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:

  1. To help Hudson’s Bay broaden their digital business and further develop their all-channel retail model.
  2. To provide credentials around mobile and personalization technology.
  3. To give Hudson’s Bay access to 9 million active users, most of which are the up & coming spenders.
  4. 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.
  5. 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).
  6. 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.
  7. To boost revenues by adding about US $500 million to Hudson’s Bay’s overall revenue.
  8. To develop operational efficiencies by combining businesses to reduce shipping costs, have increased purchasing power and shared inventories between Gilt and Saks Off 5th.
  9. To foster a culture of innovation much like what Gilt has done.
  10. 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.