Gilt: More Full Price Sales Will Likely Be A Part Of Our Future

A spokesperson from Gilt got back to me regarding the Vogue partnership. Here’s what she had to say:

• There will definitely be Vogue-sponsored “Shop The Issue” sales in February and March. Vogue hasn’t committed to anything beyond that.
• As Gilt grows, full price sales are something it wants to do, but no definite plans have been made.

Obviously, the big question is: Why bother? Gilt’s already grabbing market share from pretty much every type of retailer, including off-price brick-and-mortar (TJ Maxx), department stores, boutiques and outlet stores.

Well, I think what Gilt may be dealing with now is somewhat of a backlash from designers, as my Twitter follower @EmekaPatrick suggested yesterday. Many boutiques are frustrated with certain designers because they’re producing in-season merchandise for Gilt and allowing Gilt to sell it at a hefty discount while it’s still full price at traditional stores.

Consumers are picking up on this. One boutique owner told me that clients have actually said to him, “I saw this on Gilt the other day for 70% off, why is it full price here?” I’m sure designers are hearing from disgruntled store buyers and have relayed these concerns back to Gilt. I’m also sure it’s not a huge deal for the company as of yet, but as the economy improves and traditional store buyers have more money to spend, Gilt’s going to have to come up with new ways to convince designers to cut them a deal.

That’s not to say Gilt’s original form of revenue will go away. No matter what’s up with the economy, people love sales, even if the product is a couple of seasons old. But in-season merchandise is going to be more difficult to discount down the road. As a frequent Gilt customer, I look forward to observing how the executive team deals with this and other challenges.

Gilt Teams Up With Vogue For “Shop The Issue” Sales, Starting Tonight At 9pm

What may well be its most brilliant marketing move yet, Gilt Groupe has teamed up with American Vogue to hold special “Shop The Issue” sales. The first one happens tonight at 9pm and features See by Chloe, whose safari shirt was profiled by fashion writer Mark Holgate in the January issue of the magazine.

There is very little information available from Gilt–meaning no press release, no blog post–so I’m unsure as to whether or not other designers from the issue will also be featured or if the clothing will be discounted. (I have a feeling that if it is, it won’t be by much. Don’t expect 70% off in-season merchandise here.)

I’ve contacted Gilt and hopefully they can answer my questions. I’ll get back to you soonest.

Update:

The sale is filled with non-discounted items from several labels, including Dooney & Bourke, Giles & Brother and the aforementioned See By Chloe.

The model is doing a lot of Vogue spread-inspired poses.

Gilt is using Vogue’s new feature Steal of the Month as the centerpiece for each sale. That’s a good idea, as long as the designers involved are okay with selling his/her new goods on Gilt.

This biggest news here? Gilt has moved into full-price retail. Yes, it’s still a flash sale, but without the discount, what’s the point?  Gilt execs say that traditional retailers don’t understand the flash sale model. Will they be able to duplicate its success while charging full price?

Decade List: Ten Moments In Fashion That Changed The Business

Like every industry, fashion suffered quite a bit in the Naughts, with enough shuttered labels and disgruntled consumers for an aspiring fashionista to throw in her Hermes towel. However, in my opinion, the triumphs outweighed the missteps.

While the democratization of fashion may have feathered some ruffles, it–in the end–helped to establish a stronger, more lucrative industry. Here, in the spirit of those top ten lists that I know you love reading, I’ve named the ten moments over the last ten years I that believe changed the business of fashion. Maybe not forever, but at least for now.

2000: H&M Opens in the US
In high school, I read a lot of British magazines. (Yes, I was a bit of an anglophile, watching Are You Being Served when I didn’t have lacrosse practice after school.) I soon understood that while British women were terribly obsessed with fashion, they were also obsessed with not paying exorbitant amounts of money for said fashion. In the pages of British Vogue I discovered H&M, a Swedish retailer that sold clothes rivaling Target in price and Prada in style. By the time I was interning in New York City at a downtown magazine, H&M had arrived on 5th Avenue.

