A little biz news to shake up fashion week: Nordstrom has just announced that they are acquiring private flash sale site HauteLook for an estimated stock value of $270 million.
Considering HauteLook's four million members (as of June this past year Gilt only had around three million but is valued at over 400 million), it's not for a huge amount of money, but it's significant nonetheless. Here's why: The deal marks the first instance of a big brick-and-mortar retailer buying a private flash sale site. Big retailers like Nordstroms make a lot of money through outlet stores and flash sale sites have become the new outlets, so to stay alive, big retailers have to get in the game--only they lack the infrastructure. Nordstrom didn't suffer as badly as many other major retailers did during the recession so they're well placed to make this deal. It's a good deal for HauteLook, too. While they sell everything from Omaha steaks to Cartier watches on their site, as part of Nordstrom the site will have access to more brands. And don't worry, current HauteLook users, the site hasn't been absorbed into shop.Nordstrom.com. Nor will it look any different. According to the Times, "Hautelook will operate as a stand-alone subsidiary, and its website will remain separate from Nordstrom.com...HauteLook will stay in its Los Angeles headquarters and continue to be run by its founder, Adam Bernhard."
“It’s clearly one of the fastest growing ways of shopping. Jamie Nordstrom, president of Nordstrom Direct, told WWD. “We have to do a better job of responding to customers. They are really changing the way they shop.” He told the paper that HauteLook was the "best fit" for Nordstrom because it "has capabilities in enhancing service and doing it fast. We are a big company. We don’t move as fast as a small startup company as HauteLook. This will help us innovate faster and become nimbler.”
But the deal is even more significant for what it might signal. While other big retailers like Saks and Neiman's have created their own flash sale sites to compete with HauteLook, Gilt, ideeli, and the countless other flash sale sites that have sprung up over the last few years, this could be the start of a trend. Leena Rao at TechCrunch notes, "I wouldn’t be surprised if other larger retailers snap up niche, smaller flash sales sites over the next few years."