Saks challenges discount web sites - WSJ

Saks challenges discount web sites - WSJ

WSJ reports the co is testing online "private event" sales of discounted designer goods, in a bid to compete with "flash" Web discounters that are gaining popularity in the U.S. Saks on Tuesday launched a 36-hour sale, dubbed Fashion Fix, open only to those who received emails from Saks directing them to the site. The limited time sale will be followed by another test in November, it said Wednesday. The realm of online "private sales" so far has been dominated by a small number of retail startups that specialize in the limited-time sales of discount designer apparel. Their Web sites, including Gilt.com, RueLaLa and HauteLook, have built a following with virally marketed, daily "members only" sales. Adam Bernhard, CEO of Hautelook.com, said Saks' entry into the business "reaffirms this is the new way of retail." However, he said the move is likely to confuse fashion designers and its other suppliers. "Saks is first and foremost a full price distributor of brands," he said. The Web test will cause suppliers to question, "Are they are full price retailer? Or a discount flash sale site?" he said. A Saks spokesman said "our vendors are excited to work with us on this off-price initiative."

Why are the flash discounters successful at all? Is it solely because of the exclusivity and limited timeframe of the sales? I.e. They would actually be less successful if they sold the same items at the same prices on a public site for an unlimited amount of time (until they're sold out)?

Neiman Marcus has been doing this online with their "mid-day dash" sales.

Originally Posted by Kent Wang

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Why are the flash discounters successful at all? Is it solely because of the exclusivity and limited timeframe of the sales? I.e. They would actually be less successful if they sold the same items at the same prices on a public site for an unlimited amount of time (until they're sold out)?

Gilt et al aren't really that exclusive, you just have to care enough to take some time and get an invite. However, I do believe that they're successful because people are more willing to pull the trigger on a good deal for a well known brand if they know the quantity is limited and the timeframe to make the purchase decision is limited.

Which calls into question the retail structure and pricing overall.

How long before designers come down on this and decide they dont want any of their items sold in any of these quickie venues and to do that they have to limit production even if it means sacrificing numbers?

Sacrifice short term revenues for the brand and its exclusivity.

Originally Posted by dsgNYC

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Gilt et al aren't really that exclusive, you just have to care enough to take some time and get an invite. However, I do believe that they're successful because people are more willing to pull the trigger on a good deal for a well known brand if they know the quantity is limited and the timeframe to make the purchase decision is limited.
Right. So is their success built entirely on irrational purchasing behavior? Or is there a legitimate reason for the exclusivity, e.g. to not dilute a brand's image by publicly advertising discount prices. Are they compelled by contract to do this?

Due to clever marketing, I think a majority of people's purchases do end up being as being irrational, because of the perceived notion of limited stock and short timeframe. However, I think they offer a good service because it is more convenient than fighting with other people at a sample sale location and also offers access to those brands that might not be available outside metropolitan areas.

Originally Posted by Kent Wang

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Right. So is their success built entirely on irrational purchasing behavior?

Or is there a legitimate reason for the exclusivity, e.g. to not dilute a brand's image by publicly advertising discount prices. Are they compelled by contract to do this?

I'd agree that the limitied quantity and "limited time only" bend of the sites probably drives a lot of people to make irrational purchasing decisions. I mean, come on, who buys a Thom Browne skirt suit when they have a night to sleep on it?

Very good point about the potential contractual stipulations driving the "exclusivity" of the sites.

The two and three hour sales are definitely a gimmick to make you buy on impulse. I looked at a couple of these sales on Neimans and the prices are typical compared to any other sale you'd see in a store, and many times the store prices will be better.

But in all fairness, "it's immoral to let a sucker keep his money."

Originally Posted by Kent Wang

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Right. So is their success built entirely on irrational purchasing behavior?

Or is there a legitimate reason for the exclusivity, e.g. to not dilute a brand's image by publicly advertising discount prices. Are they compelled by contract to do this?
Judging by the amount of crap that floods B&S or exchange requests with sob stories (it doesn't fit, not my size, not my style, etc) after a Gilt sale... YES.

Originally Posted by Kent Wang

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Right. So is their success built entirely on irrational purchasing behavior?

Or is there a legitimate reason for the exclusivity, e.g. to not dilute a brand's image by publicly advertising discount prices. Are they compelled by contract to do this?

From a Forbes article ( http://www.forbes.com/forbes/2008/0225/070.html ) about the site:

Last summer, when brainstorming ideas for a new business, Maybank seized on the idea of selling to "aspirational" luxury buyers, that is, people who want luxury goods but can't quite afford them. Many brands, worried about having their cachet sullied, don't sell directly via the Web, and a few, such as Balenciaga, forbid other companies to sell their goods online. But the right site could offer brand owners a quick, painless exit for their slow-selling items.

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And it works. I also happen to think that it's part of the new world order. This model allows brands access to a much larger market without diluting the brand image. I know firsthand that a group of boutiques has been actively campaigning against discounts (online and otherwise), and flexing their collective muscle against smaller vendors. This type of "flash sale", is a middle ground. And with Saks, Neiman's, and other powerful retailers realizing that they need to grow their markets, the attitude that some retailers have against sale shoppers is rapidly changing. It has to.

Originally Posted by FIHTies

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Which calls into question the retail structure and pricing overall.

How long before designers come down on this and decide they dont want any of their items sold in any of these quickie venues and to do that they have to limit production even if it means sacrificing numbers?

Sacrifice short term revenues for the brand and its exclusivity.

I've been following this for a while, and I'd put a good retail dollar down that this is not going away.

Originally Posted by LA Guy

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I've been following this for a while, and I'd put a good retail dollar down that this is not going away.

Agreed. I was speaking with the sales folks at Saks and the 70% off feeding frenzy of the last year has ruined many of their best customers who were previously content to buy at mostly at full retail and fill-in with sale merchandise.

These customers are now holding out for the deep discounts that they feel will inevitably be coming. As a result, stores will have to either dramatically reduce the range of merchandise they carry or find outlets like Gilt (or their own version) to offload left-overs without further damaging their core customer base.

Or just hold the line and not give-in to large scale reductions. The manager of the Kiton shop at Saks went out of his way to tell me that Kiton will not be going on sale this season at Saks.

Ha ha, pretty funny how Saks is contradicting their own previous statments as shown in this thread:

http://www.styleforum.net/showthread.php?t=105236

Originally Posted by stylemeup

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Ha ha, pretty funny how Saks is contradicting their own previous statments as shown in this thread:

http://www.styleforum.net/showthread.php?t=105236

The writing's on the wall. Of course they are going to change their minds.