After work I’d take the N up to Rockefeller Center and spend an hour rifling through racks of asymmetrical blouses, wide-leg trousers and colorful plastic baubles.  H&M went on to change American retail, heralding in the concept of fast fashion–clothing that is made cheaply, stylishly and above all, quickly. Soon enough, European favorites like Zara, Topshop and Mango were also infiltrating US shores, leaving All-American basic labels like Gap and Abercrombie & Fitch in the dust.

2001: Vente Privee Launches
Remember life before Gilt Groupe? If you responded by saying “not really,” you’ve got to thank its predecessor, the France-based Vente Privee. You all know the story: Company launches exclusive online sample sales, reports $800 million in revenue in 2008. A decade later, the private sale is the hottest retail model around.

2001: PPR Wins Gucci
After an epic battle between billionaire Bernard Arnault of Moet Hennessy Louis Vuitton (LVMH) and billionaire Francois Pinnault of PPR, the latter finally gained control of the Gucci Group, which includes Gucci, Bottega Veneta, Yves Saint Laurent and more. As PPR moved from discount retail into the world of high luxury, it was obvious to designers that being a part of a big conglomerate like LVMH, PPR or Richemont was a way to build a brand without sacrificing design integrity. The corporate infrastructure of these companies helped brands like Balenciaga, Stella McCartney and Edun to increase profits through fragrance, accessories and other well-thought-out licensing deals.

2003: Target Signs Isaac Mizrahi
When Target brought him on to design a women’s fashion collection in 2003, Isaac Mizrahi was nothing more than a 1990s flash in the pan, better known for his documentary Unzipped and a short-lived talk show than beautiful preppy-glam clothing. Yet women couldn’t get enough of what Mizrahi offered at Target: Shiny shift dresses, polka dot blouses and pointy flats. By 2005, the cheap-chic collection garnered $500 million in sales for Target. Mizrahi has since moved onto Liz Claiborne, but his work at Target made it okay for high-end designers to collaborate with low-end retailers.

2004: Rachel Zoe Becomes a Household Name
While celebrity stylists have been around for decades, it was the Naughts that made them rich and independently famous. When Rachel Zoe transformed train wreck Nicole Richie into a chic hippie, she also made big sunglasses, tiered prairie dresses and honey-highlighted hair the look du jour. Today, stylists command thousands of dollars per day for their services, and more and more young women are clamoring to follow in their footsteps.

2005: LVMH Sells Lacroix, Proving that Fashion is More About Commerce than Art
After standing by his money-sucking side for nearly 20 years, LVMH exec Arnault finally sold off Christian Lacroix’s failing fashion business to Florida-based investment company Fallic Group for a measly 2 million euros. We all know how the story ended: Fallic was unable to revive the brand, which made beautiful six-figure couture dresses but could not connect with a consumer at the fragrance, accessory and ready-to-wear levels. It was reduced to a licensing operation at the end of 2009. As sad as it is that Lacroix is not making his beautiful dresses, his struggles serve as an example for the rest of the fashion industry. The lesson: If you want to stay small, stay small, but if you want to make a lot of money, you’ve got to play by retail’s rules. Design may be an art, but fashion is a business.

Jil Sander and Others Lose the Rights to Their Own Names
Another indication that fashion is serious stuff: After disagreements with their corporate backers, designers like Jil Sander, Helmut Lang and Camilla Staerk have lost the rights to their name brands, which are also their given names. Jil Sander returned with +J for Uniqlo, Lang stopped designing altogether to do fine art and Staerk now designs under her surname.

Versace, Ferragamo and Prada Hint At–But Don’t Go Through With–IPOs
From whispers at Salvatore Ferragamo and Versace in 2006 to Tommy Hilfiger, and Prada’s de-listing–then hopes of re-listing–at several points throughout the decade, many fashion companies sought out public funds, but for one reason or another, were not able to actually attain them. Of course, the 2008 crash made raising money even more difficult. Yet Hilfiger, Versace and Prada still haven’t ruled out public offerings. The Teens may just be the decade of fashion IPOs.

