the Los Angeles Times.
But The Wall Street Journal reports that a new buyer could soon arrive with other plans. Frederick’s, owned by Harbinger Group since 2013, has the terms of a purchase agreement drafted with a proposed buyer as part of a bankruptcy filing, according a report. Any deal would face a bankruptcy action in which others could bid for the business and would need court approval.
While the new buyer could bring back some stores, wholesale could also be an option. In 2011, Iconix Brand Group acquired Sharper Image and now sells Sharper Image products at Lord & Taylor, Macy’s, Kohl’s, Bed, Bath & Beyond, Target and elsewhere as well as sharperimage.com.
Frederick Mellinger founded Frederick’s in the late 40’s by bringing the black lingerie, push-up bras and thong underwear he saw in Europe during World War II to the U.S. It began as a mail order catalog but soon began opening stores — including a flagship on Hollywood Boulevard — and continues to flaunt its racy lingerie. Eventually, competition arrived from Victoria’s Secret and designers bringing a more refined approach to sexy intimate apparel. Frederick’s first filed for bankruptcy in 2000 when it had 200 doors.
BrainTrust
Recent Discussions
Discussion Questions
Do you see Frederick’s of Hollywood’s greatest potential as an e-tailer, a wholesale brand, a brick & mortar retailer or some combination? What mistakes from the past will Frederick’s need to avoid if it is to succeed in the future?
Poll
Right up there with Sears and Howard Johnson’s for mismanagement of a brand. Frederick’s should have been Victoria’s Secret. Online is not the same as brick-and-mortar—the brand has to tell a story in a different way. I would expect a new buyer to open at least a couple brick-and-mortar stores, eschewing the tacky J.C. Penney merchandising and color choices for the woman of today.
I do not think they can make it in a store format. As an online retailer they will attract a whole new generation of customers. The brand still represents quality and being able to purchase intimate products without leaving home would be their claim to success.
This is a real study in the strength of branding. Frederick’s was the first to bring lingerie out of the closet. But, his closet was about fantasy. Today, if you asked women what Frederick’s is about, the word “sleazy” is pretty common.
Victoria’s Secret made a break-through that lingerie can be sexy, not sleazy It could be part of a woman’s wardrobe, not part of her fantasy. European retailers like LaPerla, Journelle and Agent Provocateur came into the market. Department stores brought in elegant and sexy “everyday” lingerie.
The poll gave us three alternatives. None are really viable for this brand. Frederick’s is finished. The brand image is too strong.
Seems to be a business that would be natural for online-only and be ripe for someone willing to invest in the reinvention required to maximize value from a very recognizable brand. Something interesting to consider is maybe moving from a store footprint to a vending/kiosk footprint.
I’d like to see a combination, but I’m guessing it’s destined for online. Ah, for the good old days.
I have to agree with Gene. A name that our parents—and increasingly grandparents—could relate to has little chance of making it once the magic is gone…particularly a “sexy” product line such as this.
Frederick’s of Hollywood spends millions of dollars to satisfy pedestrian curiosity adding to the costs of goods sold and forced price increases ultimately passed on to the consumer for damage and shrink. This alone is a cause for many traditional brick and mortar retailers to at least consider e-commerce and/or wholesale only way of doing business in the future.
Another consideration is changing economic demographics, which remain largely unsettled. This makes static business locations a large risk especially if long-term stable lease terms are necessary to insure growth.
Yet another reason for consideration is to participate in the global market. Freeing up overhead dollars to gain momentum and expansion in this new market is most inviting considering its size and low support costs. I am not so sure this is a migration from past sales practices. We may be watching the evolution of Frederick’s in a way that simply sheds some of the location and dwindling sales from past practices for the way of the future as it is unfolding today and will reshape for the future. Time alone will disclose if they are doing the right thing(s) the right way(s).
I thought I should send you my answer in a brown paper wrapper. I think the e-tail market is made for Frederick’s—and vice versa. Able to study and select from a variety of merchandise and order online from the privacy and comfort of one’s own home is very desirable. Stores would be nice, too, if they could be profitable, so I think online and brick & mortar make a nice combination. I think the stores will be more as special attractions, in vacation areas or certain neighborhoods, but not as a line of stores in “normal” locations.
E-tailing is the clear future for Fredericks. It has repeatedly failed at brick-and-mortar stores, and the expensive presence that brick-and-mortars require cannot be maintained in today’s environment. Plus, Fredericks can simply go 100 percent online and become a much better e-tailer than its stores ever were.
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Right up there with Sears and Howard Johnson’s for mismanagement of a brand. Frederick’s should have been Victoria’s Secret. Online is not the same as brick-and-mortar—the brand has to tell a story in a different way. I would expect a new buyer to open at least a couple brick-and-mortar stores, eschewing the tacky J.C. Penney merchandising and color choices for the woman of today.
I do not think they can make it in a store format. As an online retailer they will attract a whole new generation of customers. The brand still represents quality and being able to purchase intimate products without leaving home would be their claim to success.
This is a real study in the strength of branding. Frederick’s was the first to bring lingerie out of the closet. But, his closet was about fantasy. Today, if you asked women what Frederick’s is about, the word “sleazy” is pretty common.
Victoria’s Secret made a break-through that lingerie can be sexy, not sleazy It could be part of a woman’s wardrobe, not part of her fantasy. European retailers like LaPerla, Journelle and Agent Provocateur came into the market. Department stores brought in elegant and sexy “everyday” lingerie.
The poll gave us three alternatives. None are really viable for this brand. Frederick’s is finished. The brand image is too strong.
Seems to be a business that would be natural for online-only and be ripe for someone willing to invest in the reinvention required to maximize value from a very recognizable brand. Something interesting to consider is maybe moving from a store footprint to a vending/kiosk footprint.
I’d like to see a combination, but I’m guessing it’s destined for online. Ah, for the good old days.
I have to agree with Gene. A name that our parents—and increasingly grandparents—could relate to has little chance of making it once the magic is gone…particularly a “sexy” product line such as this.
Frederick’s of Hollywood spends millions of dollars to satisfy pedestrian curiosity adding to the costs of goods sold and forced price increases ultimately passed on to the consumer for damage and shrink. This alone is a cause for many traditional brick and mortar retailers to at least consider e-commerce and/or wholesale only way of doing business in the future.
Another consideration is changing economic demographics, which remain largely unsettled. This makes static business locations a large risk especially if long-term stable lease terms are necessary to insure growth.
Yet another reason for consideration is to participate in the global market. Freeing up overhead dollars to gain momentum and expansion in this new market is most inviting considering its size and low support costs. I am not so sure this is a migration from past sales practices. We may be watching the evolution of Frederick’s in a way that simply sheds some of the location and dwindling sales from past practices for the way of the future as it is unfolding today and will reshape for the future. Time alone will disclose if they are doing the right thing(s) the right way(s).
I thought I should send you my answer in a brown paper wrapper. I think the e-tail market is made for Frederick’s—and vice versa. Able to study and select from a variety of merchandise and order online from the privacy and comfort of one’s own home is very desirable. Stores would be nice, too, if they could be profitable, so I think online and brick & mortar make a nice combination. I think the stores will be more as special attractions, in vacation areas or certain neighborhoods, but not as a line of stores in “normal” locations.
E-tailing is the clear future for Fredericks. It has repeatedly failed at brick-and-mortar stores, and the expensive presence that brick-and-mortars require cannot be maintained in today’s environment. Plus, Fredericks can simply go 100 percent online and become a much better e-tailer than its stores ever were.