The Takeaway: When one channel isn't enough, brands must extend to others while maintaining customer experience consistency across all of them. That's the lesson in this story of about Gilt and Saks.
Gilt is a textbook example of ecommerce-only success. Founded in the wake of Amazon's disruption in the late 2000s, the flash-sale site for high-quality, inexpensive clothing, jewelry, and much more quickly rose to fame amongst Millennial shoppers. The online store promised consumers new sales every day on some of the hottest trending products, and thanks to a mobile app and some support from celebrity endorsements, Gilt became a lifestyle.
Now, Gilt is a part of the Hudson's Bay Co., the same organization that owns Saks Fifth Avenue. The major international brand acquired Gilt for a cool $250 million last month. Saks is wasting no time bringing that treasured Gilt-experience into stores - which comes as no surprise following the success Nordstrom has seen with the HauteLook integration.
A bit of a background
Change couldn't come at a better time. Bloomberg contributor Brooke Sutherland explained that the flash-sale bandwagon is losing passengers, despite those companies' successes in the not-too-distant past. The brand Gilt was worth around $1 billion, she noted, but nowadays, websites offering discount clothing and accessories are a dime a dozen. Furthermore, traditional retailers are better equipped to provide similar experiences to Gilt and other flash-sale sites - with Nordstrom-HauteLook being a prime example, increasing off-price sales by 12 percent after joining forces, according to Sutherland.
Therefore, the HBC-Gilt strategy made sense. HBC was able to offer the Gilt brand a path to success within its pre-established Saks stores, and the company knew that acquiring Gilt could pave the way into the future of distributed commerce - the brands will slowly merge until each of their customer bases is the same. But it all comes back to the experience.
Applying an experience
Saks needs to bring the unique aspect of buying from Gilt into its brick-and-mortar stores.
Fortune's Leena Rao reported that Saks Off 5TH is doing just that. At its midtown Manhattan location, Saks Off 5TH will have a new Gilt department. This section of the store will only sell Gilt merchandise, giving consumers the ability to browse Gilt's collection of high-quality products in-store, and that selection will change weekly. For a fashion e-tailer, this is a new kind of shopping experience, but one that was desperately needed.
"Saks is bringing Gilt's click experiences to its bricks."
Of course, Saks isn't stopping there when it comes to offering a unique, yet familiar experience for Gilt shoppers. According to Rao, Gilt departments in Saks Off 5TH will have "comfortable seating" and Gilt by Appointment - a personal shopping and stylist service - to drive home that upscale Gilt feel that online shoppers are accustomed to.
Most interestingly, Saks pinned down a key Gilt-shopper behavior and created an experience around it: in-store mobile browsing. Rao explained that these Gilt sections will have a way for consumers to check out the Gilt website. This ensures that Gilt users feel right at home - so to speak - as well as making these individual in-store experiences seamlessly connected to those on the Web. This a relatively new idea in this space, and quite frankly, it's innovative moves such as this that set one brand's experiences apart from others'.
Doing whatever it takes
Both Saks and Gilt benefit from the HBC acquisition: It allows the brands to meet customers no matter where they are and enables them to give those shoppers the type of experience they want at any time and any place, physical or virtual. This is distributed commerce. And in this world, clicks need bricks, just as badly as bricks need clicks.