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Saks to acquire Gilt Groupe: Why should entrepreneurs care?

The race to acquire millennial loyalty has been on for awhile. In a bold and genius move, Saks is acquiring Gilt Groupe, an online flash sale site, and bringing it in-store. Will this create a boom of big names partnering with and acquiring big trends?

saks gilt

Flash sale site being brought inside

Hudson’s Bay Company (HBC), owner of Saks Fifth Avenue and Lord & Taylor, is purchasing the wildly popular Gilt Groupe for a cool $250 million in cash. If you somehow aren’t familiar, Gilt Groupe is a flash sale site that was started back in 2007 by entrepreneur Kevin P. Ryan and several partners who really struck gold with Ryan’s gilded idea.

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First to flash

Gilt was one of the first U.S e-commerce sites to navigate the tricky waters of the flash sale. How Gilt works: new sales are offered to members every 36-48 hours and feature merchandise from a single brand or a very select group of brands. The Gilt Groupe itself purchases such a mass quantity of inventory at such an extreme discount that they can then mark up prices and sell product to members and still make a profit.

At first Gilt really flourished, but then giants like Nordstrom and Niemen Marcus made things difficult by offering their own flash sales. So now Hudson Bay Co is swooping in to purchase Gilt for $250 million, an enormous sum, but only about one quarter of what Gilt was worth at its peak.

Sakes opening Gilt concept shops

However, HBC doesn’t want to lose the genius of Gilt. So actual Gilt Groupe concept shops are going to be opened inside Saks Off 5th Avenue stores. This is huge for Gilt Groupe, who probably never imagined having brick and mortar physical stores or being associated with the prominent Saks 5th Avenue back in 2007, but it’s also a brilliant move for Saks.

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We always want to make sure we’re appealing to the incoming generation, and particularly the kind of customer that Gilt has,” HBC CEO Jerry Storch said. “The affluent millennial audience is the most sought-after audience in retail today.

A partnership for the future

Gilt has more than nine million members and HBC expects that this deal will bring in $500 million in sales for this fiscal year alone. What’s more, Gilt’s majority of millennial customers will be able make returns and shop in the 15-20 Gilt concept shops that are opened “indefinitely” each year going forward.

“Opening Gilt boutiques in Saks Off Fifth and a place to make returns is a point for differentiation,” Storch. “It will make it much more exciting and drive a new cachet to Saks Off Fifth above and beyond what’s already there.”

The two companies are obviously going to help each other with relevance within the department store world and clout with the millennial bargain shoppers.

#GiltAcquiredBySaks

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Staff Writer, Abigail White is a wordsmith who hails from the Deep South, having graduated with a degree in Journalism from Auburn University. She is usually reading three books at once, loves history, sarcasm, and arguing over the Oxford comma.

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