2005: LVMH Starts Suing the Heck out of Copyright Infringees
From eBay to Wal-Mart to Bad Boy Records, LVMH crusaded against counterfeit handbags and copyright infringements in the last half of this decade. The lawsuits resulted in an industry-wide debate over what could-and couldn’t-be copied. Intellectual property lawyers prayed to the Louis Vuitton gods each day, thanking them for making their profession more lucrative than ever.

2006: Tom Ford Proves You Can Still Build A Luxury Brand From (Almost) Scratch
After years of conglomerates buying the rights to old fashion houses and hiring the Next Big Designer to revive the brand, Tom Ford did something radical. He broke away from Gucci (where he had played the corporate fashion game, making both said brand and YSL financially viable) and launched a label under his own moniker. Tom Ford currently consists of fragrance–a partnership with Estee Lauder–men’s suiting, shirts, shoes, sunglasses and a few discreet shops that keep customer’s measurements on file for bespoke services. Next step? Women’s wear. Could Ford be THE brand of the Teens? I sure think so.

If Amazon Buys Vente-Privee, What Happens To Gilt Groupe?

Last week, Tech Crunch reported that Amazon was in talks to buy French sample sale site Vente-Privee for an estimated $3 billion. VP is the original inspiration for U.S. phenomenon Gilt Groupe, which brought in an estimated $150 million in sales for 2009. (Of course, there are several other sites that followed Gilt, including Rue La La, which was acquired by GSI Commerce in October 2009 for an estimated $350 million.)

While Gilt is undoubtedly the most successful and high-profile of the sample sale sites currently operating in the U.S.–it even sponsored runway shows for top designers Rodarte and Alexander Wang at New York Fashion Week this past September–Vente-Privee is a bigger animal, and its presence in the U.S. would undoubtedly cut into Gilt’s market share. Unlike Gilt’s other competitors, this France-based company has similar access to top fashion houses like Balenciaga and Alexander McQueen. Sites like Haute Look and Rue La La stick to mid-market, more accessible labels. Plus, Amazon’s customer service and logistical operations are beyond sophisticated. Even retail behemoths like Wal-Mart can’t touch Amazon online.

Vente-Privee’s 2008 sales reached $807 million, a 46% increase from 2007. It currently operates in France, Germany, Spain, Italy and the United Kingdom.

Regardless of whether or not Amazon buys VP, there’s little doubt the sample site that started it all will eventually going to open up shop in the U.S. How can Gilt Groupe continue to flourish when this happens?

1. Join them. The Business Insider suggests that Amazon should consider buying Gilt, too.
2. Continue to diversify. Although I am not at all impressed with Gilt’s travel deal Web site Jetsetter–the deals are mediocre; anyone who is savvy enough to belong to Jetsetter is savvy enough to find a similar booking on Kayak.com–I think it’s a good move to venture into other consumer markets. If Gilt figures out how to offer true value on Jetsetter, it might be able to make it work. Gilt Man, I believe, is its most impressive spin-off yet.
3. Wine and dine those designers to get exclusives. Since the beginning, Gilt’s differentiator has been its direct relationships with the designers. Founders Alexandra Wilkis Wilson and Alexis Maybank both run in elite New York circles, which means that these are people they party with on regular basis. What’s more, Wilkis Wilson spent years as a buyer for companies like Louis Vuitton, so both the business and social connections are strong. Gilt needs to continue capitalize on that and make exclusive deals with these brands before Vente-Privee swoops in.

Happy Birthday, Gilt Groupe!

The sample sale site that started it all is two years old today, which means free shipping on every purchase for the next 12 hours!

Want the scoop on how Gilt got its start? Check out my February 2008 story on the company.