Gilt Groupe, Rue La La and ideeli all cashed in on the surplus of luxury goods that distributers could not sell when the economy downturned. But as prospects for a profitable year ahead in the luxury sector, coupled with an adjusted business model that advocates a more tightly edited production to begin with, what does the future of such discount luxury shopping look like?
I hope that a) those luxury sample sites already sold or b) they have a flexible and proactive vision for the future. According to Saks Chairman and CEO Stephen Sadove, the luxury market had $1 billion dollars in excess inventory during the past two years of the recession, so Saks accelerated markdowns straight to 70%. Sadove said, “We took a bloodbath but got the problem behind us and generated cash.” Yet, this was a one-off event, not something on which to build a new business. Hmm.
NYU Stern Business School students have given this conundrum some thought. Melanie Moore and Susanne Greenfield co-founded the new luxury discount site ToVieFor.com, which utilizes a dutch auction system and membership access fees.
ToVieFor sells current season luxury handbags and women’s fashion accessories at 40 percent to 70 percent off retail prices, primarily through a dutch-auction process online. To place a bid, shoppers must become site members and pay $1 to $5 for each session. ToVieFor will work directly with the brands — not distributors — to obtain the luxury goods it sells (nytimes.com).
Sounds like a good start. Shoppers still get discounted designer items, that are current, and whether they are aware of it or not- they are caught up in the thrill of bidding and playing a ‘game’ to get what they are lusting after.
Another approach is to expand beyond luxury items to luxury experiences- like spa treatments, vacation packages, performance tickets and even restaurant discounts. Kind of sounds like GroupOn, or the more locally positioned sites like the Weekly Plus. Gilt Groupe is moving in this direction with the upcoming release of Gilt City.
We’ve combed through five boroughs, hundreds of neighborhoods and countless things to do, and boiled it all down to the city’s newest, most exciting and most convenient, just for you. Savor food whipped up by top chefs, score tickets to that soldout show you’ve been dying to see, and if you need dry-cleaning delivered to your door, yes, Gilt City can help with that, too (gilt.com).
Let’s take it one level further, how will these brands/ sites monetize the rapid expansion of location-based marketing provided through GPS social applications like FourSquare?
It is a very curious area. When the supply dies down but the demand for discounted luxury is still there, what will these sites do and how will they embrace new technology and social media facets to facilitate their (hopefully) stayed growth?
