Tapping into one of the fastest-growing segments of the retail industry, tony department store retailer Nordstrom has acquired HauteLook, the private sale website, for $180 million.
HauteLook, like competitors Gilt Group and Rue La La, have popularized the online sample-sale format. These private sale (also know as "flash sale"), websites offer steep discounts, usually for 36-hours to 48 hours, on high-end and designer merchandise in limited quantities.They cultivate an air of exclusivity with an "invitation only" hook that targets a shopping base of fashionistas.
HauteLook, which launched in 2007, offers discounts of 50% to 70% on brands for women, men, kids, home beauty and travel services: From Adrienne Vitadinni printed pumps and HYPE floral dresses to Mario Badescu skincare products.
Nordstrom's acquisition of the site grants the vaunted department store chain access to HauteLook's four million shoppers, but more importantly, gives it entry into an online retail business that is quickly gaining a cult-like following among consumers. Nordstrom has 204 brick-and-mortar stores.
"We are excited to partner with HauteLook as we believe this acquisition further enhances our focus on serving customers in new and compelling ways," said Blake Nordstrom, president, in a statement.
The online sample sale retail segment began about 15 years ago in France and took root in the U.S. in 2007, says Craig Johnson, president of retail consultancy Customer Growth Partners.
It includes pioneer Gilt Group, the biggest player in the space, Rue La La and Ideeli, among others, and is a $1.25 billion business and growing, he says.
So why has this retail format struck such a resonant chord with consumers?
Johnson says the social nature of the shopping model is at the heart of its appeal. "It's a social phenomenon as well as a shopping phenomenon among women."
As these private sales usually take place during the day, women will interrupt their office day to appointment shop. And as the sales are for a limited-time only, there is a sense of urgency and an entertainment value to the purchase, he says.
The target audience for these sites is women ages 24 to 39 who are single or recently married, "who is definitely upmarket -- but not high wealth," he says. Online sample sale websites also offer a new, fun take on e-commerce. "And nobody doesn't like a bargain -- particularly nowadays," says Johnson.
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