Behind the Shelf – GILT-y as Charged
A blog series on Shopper Marketing – Planning for Change
The technology tipping point (and let’s face it, competitive pressures), may have pushed Hudson’s Bay to make a smart acquisition decision: they’ve acquired GILT Groupe Holdings Inc. Gilt is a 9 million member online retailer that caters to and has cultivated a loyal and devoted Millennial following. With time-limited ‘flash’ sales, Gilt has done an excellent job of email and personalized communications. So why is Gilt a smart move? The answers are many:
- To help Hudson’s Bay broaden their digital business and further develop their all-channel retail model.
- To provide credentials around mobile and personalization technology.
- To give Hudson’s Bay access to 9 million active users, most of which are the up & coming spenders.
- To create a true powerhouse in the growing off-price market by folding the luxury flash sale site into Saks Off 5th and offering Gilt’s customers a physical location to return goods bought online.
- To leverage Gilt’s mobile platform and accelerate the growth of Hudson’s Bay’s digital business across all of its banners – Hudson’s Bay, Saks Fifth Avenue, Lord & Taylor and Kaufhof Department store (Germany).
- To compete effectively with the fast growing e-commerce sites of Nordstrom’s Rack and the TJX Companies. Nordstrom for example bought HauteLook which laid the groundwork for the Rack’s successful online business [sidebar: Nordstrom’s off-price business has 19% annual growth compared to 5% for full-price business] according to Fortune.
- To boost revenues by adding about US $500 million to Hudson’s Bay’s overall revenue.
- To develop operational efficiencies by combining businesses to reduce shipping costs, have increased purchasing power and shared inventories between Gilt and Saks Off 5th.
- To foster a culture of innovation much like what Gilt has done.
- To spend a relatively small amount to secure both product and experience innovation.
Hudson’s Bay is timely. Once valued at $1 billion in 2011, Gilt was scooped up for $250 million. The technology tipping point isn’t what it seems. Hudson’s Bay and Nordstrom realize that these once standalone flash sites cannot operate independently as e-commerce only sites. These sites must be ‘married’ to a bricks & mortar partner. Having a physical presence is valuable and a positive addition to the online experience. It’s what all-channel powerhouses are all about! Technology AND bricks and mortar are the winning combination.