Marketing Victoria's Secret requires little subtlety. The retailer's motto could be, "If you've got it, flaunt it" -- even on the Web.

Model Heidi Klum, for instance, shows off the Victoria's Secret new Natural Miracle Bra on TV, on the cover of the company's latest catalog, and on the VictoriasSecret.com home page. The point is, says Lauri Brunner, retail analyst for banking firm Dain Rauscher Wessels, "you need to make an offer anywhere the customer is."

In other words, the importance of multi-channel retailing is becoming increasingly vital, especially in the Web world. Web stores, while convenient, have difficulties establishing brand identity, so it's harder for them to shape consumer behavior. Underscoring the point is the thinking at Intimate Brands, the Columbus, Ohio, parent company of Victoria's Secret. Intimate Brands stresses the importance of its physical stores to its bottom line even as VictoriasSecret.com's business booms.

"Just being online is not enough," says Jeff Klinefelter, a senior research analyst with US Bancorp Piper Jaffray. "It needs to go in step with overall growth and overall increases in brand awareness."

Victoria's Secret's virtual store is expected to triple its sales this fiscal year to $135 million over fiscal year 1999. Analysts say the Web site, launched in late 1998, is profitable (Intimate Brands won't comment). Analysts believe the site costs less than $10 million a year to operate.

STOREFRONT KNOWLEDGE

Many Web retailers can only dream about achieving those kinds of numbers. In contrast, Intimate Brands officials, while pleased by how their Web commerce is faring, say the Web has limited retail potential. So the company continues to invest heavily in Victoria's Secret storefronts. Analysts cite two immediate reasons why.

First, stores are showrooms for new products, which Victoria's Secret rolls out constantly. Also, showing off new products in the right atmosphere is critical to brand-building.

"They have a new store prototype they're rolling out," Ms. Brunner says. "They're getting out of hot-pink wallpaper and using pale pink and beige wallpaper. It's a much more upscale feel. Fixtures will be of higher quality and signage will be much better. It just really upgrades the quality of the store experience."

Second, Victoria's Secret stores are at the front line of competing for "intimate apparel" market share. Victoria's Secret stores in malls, for example, compete with neighboring department stores, which are less adept at selling lingerie, according to Ms. Brunner.

Also, Victoria's Secret stores are important because customers -- especially women -- want them. Consumers like to try clothing on before they buy it, which goes double for the fit and flatter required of intimate apparel.

INTEGRATED APPAREL

The Web store is seeing increased purchases by men -- Intimate Brands thinks men are more comfortable buying lingerie gifts online than in person in overtly feminine stores. By contrast, female customers are in the habit of buying in Victoria's Secret stores. VictoriasSecret.com isn't cannibalizing sales from its brick-and-mortar counterparts. Rather, the stores are doing a better job of selling lingerie than department stores, according to Ms. Brunner.

"The excitement these (Victoria's Secret) guys have generated over the past few years originates at the store level," Ms. Brunner says. "The stores are the brand." She adds: "Their customers want to be in the stores rather than buy online. E-commerce will be a nice supplement, but it won't replace the stores."

Web stores may not replace physical stores, but with more consumers moving online, old-line retailers need Web stores -- the reason VictoriasSecret.com is plugged on store bags, TV ads, package inserts, and in 380 million print catalogs mailed every year. More customers shopping online also is why Victoria's Secret hosted a May fashion show Webcast, which drew 2 million viewers and resulted in 15 million hits on its Web site.

RETAIL SUPERMODEL

The Victoria's Secret Web store and catalog are managed as a single unit. Online merchandise is sourced, inventoried and distributed with catalog merchandise. Also, online and catalog sales are tallied together. According to Intimate Brands, Victoria's Secret sold $2.9 billion worth of goods in 1999, with $799 million sold through its catalog and Web unit.

Anne Marie Blaire, director of Internet brand development for Intimate Brands, says online sales are expected to grow fast, but she acknowledges they will remain small compared to catalog sales. "We're definitely getting efficiencies from customers self-selecting to place orders on the Web site, but it's about giving them a choice," Ms. Blaire says.

One area where VictoriasSecret.com may play a larger role is in international sales. Victoria's Secret has no physical stores abroad. The company says 7 percent to 9 percent of its online sales are for orders placed overseas. Ms. Blaire believes Victoria's Secret models are recognized worldwide and serve as walking billboards. Also, Ms. Blaire says, foreign Web shoppers are maintaining a bond to the Victoria's Secret brand -- established first in one of the company's U.S. brick-and-mortar stores.

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