Turning "Rags" Into Riches
Founder of The Limited Inc.
"You have to understand that no one has to buy anything.everybody has enough clothing in their closets to last them 100 years. So the issue is to create a demand to stimulate people to buy."-Leslie Wexner
He knows Victoria's Secret. Pushed the limits with The Limited. Rode the Express to fashion fame. A true pioneer of specialty clothing stores, the dozens of retail concepts Leslie Wexner has whipped up over the past 40 years have not only made him a very wealthy man, but helped create a new marketing niche that blazed the path for such brand-oriented ventures as Talbot's, The Gap, J Crew and countless others.
Wexner seemed to be destined for a career in the "rag trade." After emigrating from Russia, Wexner's parents worked in a variety of garment-industry positions before opening their own women's clothing store in Columbus, Ohio, in 1951. They named the store Leslie's after their son.
Initially, Wexner didn't aspire to a career in retailing. One of his earliest ambitions was to become an architect. Yet as he grew older, at least partly as a result of pressure from his father, Wexner became increasingly interested in running his own business. After graduating from The Ohio State University with a degree in business administration, he began helping his parents run the family store. At the time, Leslie's was a moderately successful operation that sold all types of women's clothing. But Wexner believed the store could be more profitable if it specialized only in sportswear. "Although I didn't understand fashion, I understood that [sportswear] was what all my female friends wore," Wexner explains. "[Sportswear] was our most profitable line, and my feeling was that if you made money in chocolate ice cream, why sell other flavors?"
After several unsuccessful attempts to talk his father into stocking just sportswear, Wexner decided to strike out on his own. With a $5,000 loan from his aunt, he opened his own shop in Columbus in 1963, dubbing it "The Limited" because he limited his stock to women's sportswear. Determined to make his new venture a success, Wexner followed a grueling work schedule-often arriving at the store at 7 a.m. and leaving after midnight.
It wasn't long before Wexner's hard work and unique retailing strategy began to pay off. In its first year, The Limited's sales topped $160,000, and by the end of the second year, Wexner had opened two more stores. In 1965, Milton Petrie, chairman of a large chain of women's specialty stores, was so impressed with Wexner's operation that he offered to buy 49.5 percent of the operation. But Wexner wanted to run his own business, and promptly turned Petrie down. Still, Wexner credits Petrie with helping him overcome his "shopkeeper's mentality" and to think like an entrepreneur in terms of building a multistore chain.
Throughout the 1960s, The Limited continued to grow. Looking to extend his operations beyond Ohio, Wexner took The Limited public in 1969 to raise money for further expansion. Around that time, he struck up a friendship with Alfred A. Taubman, a real-estate developer who specialized in malls, who would prove to be a key element in Wexner's success. Taubman taught Wexner the importance of attractive store design and finding the right locations for his stores. Thanks to Taubman's help and advice, by the 1980s, Wexner's stores were recognized as the industry leader in store presentation.
As times and tastes changed, Wexner's ability to keep abreast of and meet the evolving needs of his customers enabled him to stay one step ahead of the competition. In the 1980s, many of the teenage baby boomers whose penchant for sportswear had inspired Wexner's first stores had begun climbing the corporate ladder. They still wanted comfortable clothes at reasonable prices, but they also wanted clothes of higher quality and of a style that reflected their new level of sophistication. To meet this new demand, Wexner signed on several top designers to produce exclusive collections for his company.
Realizing the importance of bringing these designs to market as quickly as possible, Wexner purchased Mast Industries to produce his fashion line, and instituted a computerized distribution network that enabled The Limited to manufacture its own garments and have them on the racks within a matter of weeks. As a result, The Limited could ship new designs to its stores every few weeks rather than on a seasonal basis, as was then the industry standard.
With The Limited's soaring success, Wexner turned his attention to other avenues of retailing. In 1982, he purchased and expanded both the Lane Bryant and Victoria's Secret chains; started a chain of stores in 1983, called Express aimed at younger buyers; took over the near-bankrupt 796-store Lerner chain and the Henry Bendel stores in 1985; also opened Bath & Body Works in 1985 to compete with Anita Roddick's The Body Shop; launched both The Limited Too to sell children's clothes and the menswear chain Structure in 1987; and purchased Ambercrombie & Fitch in 1988.
At the end of the 1980s, Wexner seemed virtually unstoppable. But there were storm clouds gathering. The recessionary 1990s caused sales to flatten. Even worse, while his core businesses began to deteriorate, Wexner became distracted by outside pursuits ranging from real estate to interior design. Stock prices plummeted and investors placed the blame firmly as Wexner's feet.
Realizing that he had overextended himself, Wexner began spinning off noncore ventures to concentrate on women's apparel, and he embarked on a series of stock buybacks in order to increase its value. By 1999, these strategies began to bear fruit. In June of that year, The Limited Inc. was named one of the fastest-growing firms in Ohio by The Plain Dealer, and by August, stock prices had risen by 11 percent.
Whether Wexner and The Limited can return to their former glory remains to be seen. But the fact remains-Wexner has greatly influenced the fashion industry and shown the corporate world how success can be obtained by paying attention to market factors and by understanding what drives buyers to purchase products. One of the first to recognize the appeal of smart-looking sportswear, Leslie Wexner helped create the stylish, affordable casual clothing that now dominates the fashion market.
Victoria's Real Secret
Despite the perception of aristocratic roots and Victorian-era imagery, Victoria's Secret is as American as apple pie. Originally a small, five-store chain in San Francisco, there was little difference between Victoria's Secret and other lingerie retailers when Leslie Wexner took it over in 1982. But, as he had done with The Limited and The Limited Express, Wexner quickly went to work making over the stores to make them unique. By decorating them with Victorian furnishings and sensuously displaying silk and lace lingerie on padded hangings, Wexner helped make the chain synonymous with genteel sexiness.
Image Is Everything
One of the keys to Leslie Wexner's success is that he learned early on that he was not simply selling clothing, but desires and self-image. For example, when he took over Lane Bryant, the store's line of clothing for larger women lacked style and was made from loud fabrics that weren't used for regular sizes. Declaring that "Big women are just like every other woman.they want to look like their smaller friends," he revamped the line to make if more trendy and fashionable. As a result, sales at Lane Bryant stores jumped 20 percent annually in the first few years after Wexner took over.