Frederick's of Hollywood Group Inc. conducts its business through its multi-channel retail division and wholesale division. The company primarily sells womens intimate apparel and related products though 132 specialty retail stores nationwide, a catalog, and an online shop at www.fredericks.com. Most of Frederick's of Hollywood stores are located in shopping malls, so the volume of mall traffic highly influences sales. A decline in the desirability of the shopping environment of a particular mall could reduce the volume of mall traffic, which could have an adverse effect on the business, financial condition and results of operations. This fact forces the company to expand its e-commerce division of retail to remain in the game with its competitors, such as Victoria's Secret.
Thomas Lynch, the Company's Chairman and Chief Executive Officer, stated that one of the company's focus for the future will be on several fronts, including driving increased traffic to the e-commerce website. Currently, website traffic accounts for a very low proportion of sales revenue. In comparison, Victoria's Secret generates approximately 15% of its sales from e-commerce. During peak seasons, such as Christmas and Valentine's Day, an immediate option for gifts is at victoriasecret.com. Frederick's of Hollywood, in order to compete, needs to extend its branding, having its most primary source in its website. When comparing websites, Victoria's Secret seems to be more accessible and easier to run through than Frederick's. Immediately when going to the website of Victoria's Secret, shoppers are drawn into putting in their bra size and panty size, and checking out the top specials and styles that fit. This is a great tactic, because customers shopping for something other than bras or panties have a now increased curiosity with what is available in those categories.
Frederick's of Hollywood's homepage is very appealing as well, automatically showing specials and new styles for the current time. They offer clothing in similar categories with Victoria's Secret, so increased recognizability of its brand is crucial. Recently, the company has received a significant investment from a hedge fund to specifically improve thier e-commerce sales revenues. This will include the reorganization of the website to make it more appealing, and the increased recognition of its existence. With this investment, Frederick's looks forward to becoming a true competitor in the e-commerce world, and to have its name be searched during peak seasons as well.
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